A plan in the works for more than a year to help revitalize the Sunset Plaza mall was shot down by the Norfolk City Council at its regular meeting Monday night.
The proposed agreement between the City of Norfolk and the owners of the mall would have allowed for a 1% occupation tax in all stores except for Target. Proceeds would have paid for improvements to the mall, especially in the wake of Herberger’s closing.
The plan for the occupation tax and revitalizing the mall began last year, but the plan has undergone delays and changes. The council approved the designation of the mall as an “enhanced employment area” in August, which made the mall eligible for occupation tax with legal stipulations attached.
The tax would have applied to mostly the same items subject to sales tax within the mall. The city would use about 2% to offset administrative costs while the remainder would be reinvested into the mall for up to $4.1 million in improvements and renovation projects.
Michael Carter, representing the mall owners, said the funds would mainly be used to renovate the now vacant Herberger’s space, which will be occupied by four to five future tenants, rather than a single large tenant. Other improvements include the food court area, the roof and the parking lot.
City council members and Mayor Josh Moenning expressed their skepticism about the mall and a perceived lack of transparency between the mall owners and the government and taxpayers.
The responsibility of informing customers and taxpayers about the purpose and necessity of the occupation was left to the mall itself, which did not carry out this responsibility in the eyes of some council members.
Carter said they did plan to market the idea but wanted to wait until new tenants were found, and that has been taking longer than anticipated, leading to virtually no progress in marketing the proposed tax.
Councilman Rob Merrill responded to this admission with a pointed question.
“Why did you tell us you would do that and then you did not?”
Carter apologized and said there should have been a more aggressive approach. Merrill and other council members did not respond to the apology.
Moenning also raised questions about how the mall has been allowed to fall into its current condition, and whether it is even still viable, given economic and societal trends away from traditional indoor malls.
“If this mall, this property, were a priority for its owners, why weren’t facility improvements maintained and updates made over the last 20 years?” Moenning said.
The council also questioned the practicality of improving the Herberger’s space by subjecting other tenants to the tax.
“What makes anyone think that internal improvements to one wing of a struggling mall, which happens to be part of a dying model, can change anything for this facility?” Moenning said.
Carter said that by reopening and improving the space with new tenants, it would bring more people to the mall and ultimately help the other tenants and fill other empty spaces.
“Major retailers will be there and generate traffic, and hopefully more will come because there will be more traffic at the mall,” Carter said.
Carter said many of the major issues with the mall have indeed been fixed over the years, but future growth and improvement must be tenant driven.
Lastly, Moenning characterized the occupation tax plan as a bailout for its owners.
“Why should taxpayers and existing mall tenants, who already pay high rates of rent, essentially be asked to bail out a property that has appeared for so many years to be an afterthought of its owners?”
Carter said that in regard to a bailout, occupation tax has become more and more widely used to help revitalize malls like Sunset Plaza.
But ultimately, the council was not satisfied with many of Carter’s answers, and Moenning said a consistent lack of communication and planning has frustrated him personally, as well as many others in the community.
“I understand these things take time,” Moenning said. “But we have not gotten that signal these discussions and negotiations are proving fruitful. Frankly, the lack of communication during this period has not been helpful.”
Ultimately, the council denied the agreement between the mall and the city, and an ordinance to impose the occupation tax was scrapped.
The agreement was denied by a 4-4 vote, with Moenning, Merrill, Thad Murren and Corey Granquist voting in opposition. Normally, Moenning is not permitted to vote, but because the proposal required five affirmative votes and a council member was absent, Moenning was allowed to cast what essentially amounted to a tie-breaking vote, and he subsequently voted no.
The Norfolk City Council met Monday at 5:30 p.m. at the Norfolk City Council Chambers.
Council members present: Mayor Josh Moenning, Dick Pfeil, Corey Granquist, Shane Clausen, Jim Lange, Gary L. Jackson, Rob Merrill, Thad Murren.
Council members absent: Fred Wiebelhaus.
Meeting lasted: 1 hour, 10 minutes.
Others in attendance: City staff, five; media representatives, three; and about 20 from the public.
— The council held a public hearing and unanimously passed an ordinance amending the city code land use matrix to allow campgrounds in zoning district R-M and to allow indoor shooting and archery ranges as a conditional use in zones C-1, C-2, C-2A, C-3, B-P and I-1.
— The council held a public hearing and unanimously passed an ordinance to clarify city code regarding gun clubs, shooting ranges and others that may fall under exception to the prohibition of discharging firearms and to allow for the council to grant temporary permission for the discharging of firearms.
— The council approved a contract with JKK Construction for 2019 Norfolk bridge repairs for a total of $508,948.
— The council passed on first reading only an ordinance to annex the right-of-way along the east side of Highway 35.
— The council approved an agreement between the city and Pictometry International for oblique aerial photography in three projects totaling $136,848.
— The council approved the 2020-29 Capital Improvement Plan.
— The council denied an agreement between the city and Dial-Sunset Mall and NSP LLC for the Sunset Plaza Mall Enhanced Employment Area Project by a 4-4 vote. Granquist, Merrill, Murren and Moenning voted in opposition.
— The Norfolk Morning and Noon Optimists Club presented an award to Kevin Armbruster, firefighter and paramedic of the Norfolk Fire Division.
— The mayor proclaimed Nov. 1 as “Extra Mile Day” and Oct. 6-12 as Fire Prevention Week.