The Kingsport Economic Development Board (KEDB) on Tuesday approved a Payment In Lieu Of Taxes (PILOT) agreement that would allow for a $2.3 million incentive over an 11-year period and require the retail mall’s owner, Augusta, Ga.-based Hull Property Group, to invest a minimum of $4.6 million in the facility over a five-year phase one period. The Kingsport Board of Mayor and Aldermen approved the deal last December.
Kingsport Development Services Director Lynn Tully outlined the mall’s situation: A 2014 total property valuation of $29.7 million that went to $16.7 million in 2015, and then was sold in June 2016 for about $5 million.
“We’re in a situation where we’re seeing a fairly quickly declining property value,” she told KEDB.
Sales, she added, also have steadily declined from 2012, going from $62 million to $49 million last year.
“We currently have got about 120,000 square feet of unleased space within the mall,” she noted. “Sears recently announced its closure and is working toward that end as we speak. Those continued high vacancy rates will discourage any new tenants, but we do have a new owner, and that owner has a track record and history or returning some of these struggling malls to a profitable endeavor. Seeing new retail in those malls takes some time, and it takes some effort on their part, but they’re willing to do that.”
The PILOT calls for Hull Property Group to increase sales by at least 15 percent beginning in year two to exercise a renegotiation option in year six. The city is projecting a potential six-year local sales tax increase of nearly $650,000.
The $4.6 million investment, Tully said, would upgrade the mall’s interior and entrances.
“We think (the PILOT) is favorable for the city,” Tully concluded. “We think it’s favorable for the Town Center and sets the stage for new retail growth.”
Following Tully’s presentation, KEDB Vice Chairman Lynn Johnson responded: “The way the (KEDB) executive committee understands it, we’re far better off with this recommendation than doing nothing.”
Tully disclosed Hull Property Group is working with potential new tenants. Anchor tenants J.C. Penney and Belk remain. Frank Theatres is expected to move out this spring following a legal dispute with Hull Property Group.
Hull Property Group Managing Partner Jim Hull, in an interview with the Times-News last December, pledged his company would not let the mall fail.
The mall opened in 1976. Its land and property were assessed at $20 million in 1979, according to the Sullivan County Property Assessor’s office.
For more about Hull Property Group, go to https://www.hullpg.com/