Gran Plaza moves forward
Construction is underway in early April at the site for the Gran Plaza Outlet Mall on Second Street in Calexico. (FERNANDO ACOSTA JR. FILE PHOTO / July 5, 2013)
City Manager Oscar Rodriquez stated that he believes the mall will “put us on the map” by strongly competing with the Imperial Valley Mall for Mexicali shoppers that provide much-needed sales tax revenue dollars in the Valley.
City financial consultant Marshall Linn agreed that while the opening of the mall contributed to the demise of Calexico’s downtown, which still bears the burden of border traffic but little of its spending money, Gran Plaza could capture that back.
“Gran Plaza could very well be the most important retail project ever built in the city,” he said. “It’s a great opportunity for an adequate tax base in the city.”
Corsair LLC is financing the actual construction and development of the project, and Linn iterated that “no public money is being used for the private activity portion of the project.”
However, Corsair requested that the city form a Community Facilities District to provide bond proceeds to build a major portion of the public improvements necessary for the project, and City Council approved that 3-2 with councilmen Joong Kim and Luis Castro dissenting.
In 2011, the city agreed to contribute about $7 million of redevelopment agency funds for public infrastructure improvements but that agreement was dissolved when the state did away with all redevelopment agencies.
In order to make the development financially feasible, Corsair and city staff agreed the formation of a CFD was the most viable way to fund public infrastructure needed for the project, Linn said.
The financial agreement approved Tuesday governs the use of $7 million of CFD and $3 million of Measure D funding for the development of public facilities.
Once formed, a special tax is then levied within the district to pay for the needed infrastructure. The city has no obligation to pay for debt service nor is the city legally obligated to the bond holders in the event that there’s a default, Linn said in Tuesday night’s City Council meeting.
“There’s a misunderstanding going around the city, generally speaking,” he said. “Projects of this magnitude need some type of public financial assistance to make the project economically feasible for the developer.”
He maintains that Corsair assumes all the risks and the city will contribute a certain amount of project-specific sales tax back to Corsair to help pay for the debt service on the CFD bonds.
Also, the city’s contribution will only be made if the project meets a predetermined level of sales tax generation.
Calexico financial advisory board member Yolanda Cordero said she was not made aware of the CFDs until 60 days ago. She said that while she’s in favor of the project, she feels the agreement could be worked on further, and added that when Wal-Mart came in, the project paid the city for the infrastructure.
Newly appointed Mayor Bill Hodge spoke in favor of the financial agreement Tuesday night.
“If you critically think and analyze the information offered, unless you just outright say they’re lying and you don’t trust, then you’re in a position that nothing is presented to you that you’re going to believe,” Hodge said while encouraging Kim and Castro to consider it.
“We need to trust and we need to take a risk. Based on the information, I think it’s a very, very low risk,” Hodge said. “Gran Plaza will bring a higher quality of life for everybody here with employment, shopping, and then we’ll have that money to do better things for Calexico.”
Newly appointed Mayor Pro Tem John Moreno said he wants the focus to be on creating an agreement that guarantees local hires.
“This is a win-win situation for everybody … The debt service will be peanuts in 10, 20 and 30 years from now,” he said. “It will be the economic engine the city had been needing for the last several years.”
Construction has been in full swing on the outlet mall, which is scheduled to have its first phase opened by Oct. 25.
The first phase consists of about 287,000 square feet of gross leasable space and is expected to have more than 70 stores including Gap Outlet, Banana Republic Factory Store, Guess Factory Store, Perry Ellis, Cubavera, Coach Factory, Nike Factory Store, American Eagle Outfitters, Aeropostale, Skechers, Levi’s, Wilsons Leather, Puma and Tilly’s.
Construction is expected at its peak to create about 250 on-site jobs and phase one retailers are expected to provide between 700 and 1,000 jobs annually.
Another significant economic benefit is expected from sales tax revenue estimated to be around $1.5 million.
Calexico City Council also approved to authorize a one-year contract with First Transit Inc. that would include a 3 percent per hour rate increase due to administrative and operational cost during Tuesday’s meeting. First Transit provides services for the Calexico Dial-A-Ride Program and its five-year contract with the city ends Sept. 2. Dial-A-Ride programs receive state funding annually through the Imperial County Transportation Commission that is hoping to consolidate the service through a competitive bidding process involving several Valley cities to get a better rate. However, the city is under no obligation to participate in the consolidation, and the rate increase to the city wouldn’t directly affect the fare amount.
Staff Writer Chelcey Adami can be reached at 760-337-3452 or email@example.com