Metrocenter with its ice skating rink, big department stores, airline-themed restaurant and Orange Julius was the place to be in Valley during the late 1970s and 1980s.
Parts of the movie "Bill & Ted's Excellent Adventure" were filmed at the popular mall.
But the northwest Phoenix development once hailed as the future of shopping with five major department stores, hit hard times in the late 1990s as people fled to suburbs and newer shopping centers in Scottsdale, north Glendale, northeast Phoenix, Tempe and Chandler.
The real estate crash of 2008-2011 left the mall, west of Interstate 17 between Peoria and Dunlap avenues, with a flood of vacant stores and foreclosed homes in the neighborhoods around it.
As other areas started to recover, it didn’t. The city of Phoenix designated the neighborhood a blighted area.
Metrocenter has attracted new owners and a Walmart but is still struggling.
Phoenix officials are hoping a new tax break to draw investors and developers to low-income areas will finally spur Metrocenter’s redevelopment.
Metrocenter is in one of metro Phoenix’s 85 opportunity zones. Not all of the areas need help like the northwest Valley neighborhood.
The zones, created in President Donald Trump's 2017 Tax Cuts and Jobs Act, provide a tax break aimed at driving investment and fast-track development to areas that need affordable housing, shopping centers that offer local services and more jobs.
“Opportunity zones really do provide redevelopment opportunities, particularly along transportation corridors where workforce housing is needed,” said Christine Mackay, director of economic development for Phoenix. “We very purposefully picked Metrocenter for one of our zones.”
Cities could nominate 25% of their census tracts that met these federal standards for the program: 20% of its households below the poverty rate, or a median family income of less than 80% of the region or state's median family income.
She said Phoenix would like to see Metrocenter revived like the city’s oldest shopping center Park Central in midtown that’s in the midst of redevelopment that will bring a medical school to the former mall.
In 2012, The Phoenix City Council unanimously approved a new zoning plan for the 130 acres in and around the struggling shopping center.
The approval opened the door for Metrocenter's owner to add more retail and restaurants as well as office buildings, apartments, senior housing and health care facilities to the mall.
“We now have the official green light to redevelop this valuable infill site in a very significant way,” said Warren Fink, the chief operating officer of Carlyle Development, in 2012 when his group bought the mall for $12.2 million
Carlyle didn’t respond to requests for an update on Metrocenter’s redevelopment plans.
Former Phoenix Mayor Thelda Williams said in 2014 that Metrocenter could “turn into a slum” if something wasn’t done soon.
A 150,000-square-foot Walmart in a long-vacant department store spot is the most noticeable part of Metrocenter’s redevelopment so far.
In June, a Denver investor bought the former JCPenny store.
Southwestern Property Corp. paid $3.17 million for the 156,000 square-foot building and said it planned to redevelop the space into a high-end self-storage and boat/RV storage facility or an entertainment center.
If Southwestern Property used money from capital gains from another investment to buy the JCPenney building, it could eliminate the capital gains taxes on that initial deal and on the Metrocenter property because of the area’s opportunity zone status.
Opportunity zones are poised to save investors billions of dollars in taxes during the next decade.
To get the tax benefit, investors must quickly reinvest money from capital gains, which is the profit from the sale of real estate or an investment. Putting those profits into an opportunity zone allows people to reduce or even escape paying capital gains taxes.
Chris Loeffler, CEO of Scottsdale-based Caliber, which has a $500 million fund to invest in opportunity zones, explains how the tax break can work:
Downtown Phoenix, Scottsdale, Gilbert and Tempe Town Lake also were named Valley opportunity zones, where investors and developers can get the tax break.
An Arizona Republic analysis of opportunity zones in Maricopa County found that while some of the areas could use help, others are thriving and most likely would draw developers without the tax break.
Metrocenter is a great example of an area that could use the tax break to bring more housing, jobs and shopping to the area.
Reach the reporter at [email protected] or 602-444-8040. Follow her on Twitter @Catherinereagor.
