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How a new Arizona law has slowed Metrocenter Mall redevelopment in Phoenix

metrocenter mall
Tim Agne/KJZZ
Metrocenter Mall in Phoenix on June 20, 2020.

Demolition of the former Metrocenter Mall in Phoenix is more than a year behind schedule. When the city and co-developers Concord Wilshire and Hines announced plans for the iconic site in late 2021, it was pitched as a mixed-use project with 3,200 housing units and close to 400,000 square feet of retail, restaurants, services and offices.

But that was before state lawmakers threw a curveball and banned cities from collecting a certain sales tax.

As part of the development agreement, Phoenix offered to reimburse the developers $ 68 million in sales taxes in exchange for them building public infrastructure and amenities. But starting Jan. 1, 2025, cities can no longer collect taxes on residential rents, which is a big deal for a project that originally touted thousands of apartments.

 Updated renderings of the planned redevelopment of Metrocenter Mall in Phoenix.
Concord Wilshire
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Concord Wilshire
Updated renderings of the planned redevelopment of Metrocenter Mall in Phoenix.

Steve Betts, senior development manager for Concord Wilshire, said they are now reimagining the 80-acre site off Interstate 17 and Dunlap Avenue.

“We know that there are a lot of young people that would like to have, as starter homes, an urban product, that we might be able to provide in this village, in addition to rental product,” he said.

To make up for the rental tax loss, Phoenix will use other sales tax revenue to reimburse Metrocenter developers for building a large public parking garage and public park. When construction is completed, Phoenix will own the garage with revenue going to operation and maintenance and the co-developers, Concord Wilshire and Hines.

Betts said construction financing should close by mid-August with demolition to begin by the end of the month. It could take 10 months because of asbestos removal.

Updated rendering of redevelopment plans for Metrocenter Mall in Phoenix.
Concord Wilshire
Updated rendering of redevelopment plans for Metrocenter Mall in Phoenix.

“Unlike a lot of buildings that you can either see imploded or scraped quickly with a big grader or piece of heavy machinery, Metrocenter Mall can't be done that way for health reasons,” Betts said. “What we don't want to do is release that asbestos into the air for air quality reasons and for health reasons. So we will be removing the asbestos in advance of demolishing different phases of the mall as we take it down.”

He said the Metrocenter Mall’s two-story design provides an opportunity to have levels within their walkable urban village concept. After demolition and grading, water and sewer lines will be installed, and a public park should be built before construction begins.

“So this will be a two-year endeavor before you're able to see the village come out of the ground,” Betts said.

Gallery: Look back at Metrocenter Mall in Phoenix through the years

As a senior field correspondent, Christina Estes focuses on stories that impact our economy, your wallet and public policy.
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