By Shereen Siewert
The final retail tenant at Wausau Center mall closed Monday, the end of an era for the city’s downtown shopping center.
The closure paves the way for the mall to be razed, allowing for sweeping changes to the property that will transform the downtown area.
When Wausau Center opened in 1983 the mall, then owned by the Jacobs Group, was a bustling 424,000 square-foot regional center with three anchor tenants: J.C. Penney, Sears, and Prange’s, which evolved into Younkers. But over the years, the mall changed hands, lost tenants and lost its appeal for shoppers, as big-box retailers began to line the streets of Rib Mountain and online retailers grew in popularity.
Wausau Opportunity Zone, Inc., or WOZ, in February 2020 purchased the mall from Rialto Capital Management. The purchase was funded in part by a pair of local foundations, the Dwight and Linda Davis Foundation and the Judd S. Alexander Foundation, in partnership with the city of Wausau. The Wausau City Council in November approved a proposal to spend $4.7 million to help the group fund demolition and redevelopment of the space.
The purchase was finalized on Feb. 4 and was made possible in part by millions in taxpayer-funded incentives that included transfer of city-owned assets to the LLC for $1. Those assets include the former Sears building, which the city purchased in 2017 for roughly $650,000, and the land and air rights to the property.
The initial proposal floated to the city under the former administration called for a $1 million forgivable loan to the group, which would also receive seven annual tax increment financing grants from the city totaling more than $2.2 million. Under the terms of a new agreement negotiated by the city’s current mayor, Katie Rosenberg, the city eliminated future annual payments to WOZ of $327,000 per year – roughly the same amount as the 2018 tax burden for the property at the time the agreement was reached – and reduced the existing loan to WOZ from $1 million to $660,000. Rather than a forgivable loan, as the former administration approved, that $660,000 was converted to an interest-free loan with annual payments of $110,000 beginning July 1, 2022.
Perhaps the most significant change to the development agreement negotiated by Rosenberg and approved by the council is the caveat that WOZ will pay guaranteed real estate taxes based on an assessed value of $7 million beginning Jan. 1, 2024, regardless of construction. The developer expects the value of improvements to range from $18 to $21 million.
The project is, by any definition, expansive and ambitious. Demolition and restoration of damaged and or exposed facades is expected to cost about $3.5 million. Water, sewer, and storm will be installed in the new street grid. Temporary streets will be constructed for Second, Third and Jackson Streets, while Washington Street will be expanded for two-way traffic and pedestrian amenities, infrastructure improvements expected to cost about $1.2 million.
‘Operation Termination’ – and response to public criticism
Since WOZ purchased the mall, the businesses within – a mix of local and national retailers – either moved their operations or shut down altogether. The group’s efforts were outlined in emails obtained by Wausau Pilot & Review and touted as “Operation Termination,” a plan to clear the mall to make way for the new development.
In September, as part of the operation, a dozen retailers were notified by certified mail that their leases would not be renewed and that they would need to vacate by the end of January. Those retailers had either a natural expiration date of Jan. 31, 2021 or were month-to-month tenants.
Since then Buckle, Maurice’s, and Spencer Gifts opted to relocate to Rib Mountain Drive. Reflexology Massage relocated to 315 N. Third St. in downtown Wausau. Other businesses have yet to announce their plans, though some have shuttered permanently.
Though public enthusiasm for the project was largely positive, many residents publicly balked at taxpayer investment in the project. In an apparent effort to counteract that criticism, WOZ embarked on a dedicated effort to gather public support and mobilized downtown stakeholders to send a unified, positive message.
“…it seems to me based on the city council committee meeting we should write to chamber and GWPP members to have them sign a letter of support,” wrote Jim McIntyre, in an email to Wausau Region Chamber of Commerce President and CEO Dave Eckmann, along with Gary Freels, Jeff Stubbe, MaryAnne Groat and Mark Craig. “I think it will also be important to have a group of young professionals do (the) same.”
“Jim, I will see if I can create energy with the young stars I have been having dialogue with,” replied Jeff Stubbe.
As a result of those efforts more than a dozen letters were submitted to the council and included in the city’s packet for consideration.
In an email to the WOZ board Chuck Ghidorzi, who has been appointed managing director of the development, expressed his enthusiasm for the opportunity the project presents.
“I am looking forward to the next month with our team and community to advance and ‘unlock our fantastic opportunity,'” Ghidorzi wrote.
The mall is located within a so-called “opportunity zone,” designated as such through the federal tax cuts and job acts of 2017. The program aims to drive long-term investment into designated, economically distressed areas across the country, while offering potentially lucrative tax incentives to real estate investors.
Under the terms of the program, investors can defer capital gains on a previous investment if the money is reinvested into an “opportunity zone” asset. Investors can also take advantage of additional assistance such as tax increment district (TIF) funding. See a description of the opportunity zone program here.
Looking to the future
The closure comes roughly five years after city leaders approved a $4.1 million plan to help former owner CBL with physical improvements for the mall. Part of CBL’s plan, which never materialized, involved moving what was then Younkers to the space once occupied by J.C. Penney. At the time, CBL representatives said moving Younkers was critical to keeping the anchor store open.
The move never happened, and Younkers ultimately closed in 2018 after parent company Bon-Ton went out of business. CBL walked away from the mall property, which was sold in July 2017 for $12.8 million to Miami-based Rialto in a sheriff’s sale.
As for the earlier $4.1 million investment, those dollars were subsequently used in other ways. In February 2018, Wausau Finance Director Maryanne Groat told Wausau Pilot and Review the $4.1 million loan taken out by the city and earmarked for the mall had since been “repurposed.” The city used $650,000 to acquire the former Sears property and dedicated $750,000 to extend Fulton Street as part of the riverfront project. The remaining $2,740,000 was redirected to the city’s Riverlife project, Groat said. But since that time, the Fulton Street project price tag dropped after the city received grant funding and the project size decreased, freeing up some of those funds.
Project planners call for major changes that include running a portion of Third Street through what is now the center of the mall, ending at the entrance of HOM Furniture, which will be refaced. Third Street will intersect with a newly constructed Jackson Street, that will end at Fifth Street, according to the plan. Second Street will run from Washington Street through the current mall to Forest Street.
What was once J.C. Penney will be opened up with two buildings and green space, while the portion of the mall facing Washington Street is set become 3- to 4-story units with retail on the lower level and residential on top. Underground parking would add more than 500 parking spaces to the downtown’s roughly 1,500 existing spaces.
The money earmarked by the city will include up to $3.5 million to demolish the mall including the former Sears and J.C. Penney anchor stores, and restore exposed walls for Hom Furniture, which acquired the former Prange’s anchor. Work will begin as soon as July and will conclude about 15 months later, according to the most recent term sheet summary.
After demolition, WOZ will dedicate about 95,000 square feet of land for extending streets, sidewalk and utilities of Second, Third, Jackson and Washington Streets.
The first phase of demolition will begin in May.