CID Aims to Bolster Manhattan Town Center

When the Manhattan Town Center opened in 1987, the native limestone exterior, cathedral-high ceilings, and array of fountains wowed area residents. Everything, from the rosette logo down to the tile floors, was crafted with care. Unfortunately, 30 years of wear can take its toll on just about anything. And when things like 30-year-old floor tiles need replacing, it’s not always as easy as you would hope. In the Town Center’s case, it’s impossible, according to Marketing Manager Jeff Sutton.

The tile lining the halls of Manhattan Town Center is no longer produced. Not by the German company that produced it in 1987 and not by anyone else. “We’ve tried looking all over the world to get this tile replaced.” Thus, as the mall looks at addressing the flooring of different areas, they must consider replacing the entire floor, rather than just patching problem areas with replacement tile.

It’s not just the floor that needs some care. Sutton says that many pieces of the Manhattan Town Center that benefit members of the community every day have not been tended to since the mall’s construction. Thankfully, changes are coming to Manhattan Town Center in the form of a new economic development tool that will help fund future renovations spanning from the mall’s floor to its roof. The Manhattan Town Center is officially a Community Improvement District (CID).

A CID is an economic development tool designed to help improve Kansas communities by bettering conditions for existing businesses and attracting new growth. For Manhattan Town Center’s purposes, the tool will add a 0.75 percent sales tax to all purchases made at Town Center shops and movie theater, and its surrounding restaurants, including Chili’s and Texas Roadhouse. Ninety percent of the funds generated from the additional sales tax will be dedicated to renovations, repairs, and enhancements to non-revenue-generating areas throughout the mall, many of which are long overdue. The remaining 10 percent will belong to the city of Manhattan.

How the Mall’s CID Came to Be

In June 2018, following a presentation by members of the City Manager’s Office, the Manhattan City Commission passed the policy that allows Manhattan businesses to earn the CID designation with a 5-0 vote. The potential of the tool earned strong support from the members of the commission. “I voted for the CID because it is one of the tools for economic development,” Butler said. “It provides revenue for mall renovation without any impact on the general fund or property taxpayers.”

The designation was officially granted to Manhattan Town Center after a public hearing in November 2018. The mall is the first area in Manhattan to receive the CID designation. Many other cities across the state have implemented CIDs, including Topeka, Lawrence, Salina, Wichita, Hays, and Kansas City. Specific examples of CIDs include Legends Outlets in Kansas City and Holliday Square in Topeka. Manhattan Town Center’s additional sales tax will be implemented in April 2019 and will be in place for 22 years, the maximum allowable length of a CID designation.

Manhattan’s CID policy directs the city to consider petitions seeking to promote economic development within the City. As outlined by the City Manager’s Office to the City Commission in a June meeting, the City may prioritize applications for CIDs that meet one or more of the following criteria:

1. The proposed project will redevelop existing retail districts and/or attract new retail to enhance the city’s economic base;

2. The proposed project will attract commercial, office, industrial, and/or mixed-use development;

3. The proposed project will create facilities that promote the cultural, historical, or artistic elements of the City or region, will encourage tourism and will enhance the quality of life;

4. The proposed project will occur within districts, corridors, opportunity areas, or other locations identified in the Manhattan Urban Area Comprehensive Plan. The City will give preference to proposed CID projects within the Aggieville and downtown business districts.

Preference to Aggieville and downtown does not mean projects in other areas will not be considered for CID designation, but that, “[Aggieville and downtown] are areas where the city is heavily investing in,” said Jared Wasinger, assistant to the city manager in a public presentation to the City Commission in June, “and we want to see that economic development growth in the future.”

Commissioner Linda Morse, who was mayor at the time of the CID designation, said, “the renovation of the Manhattan Town Center is a large project and the CID seems like a most appropriate funding mechanism. You may have noticed the updating that has taken place in the K-State Union, which wrapped up a $31 million renovation project in October 2017, in the last few years. Overall, it is more appealing to students and the public.” The renovations funded by Manhattan Town Center’s sales tax revenue will also aim to increase the downtown community’s appeal.

CID designation will help Manhattan Town Center fund projects that could include more handicap-accessible entrances with automatic doors, repairs to the roof, restroom renovations, parking lot lighting, and more. “We definitely have a need for several of these things,” Sutton said. “The mall was built in 1987. It’s time for some of those things to be updated.” With the CID designation lasting 22 years, it may wind up helping fund projects that have not even been dreamed of at this point. Sutton said, “there’s a definite need for what we’re going to be doing, but we don’t necessarily have all the answers for 22 years down the road.”

Not Another Dying Mall

In an age of one-click shopping and free shipping, a single refrain echoes: malls are dead. Across the country, malls that once served as primary retail centers for thousands of customers stand vacant as cities ponder what to do with the empty space. The issue is so wide-ranging that entire websites exist solely to detail the ins and outs of “dead malls,” along with the negative effects they can have on their communities.

While some may think the Manhattan Town Center is just a mall at the end of its life, Sutton stresses that it is much more. It’s not only a home to a variety of stores and restaurants, Manhattan also sees it as a social center. A gathering place. A key cog in the city. “We’re at the front door of the community,” Sutton said. “(The mall is) kind of anchoring downtown, and we feel that the community is invested in our success as well.”

In Manhattan, that investment involves much more than shopping. Manhattan Town Center hosts more than 40 events throughout the year. The list includes art exhibits, historical displays, musical performances, indoor trick or treating, collectible and craft shows, charity events, festivals, family events, and more. “The community feels good and feels invested in what’s happening here at the mall,” Sutton said. The CID designation will help Manhattan Town Center upgrade its space to offer better surroundings for these events and new events that may come to the mall in the future.

Unique to Manhattan Town Center is its annual hosting of the Manhattan High School prom. The mall has been home to the event every spring for the last 31 years. The transformation from shopping space to celebration center provides area high school students with the chance to celebrate in a one-of-a-kind setting, and the mall’s architecture provides a backdrop that no high school gym can replicate. “That’s different than really any other mall that you might go to,” Sutton said.

Tax Increase Risks

While some citizens may worry that Manhattan Town Center could overextend itself, racking up repair expenses that the sales tax revenue cannot cover, leaving the city to foot the bill, the tax model has removed that risk. Manhattan Town Center’s CID is pay as you go, meaning that the mall will only be reimbursed up to the amount of sales tax revenue that has been generated for the project. Reimbursement will only occur after projects are completed and verified by a third party. Manhattan’s CID policy also includes a performance agreement that allows the city to review the mall’s books, records, sales tax returns, and invoices. Sutton said, “we couldn’t come in and do millions of dollars’ worth of work up front and immediately ask for millions of dollars back because that wouldn’t have been enough time for those sales tax dollars to have built up.”

While Kansas CIDs allow for projects to be covered by special obligation bonds, the pay-as-you-go model mitigates the risks that accompany those projects, by requiring a firm financial plan up front and only distributing funds that have been earned. The model also does not touch property taxes, which was a selling point for Morse. “My primary concern was that the property taxpayers not be burdened by the project,” Morse said. “The shoppers at the MTC (Manhattan Town Center) will be funding the improvements through an increased sales tax on the goods they are purchasing.”

The sales tax increase will amount to 0.75 percent, meaning that when shoppers spend $100 at the mall, they will pay an extra 75 cents in sales tax. Regardless of the size of the hike, a tax increase is a tax increase, and the mall approached the issue with care. They conducted focus groups sessions to gauge public opinion and store owners’ opinion before presenting to the City Commission, gathering people from a variety of backgrounds to represent the varying dynamics of individuals in the Manhattan community. As part of the focus groups, Manhattan Town Center representatives polled members about the mall. They asked what members liked and disliked. After sharing opinions, focus group members had the opportunity to hear about the potential area enhancements that could result from the Community Improvement District. “We didn’t have any negative feedback about the CID,” Sutton said of the focus groups and meetings with store managers.

Prior to approving CIDs, the city historically incentivized projects with Transportation Development District or Tax Increment Finance District designations. While similar, the policies hold some key differences that eliminated them as possibilities for Manhattan Town Center. Transportation Development Districts can only be used to fund improvements for public infrastructure. Meanwhile, Tax Increment Finance Districts limit revenue streams to incremental property taxes or existing sales taxes. Because Manhattan Town Center is privately owned, and because the city did not want to affect property taxes, neither was a strong option for funding mall renovations.

As part of the CID, the city will earn 10 percent of the sales tax revenue. With their funds, they plan to address the courtyard plaza on the west side of the mall, a project that has been under discussion for years, City Commissioner Wynn Butler said. That area, which opens to Poyntz Avenue, serves as a gateway to Downtown Manhattan. Potential renovations could make the area suitable for outdoor performances.

The Next Chapter of Manhattan’s Downtown

The expense of renovating a property as large as Manhattan Town Center is an intimidating one, but the state’s CID Act was approved with opportunities like this in mind. As large of a project as the mall renovation is, a much larger opportunity also exists. “I am eager for the Town Center to continue to succeed and grow our retail space,” Morse said. “The original vision for the Town Center was to attach it to our downtown. Just think how large our downtown is now.” While mall renovations can make the space more appealing to shoppers and potential tenants, the opportunity for CID designation can make the city, and downtown in particular, more appealing to restaurants and retailers who have considered coming to Manhattan in the past or may consider coming to Manhattan in the future.

The Manhattan Town Center is itself a prime example of the transformation that can come from economic incentives; a portion of the city’s original financing for Manhattan Town Center came from an Urban Development Action Grant. Prior to the mall’s construction, the site was an eight-block tract of city comprised of 77 properties. Not seen as the ideal gateway to downtown, conversations about redeveloping the area began amongst the City Commission in the late 1970s. A decade later, Manhattan Town Center became the cornerstone of that downtown redevelopment project. It was viewed as a community-changer; an anchor for the city’s retail. As Paul Rhodes wrote in The Manhattan Mercury in June 1986, “Manhattan Town Center — with its green and gray logo that was based on a limestone rosette salvaged from one of the dozens of buildings demolished for the project — is an all or nothing bet aimed at forever maintaining downtown Manhattan as the primary commercial district.”

The mall had an immediate impact in revitalizing the downtown area. Manhattan Town Center opened with great fanfare, including a formal gala that invited 1,800 members of the community to walk the halls for the first time and an estimated 22,000 to 25,000 visitors on the mall’s opening day. Local businesses beautified their storefronts as the mall’s grand opening neared, and the sidewalks lining Poyntz Avenue received new trees, planters, and benches. Even shopping hours were affected. In response to Manhattan Town Center staying open until 9 p.m., many downtown businesses extended their weekend and evening hours to take advantage of the extra traffic. By bringing new life to downtown Manhattan, the mall complemented local businesses rather than competing with them.

Thirty-plus years later, as the city’s first CID, Manhattan Town Center is again an integral piece of economic development. It seems fitting. Al Ratner, president of Forest City Enterprises, the real estate investment company that led the mall’s development, deemed Manhattan Town Center “a link between Manhattan’s proud past and bright future” at the mall’s ribbon-cutting ceremony. That bright future has arrived. The city’s population has grown by over 40 percent since Manhattan Town Center opened and that growth brings higher demand for economic development, the sort of economic development that can flourish with tools like the CID.

“Think of a restaurant or a retailer that you would love to have in Manhattan,” Jason Hilgers, deputy city manager, said in response to City Commission questions in June. “It generates a lot of retail sales. It has a lot of interest. Communities will put these tools out there with lower thresholds to try to attract them.” While Manhattan has not needed to incentivize development in recent years, Hilgers said tools like the CID can go a long way in bringing certain businesses in. “We do know of retailers that will only come here if we are willing to give them incentives. These are the types of tools that other communities have clearly been aggressive with.”

As the city continues to invest in downtown, Aggieville and elsewhere, the CID provides a tool that will help incentivize renovation and new development. Picture new retailers, both large and small, setting up shop within the city. Picture local businesses finally having the opportunity to update interiors that were last considered modern in 1974. Picture Manhattan and what you want it to be. The CID provides another avenue to make it all possible. It all begins at Manhattan Town Center.

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Derek Larson is the communications manager at Nelnet Diversified Solutions.