A letter submitted to the Iowa Economic Development Authority shows that about $44.3 million has been identified for funding the first phase of the Merle Hay Mall redevelopment project, which includes a multiuse arena and volleyball facility.

While that is about $12.6 million short of the $56.9 million that is needed, the difference could be made up through other sources, with Liz Holland, CEO of Abbell Associates LLC, the group that owns the mall, saying, “We have been working hard to fill the gap.”

The letter, delivered to IEDA late Tuesday by the Merle Hay Revitalization District Joint 28E board, complied with the March 31 deadline that IEDA set in its November approval of the revised application for Iowa Reinvestment Act funding for the project.

Submitting the letter was the latest step in the mall’s redevelopment, a project that also includes construction of more than 140,000 square feet of space for new retail and restaurant tenants and a 150-room hotel.

The work will happen in phases with all work completed and all new spaces, including the arena, opening by fall 2028.

The mall straddles the city limits of Des Moines and Urbandale, with about two-thirds of it sitting in Des Moines and one-third in Urbandale. Because of that, the 28E board was created with two members from each community and one representative from Polk County. The board acts as the governing body representing the local governments on the project.

The letter delivered to IEDA breaks down the costs of the first phase with funding sources. It also identifies possible tax increment financing incentives of an unknown amount from the city of Des Moines, which could help close the gap.

Attached to the letter are supporting letters, including a March 26 letter from real estate capital adviser Ackman | Ziff, which says that “we are confident in our ability to arrange the financing required to complete the redevelopment.”

Another letter from the International Coliseums Company dated March 22 said it is looking to secure a “single source lender” for the financing of the arena project. GreenState Credit Union wrote a letter dated March 19 that indicates the credit union became the lender supporting the Merle Hay Mall redevelopment in 2022, and has continued to work with the mall on the arena project.

“As of today, GreenState remains committed to working with Merle Hay Mall throughout the refinance process,” the credit union’s letter read. “We support the long-term vision for the project and recognize the value it will bring to the broader community.”

Among the identified funding sources were the Iowa Reinvestment Act award from the state. While $26.5 million was approved, the monetization of those rebates will total about $16.5 million. That allows bonds to be issued that would be repaid with future increases in sale tax revenue from the Merle Hay campus once the site is redeveloped, said Aaron DeJong, the city of Urbandale’s economic development director and staff for the 28E board.

There are also improvements to the volleyball facility totaling $8.3 million that will be paid by the tenant. Then there is $7.5 million from the International Coliseums Company. The letter to IEDA also identifies features of the arena project that will be deferred to later years. Those total about $12 million and include a center hung scoreboard, spotlights, drop-down platforms, private suites, concert sound, ribbon boards and additional locker room buildouts, among others.

The letter also says that the city of Des Moines is open to discussing the creation of Tax Increment Finance development agreements for future projects on the Merle Hay Mall campus. No dollar amount was identified in the letter. 

Carrie Kruse, the city of Des Moines’ economic development administrator, said mall officials have reached out about the possible use of TIF funding for a new hotel and retail store on the Des Moines side of the Merle Hay campus.

While the city is open to those discussions and encourages development at Merle Hay, no details have been provided as to what that might look like and nothing has been negotiated, she said.

“It’s very early in the conceptual conversations but we’ve shared that we’re certainly willing to look at it,” Kruse said. 

DeJong said the letter to IEDA was intended to update the state agency on the funding for the project.

“This is the status update of all of those,” he said. “We’re not where it should be but we needed to give them a written update as to where we were today.”

Another factor waiting to be determined is the costs of construction, which could change as the general contractor re-prices the first phase, the letter to IEDA said.

Holland said the re-pricing is needed because the plan initially submitted to IEDA under the revised application last year included the cost of retrofitting the existing structure. The plan has changed and includes demolishing the existing structure and building new.

She said building new will save at least $1 million because a basement under the mall’s current food court will not have to be saved. It can be filled in and the volleyball facility will have the space it needs on one level, Holland said.

One variable that was not known until recently was the need to obtain a construction loan to help fund the redevelopment project, Holland said.

“And that’s going to take time to put together,” she said.

The loan is needed “because it’s a government entity paying for a constructed building,” Holland said.

She said she was optimistic the gap would be smaller than stated in the letter to IEDA as other funding sources are confirmed, and that some of those deferred improvements to the arena could be done by opening day.

The redevelopment would increase the mall’s sales by an estimated $124.24 million by the third year, she said. The mall would also provide a total economic impact of $136.2 million during that time.

The mall will attract 65,000 more unique visitors each year once the project is complete. The mall attracted more than 750,000 unique visitors between July 1, 2024, and July 31, 2025, with more than 3 million visits.

Once complete, the arena will be home to Drake University’s men’s and women’s hockey clubs and the Iowa Demon Hawks men’s and women’s professional soccer teams.

Other partnerships could include the Central Iowa Figure Skating Club, Des Moines youth hockey programs, and volleyball and wrestling tournaments. The volleyball facility will be open year round for practice, training and league play, and is expected to attract 2,000 visitors every weekend.

Holland said demolition of the former Younkers store to accommodate the construction of the arena and volleyball facility is still planned for late summer or early fall.

“That’s still the plan,” she said. “We’re just going to keep pushing the rock up the hill.”

Related stories:

• Demolition of Younkers set for late summer as Merle Hay Mall transformation moves forward
• Merle Hay Mall redevelopment eyes 2027 completion
• Merle Hay Mall CEO: Revised redevelopment plan expands universe of potential users