A proposal to redevelop the Valley West Mall site in West Des Moines has hit a snag and the mall is no longer under contract with the developer who has been working with the city to convert the 60-acre site into a mixed-use district, the Business Record has learned.

ATI Group went under contract for the 865,000-square-foot mall in August 2025 and has spent the past nine months in talks with the city to finalize details of an agreement that would allow the redevelopment of the site into something the city’s mayor said would be unlike anything else in Iowa.

The obstacle to making that happen has been ATI Group’s negotiations to buy out JCPenney’s lease, which runs through 2032.

A deal with JCPenney has not materialized and ATI Group’s period of due diligence, which had already been extended, expired in early April.

According to ATI Group, the deal is dead. However, West Des Moines Mayor Russ Trimble is adamant that a deal will get done, saying it’s critical to the city and to stop the mall property from falling into further disrepair.

“It’s not dead until it’s dead,” Trimble said. “This is still a work in progress.”

BJ Stokesbary, chief operating officer at the Ankeny-based development group, said: “From our position, the project is not moving forward at this time. We stand ready to step back in and continue to work with the city and JCPenney to make it a reality.”

JCPenney did not respond to an email seeking comment, but in a statement provided to Trimble, the company said, “JCPenney is 100% committed to remaining in the community for the long term.”

Trimble said the future of the project is in JCPenney’s court.

“It all comes down to JCPenney,” he said. “Either JCPenney is going to make such that this part of the city is going to continue to rot and decay until 2032, or they’re going to say yes, and we’re going to start making this something like you’ve never seen before.”

A sticking point is the store’s lease, which ATI Group said was first written in the 1970s and gives the department store say over improvements made to the mall property.

The concept that Trimble wants to see done — and that he says the community wants — includes a mix of retail, restaurant, entertainment and residential, with walking trails and two ponds connected by a canal. During the summer people could paddleboat on the ponds and canal. During the winter, when it freezes over, the area would be opened for ice skating, Trimble said.

There would also be an amphitheater for concerts and other entertainment, and some office space could be incorporated into the plan.

If the development takes shape as Trimble envisions, he said a parking garage would have to be built about eight years into the project. There would also be two public streets that traverse the site.

The ponds, trails and green space that are included in the concept would reduce the developable space on the site from 60 acres to about 34 acres. Redevelopment is estimated to cost between $450 million and $500 million.

Trimble and ATI Group say they want to transform the mall site into a destination where people can live, work, play and build family memories for the next generation.

“Everyone remembers going to the mall with their parents, or taking their kids,” Stokesbary said. 

“It’s nostalgic and it’s sad that these physical places are going away, but we’re trying to recreate that sense of community, and build that not only for today, but for 50 years and 100 years from now,” Stokesbary said during a December interview with the Business Record.

He said despite the decline the mall has experienced, it is still a desirable site for development.

“West Des Moines has so much going for it,” Stokesbary said. “When you look at Valley West, it used to be the hot spot and hub, and it can still be a great piece of real estate. So how can we re-envision that and bring life back into it?”

“It’s exciting when you have 60 acres of prime real estate to work with,” he said in December. “It’s fun to move the puzzle pieces around.”

Trimble said the goal is to make a walkable neighborhood that provides services and amenities for everyone.

“This is going to be a self-contained, little village,” Trimble said.

ATI Group redeveloped the Crossroads Mall in Fort Dodge, and is redeveloping a mall by the same name in Waterloo.

The ongoing efforts at Valley West Mall follow actions the city has already taken to set the stage for redevelopment.

The West Des Moines City Council rezoned the mall property for mixed use in June 2024. In October 2025, the council designated the site and the area around it as an Urban Renewal Area.

In another step to facilitate the redevelopment of the mall site, the city council scheduled a special meeting for this morning, where they voted 4-1 to approve an amendment to the Valley West Urban Renewal Area.

According to council documents, the city expects to enter into a development agreement with a developer who will buy the mall, raze it and redevelop the site for mixed use. 

The city anticipates providing incentives not to exceed $110 million in the form of public infrastructure, loans and grants that would be detailed in a development agreement.

Trimble said part of that would include the issuing of bonds to get cash up front and the use of Tax Increment Financing.  He said the $110 million would be spread out over the estimated 10 years it would take to build out the redeveloped site.

“We’re lining our ducks up in a row and getting ready to move forward in the event JCPenney says, ‘Hey, we’re ready to go,’” Trimble said.

The two-story mall at 1551 Valley West Drive opened in 1975 and flourished with three anchor stores until Jordan Creek Town Center opened in 2004 and retailers began to follow shoppers to the new retail hub.

The mall has seen an 80% reduction in assessed value since the height of its activity in 2005. Online records show an assessed value of $19.8 million. The mall has 138 tenant spaces, but only about 18 are occupied.

The mall went on the market in February 2025, three years after it entered foreclosure. It was placed in receivership after the mall’s owner, Minneapolis-based Watson Centers Inc., failed to make loan and other payments totaling nearly $3.5 million to U.S. Bank.

Trimble said he is continuing to reach out to JCPenney in hopes of making a deal, and ATI Group said it is keeping the line of communication open with the receiver and with JCPenney.

Trimble said he’s hopeful that a solution will be found.

He said a redeveloped mall site will provide a spark to other redevelopment in that area, and the amendment to the Valley West Urban Renewal Plan sends a message to the community “that we mean business.”

“We want to get going. We want to develop that site, and breathe new life into this thing and bring it back to greatness,” Trimble said.