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Simon Properties, La Plaza Mall, and McAllen leaders are pictured at a news conference held at La Plaza Mall on March 10, 2016.

MCALLEN, RGV – McAllen Mayor Jim Darling has explained how and why the municipality will contribute $20 million towards the construction of two new parking decks at La Plaza Mall, the largest retail shopping center south of San Antonio.

Speaking to the McAllen Economic Development Corporation board of directors, Darling said a base figure would be established for sales tax generated by the mall. All sales tax receipts above that base would be split in two. Fifty percent would go into McAllen’s general fund and the other 50 percent would pay for the debt on the $20 million.

Darling pointed out that Simon Properties, owners of La Plaza Mall, is investing $100 million in a major expansion of the mall. This, he said, will mean an additional 60 stores, four new junior anchors covering 15,000 to 20,000 square feet, and six new restaurants.

Two new two-story parking decks will be built as part of the mall’s expansion. One of the decks, accommodating about 500 cars, will be built adjacent to Macy’s, while the second, accommodating 700 about cars, will be built adjacent to J.C. Penney and Dillard’s.

“We just established a level of existing sales tax,” Darling told the MEDC board of directors. “Anything generated above that, we get 50 percent of that sales tax and the other 50 percent would go towards paying the debt for the parking structure. If that 50 percent on an annual basis does not equal the debt service, then the Mall picks that up.”

Simon Properties, a global leader in retail real estate, is pleased the City of McAllen has agreed to help pay for the parking decks.

“Unlike some municipalities, here we have a municipality that is willing to work with you, expedite the permits, and make sure if there is a problem they are working with you to solve it. That is what is going to allow us to build it so quickly,” David Contis, president of Simon’s mall division, told the Rio Grande Guardian at a news conference held to announce the expansion plans for La Plaza Mall.

Darling acknowledged the City of McAllen has received criticism from some McAllen residents over its decision to pay towards the construction of the parking lots. But he defended decision, saying it will be a good investment.

“We looked at the incentive programs around the state. For instance, City of Austin paid $22 million for a parking structure for one of its malls,” Darling said at the MEDC meeting. “We thought having the No. Two mall in the (Simon) system, with the influence it has in northern Mexico, we don’t like paying it but it is a good investment. We are going to get 50 percent of the increase in value and 100 percent of the property tax. That is the way you do business in the United States nowadays, through incentives. We think it is a good investment.”

At its news conference on March 10, Simon Malls’ Contis pointed out that La Plaza Mall is an economic driver for McAllen. He said it generates $400 million in sales, employs 2,500 people, pays $33 million to the city in sales tax and another $4 million in property taxes. With the expansion, Contis said, another 500 permanent jobs will be created.

“We are part of the economic engine in McAllen and we are proud to be that,” Contis said. “La Plaza Mall is a highly productive mall and demand for space is significant. Simon is committed to the McAllen market, and we know that this expansion will bring in highly-sought, high-quality retailers and restaurants unlike anything else available in the area.”

In his interview with the Rio Grande Guardian, Contis ran through the expansion plans. He said a newly constructed wing will accommodate an 80,000 square foot, two-level anchor, two junior anchors, 50 to 60 specialty stores and four to eight restaurants. He said the property will then expand further with new space between Macy’s and JC Penney. That portion of the development will add another 20 to 25 shops and several restaurants, Contis said.

“We are going to have four junior anchors, rather than one large anchor like Dillard’s or Macy’s. There is also demand by other large scale anchors and we are trying to determine how we can add them,” Contis.

Contis said Simon will also upgrade the interior of the mall in McAllen with new flooring, restrooms, lighting, luxury seating and landscaping. “Simon Mall has stores that are unique to the market. Simon Mall has amenities people like, whether it is Wi-Fi, whether it is restrooms. Simon Mall is part of the fabric of the community. We love being in McAllen. We will probably be making more investments, we hope.”

At the news conference, Mayor Darling pointed out that La Plaza Mall is celebrating its 40th anniversary. Before that, he said, the land was an orange grove.

“La Plaza Mall since its opening has been the premier shopping location in our region. With the new and exciting expansion underway the fantastic shopping experience at La Plaza Mall is only going to be even better,” Darling said. “The City of McAllen is very proud to have the Simon Company as part of our community.”

Also at the news conference, La Plaza Mall General Manager Robert Luciano said the mall would remain open during the renovation period and that the majority of the work would be done at night. “The new expansion is expected to open in time for Texas’ tax-free weekend in 2017,” Luciano said.