City Report Expresses Confidence Construction on 'Outlet Collection at Elk Grove' Will Resume in 2018

Elk Grove economic development director Darrell Doan to argue
for increased cash incentive for retailers to locate in the city. | 

January 20, 2018 |  

In a report that will accompany a planned presentation, Elk Grove economic director Darrell Doan is expressing confidence that construction will resume this year on the city's so-called Ghost Mall. That prognostication is part of a report that Doan will present to the Elk Grove City Council at their Wednesday, January 24 regular meeting.

The report is part of the broader presentation of the city's fledgling economic development department will make on the retail sector. The city has identified recruitment of high-end retailers as a keystone in the economic development.

Doan's prediction on the Ghost Mall, which is currently named the Outlet Collection at Elk Grove and owned by Dallas-based Howard Hughes Corporation (HHC), has sat unfinished on the city's south side for 10 years this coming July. The property has been a source of embarrassment for the city and is a reminder of not only the effects of the Great Recession and housing collapse which hit Elk Grove particularly hard but the shift in consumer retail trends.

In the report, Doan noted that there is interest in the property because the adjoining proposed $400 million Wilton Rancheria casino and there has been "leasing activity" although the number of agreements executed was not specified. The report states "Several new lease signings provide optimism for a start of construction in 2018, although this cannot be guaranteed."

Doan's assessment runs contrary to comments by Elk Grove Mayor Steve Ly who said in a published report that HHC told him that construction on the shopping center could resume in 2019. For the last several years HHC has posted signs on their property promising construction the following year.

While the city struggles to jumpstart the unfinished Ghost Mall, the report also publicly revealed its tentative plan for the development of 20 city-owned acres as a lifestyle center in the area now referred to as the civic center.  This proposed lifestyle shopping center is about three miles from the Outlet Collection at Elk Grove, which Doan also described as a hybrid of a lifestyle center and outlet facility.

As described by Doan, the project envisioned would be similar to The Fountains in Roseville. Doan said based on the results of a feasibility study a proposal to convert the city-owned land into a shopping center will be presented to the city council in the first half of 2018.

In a story published in October, 2017 public documents showed that in communications between Doan and an employee of Retail Strategies, the city's Birmingham, Alabama-based paid leasing agent and business consultant, developer Louie Pappas and Pappas Investments would have to be given the first opportunity for the project, although this was not Doan's preference. Doan wrote the city has "to give them first crack at being our developer/partner but I think there will be a way to bring in another group (Sywest) that can help get it right."

Pappas, who has been a frequent and generous contributor to several Elk Grove City Council members since incorporation in 2000, has also been the beneficiary of multi-million incentives from the city.  Recently the Elk Grove City Council approved an $8 million incentive for Pappas and the Costco store now under construction.

Interestingly, Doan also suggests in his report that the city should consider offering further incentives to recruit retailers to the community. 

Doan writes "The City can and should facilitate this development through a combination of: (a) providing all available assistance to developers, real estate brokers, and commercial tenants seeking to construct and occupy new retail space; (b) directly facilitating retail development where the City holds prime land, and in some cases, acquire such land; and (c) incentivize top desired retailers who would not otherwise choose Elk Grove and whose presence would have significant positive impacts (in the way the City incentivized Costco, for example)."

Wednesday's meeting starts at 6 p.m at City Hall.