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Little Rock’s Metrocentre Mall District Begins Dissolution Process

6 min read

Property owners in downtown Little Rock’s Metrocentre Improvement District No. 1 are finally getting a break from decades of shouldering $12.5 million of debt.

Special improvement taxes on more than 200 properties were slashed by 85 percent in the aftermath of a final bond payment in March.

That $335,000 outlay extinguished the last in a series of bonds that financed revitalization efforts in a 45-block commercial area that included the ill-fated Metrocentre Mall.

For private property owners within the district, those annual assessments represented another layer of taxation on top of conventional property taxes. The added cost also created a disadvantage in the competition to lease space to tenants.

“It’s a $1 per SF difference,” said Hank Kelley, CEO and partner at Flake & Kelley Commercial.

Kelley and Warren Stephens, CEO of Stephens Inc., are among a group of downtown stakeholders hoping to dissolve the improvement district and be fully shed of its financial obligations that date back nearly 40 years.

“We didn’t think the improvement district was going to last as long as it did,” Kelley said.

The Metrocentre Improvement District commission agreed to dissolve the district subject to the consent of a majority of its property owners. The necessary signatures are said to be in hand, awaiting verification.

“That is the direction we’re heading,” said Millie Ward, an MID commissioner. “That seems to be the wishes of a majority of the members. It’s a complex undertaking to unwind it all.”

Once verified, the petition would then be presented to the city attorney as the basis for an ordinance to dissolve the district through the city board.

But there could be a hitch in the timetable for dissolving the improvement district. One last bond issue remains outstanding.

Until Walter Hussman retires the $6.3 million bond issue, the improvement district may not be able to close its books and fade into history. As it stands now, that won’t happen until 2025.

The 1985 bonds used by Hussman’s Little Rock Newspapers Inc. was the largest of 22 tax-free bond issues made through the improvement district over the years.

When he wanted to put a printing press in the Terminal Building at 500 E. Markham St., Hussman got unprecedented assistance from Metrocentre Improvement District commissioners.

That required a controversial vote to make the property, today’s Museum Center at 500 President Clinton Ave., part of the improvement district although it lies two blocks beyond its boundaries.

Hussman received the benefit of the improvement district’s bond-issuing capability without having to pay special improvement taxes on the property. It was a consideration unlike any other associated with bonds issued through the improvement district.

Until the Metrocentre Improvement District is closed, members will have to be content with the drastic reduction in property assessments.

The reduced assessments and income from the MID-owned parking deck on the west side of Scott Street between Sixth and Seventh streets chiefly fund the clean and green crew who wrangle trash and care for the trees and shrubs.

The parking deck is one of the two most significant assets of the special improvement district. The other is the 11-foot, 5-inch bronze Henry Moore sculpture, Large Standing Figure: Knife Edge, which was installed at Capitol and Main Street in 1978.

When the district is dissolved, the parking deck would likely be deeded to the city. The Arkansas Arts Center is mentioned as a leading candidate to receive ownership of the sculpture.

The Downtown Little Rock Partnership is paid $100,000 annually to administer the financial affairs of the improvement district.

“Most people think if the improvement district goes away the Downtown Partnership goes away,” Executive Director Gabe Holmstrom said. “That’s not true.”

The initial mission of the improvement district was to develop the Metrocentre Mall in hopes of stabilizing the migration of businesses from downtown Little Rock. The pedestrian mall was among a long line of similar projects in cities across the nation that failed to stem the move to the suburbs.

As Metrocentre Mall was languishing, the improvement district picked up the development of two parking decks, part of the original mission discussion.

The projected financial performance of the parking decks didn’t materialize. That situation improved over time but still left the improvement district saddled with more debt and extended the payout period.

Doug Meyer, an MID commissioner, is among those who believe the district’s perseverance over the years contributed to the more recent successes in downtown revitalization.

“In retrospect, if it would’ve been delayed, it would probably be a huge success,” Meyer said. “Timing is everything.

“Now you’re getting people working downtown, eating downtown, living downtown and shopping downtown. It will be interesting to see if another improvement district comes to fruition if this one is terminated.”

Timeline of Metrocentre Improvement District No. 1

December 1976: A $4.5 million bond issue funds the development of a pedestrian-friendly streetscape in the heart of downtown Little Rock. The project closed motorized traffic on Main Street between Third and Seventh streets and on Capitol Avenue between Scott and Louisiana streets.

In addition to building water features and planting greenery, asphalt pavement was replaced with brick paving for foot traffic. The bonds also financed the $185,000 (more than $800,000 in 2016 dollars) purchase of the Henry Moore sculpture: Large Standing Figure: Knife Edge.

October 1978: The pedestrian-only Metrocentre Mall opens.

December 1985: An $11.8 million bond issue refinances the $3.8 million debt remaining from the original bond issue and pays for the construction of two, 650-slot parking decks. The city made a special one-time payment of $500,000 to the improvement district to help the effort.

The city-owned parking deck sites are on the east side of Main Street between Second and Third and on the west side of Scott Street between Sixth and Seventh.

The Metrocentre Improvement District Commission approves adding Walter Hussman’s Terminal Building to the improvement district. The move allows Hussman’s Little Rock Newspapers Inc. to make a $6.3 million tax-free bond issue through the improvement district.

However, Hussman isn’t required to pay an annual assessment to the improvement district on the property, now known as the Museum Center at 500 President Clinton Ave. The special accommodation doesn’t sit well with some members of the improvement district.

January 1991: The city removes the pedestrian mall features and reopens Main Street to vehicular traffic, and the Henry Moore sculpture is moved from the center of Main and Capitol. The 1,200-pound bronze work eventually is relocated to the southeast corner of Louisiana and Capitol when the last piece of the pedestrian mall on Capitol Avenue is removed in 1999.

November 1997: A $7 million bond issue refinances the remaining debt from the 1985 bonds, reducing the interest rate from 9.33 percent to 5.17 percent. The new issue also includes the flexibility of selling the parking decks, something prohibited under the 1985 terms. The Statehouse Parking Deck at 201 Main St. is sold to the city for $2.1 million in connection with the refinancing.

November 2012: A $1.5 million private placement bond issue with Arvest Bank of Fayetteville refinances the remaining 1997 issue debt and reduces the interest rate to 1.99 percent.

March 2016: The final bond payment is made, and the Metrocentre Improvement District Commission approves dissolving the district subject to the consent of a majority of its property owners. The vote tally is tied to the valuation of property ownership within the district, not individual owners.

However, until Hussman pays off his 1985 bond issue in 2025, the improvement district may not be able to disband.

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