FairOaks Mall could see increasing revenue shortfalls next year as local officials expect some tenants to not renew their leases.
The city of Columbus, Columbus Regional Health, along with the help of the Heritage Fund — The Community Foundation of Bartholomew County, purchased the 35.36-acre mall property at 25th Street and Central Avenue two years ago for $5.9 million.
The idea behind the purchase was to turn the struggling mall into a community wellness, recreation and sports center, and determine new potential uses for the Donner Center and connectivity with the surrounding areas.
The project, however, was put “on pause” earlier this year due to the COVID-19 pandemic, but still remains a priority for the city, said Mary Ferdon, executive director of administration and community development for the city of Columbus.
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The mall is projected to operate at an estimated $453,421 loss next year, which would be an increase from the $332,839 shortfall estimated for this year before the pandemic hit, according to documents reviewed and approved Thursday by the FairOaks Community Development Corp.
The mall had a $240,489 revenue shortfall during the first 10 months this year.
The city is expected to put up funds to cover 75% of the shortfall next year, or an estimated $340,000, while CRH will cover the remaining 25%, or about $113,000.
During the meeting Thursday, both parties agreed to pay half of their share of the estimated shortfall in January to help sustain operations at the mall during the first half of the year. That would tentatively come out to about $170,000 for the city and about $56,500 for CRH.
The city’s contribution will come from economic development income tax funds previously budgeted by the Columbus City Council that can be used at Mayor Jim Lienhoop’s discretion, Ferdon said.
However, the amount that the city and CRH will pay could change, “but we have to budget based upon the data we have today,” Ferdon said.
“We don’t have an exact amount, but it will be something in that neighborhood, and we’ll make a payment in January. Both partners will pay so that (the FairOaks Community Development Corp.) can pay its bills,” Ferdon said. “…We are renegotiating some leases and we will always try to reduce expenses. So if we don’t need to put in as much money later in the year, we won’t.”
“We knew that we would always have to cover some level of shortfall for the first year or two as we start the construction phase,” she added later in the interview.
The meeting on Thursday came as several tenants’ leases at the mall are set to expire over the next couple months, including Cummins, Bath & Body Works, Discount Shoe Store and Lucas Brothers.
If Discount Shoe Store and Lucas Brothers don’t renew their leases, that could amount to about a $2,500 monthly decline in revenue for the mall based upon rent amounts presented during the meeting.
Chrystal Broaddus, owner of Lucas Brothers, said the restaurant is still undecided on whether it will remain at the mall or move to another location in Columbus.
“We’re getting down to crunch time,” Broaddus said.
Bath & Body Works’ lease ends on Jan. 31, and it is currently unclear if the store will renew, especially after opening another location at Edinburgh Premium Outlets.
Additionally, Nirvana and Nirvana Holiday are on month-to-month leases.
The monthly total for those three leases is about $7,100.
Cummins Inc., for its part, recently notified the FairOaks Community Development Corp. that it will not renew its lease on the 25,000-square-foot former Goody’s department store location.
Before the pandemic, Cummins had approached the development corporation to extend that lease “for a number of years,” but later opted not to as the company is looking at making changes to its workforce environment due to COVID-19, Ferdon said during the meeting.
Cummins is expected to pay $15,521 during the final month of the lease, which expires Jan. 31.
“Obviously, losing a major tenant in the building because of COVID-related changes that they’ve made to their workforce environment has hurt us,” Ferdon said. “…We are actively seeking another tenant in that space for the short term.”
Even though the mall project has been on pause, the mall property has been put to other uses this year, most notably as a vote center for the 2020 presidential election and as a COVID-19 testing facility.
The Bartholomew County Clerk’s Office paid the FairOaks Community Development Corp. $4,000 to use the former Carson’s space as a voting location in October, and $900 in cleaning and maintenance fees, said Bartholomew County Clerk Jay Phelps.
Additionally, the Indiana State Department of Health has been using the former JC Penney location as a COVID-19 testing site.
The state was unable to provide any funding to cover leasing the former department store, but the FairOaks Community Development Corp. plans to apply for CARES Act funding to get reimbursed for about $8,000 in cleaning and utilities expenses related to the testing site from August to November, Ferdon said.
“The city and CRH felt it was so important to have a free testing site in the community that was large enough to accommodate the number of people that needed to use it,” Ferdon said. “We feel like this is a good investment in the community.”
The mall property also has been used this year for Toys for Tots’ Christmas toy drive, the Salvation Army, the Bartholomew County Sheriff’s Department’s memorial for fallen K-9 officer Diesel, as well as for efforts by the Bartholomew County Humane Society and Love Chapel, local officials said.
“Early on, with the pandemic, that the partners, CRH and the city, decided that because we have this space available, we wanted to use it as much as possible to benefit the community,” Ferdon said. “…Even though we aren’t able to get started on the project in the timetable that we wanted to, we wanted to allow it to be a benefit to the community this time period.”
