Part Two: Future & Funding
By Heidi Simmons
This is the year for Coachella Valley malls. Palm Springs’ Desert Fashion Plaza has been reduced to rubble and will soon rise anew; the languishing Palm Springs Mall is on its way to becoming College of the Desert’s West Campus; and Palm Desert’s Westfield Mall has finally filled its large empty spaces with a new entrance and shops.
Last week, phase one was to begin on the rapidly declining Indio Fashion Mall, also known as Fiesta Mall. With only nine businesses still open and no anchors, no national retailers or popular chain stores, its resurrection may be just in the nick of time to save those dedicated occupants barely hanging on.
The anticipation of any change and construction for mall tenants is tangible and desperate. Seeing is believing and hope wanes. Nothing happened on site over the last week. “With the holiday came delays. Even the delivery of the dumpsters for demo was put off by a week,” said John Liddell, Chief Operating Officer of Velocity Regional Center.
Velocity has partnered with the mall’s owner, Reo Group Properties, LLC, to finance the transformation. “We are getting ready for the face lift to the interior and exterior. We’ll start the process this week,” said Liddell. But for tenants, the financing is something you only hear about. They patiently wait to see if any change or action will actually take place.
“The initial funding for the façade and cleanup work is in the bank,” assured Kenny Dickerson, Design, Pre-leasing and Construction Consultant for the project. “Structural engineers are working on the plans for the new façade and new entrances to submit to the city for approval. A 4,000 square foot space will be renovated and updated for an incoming tenant who plans to sell cosmetics opening in June. And the building of a new food court, a construction design center and convenience store hopefully will open this fall.” Dickerson is an enthusiastic and confident guy who clearly loves a challenge. The money may be in the bank, but he eagerly waits its release from Reo owners.
According to Dickerson, for phase one, the budget is $2,900,000 — a fraction of what will be spent to revitalize and expand the mall if all goes as planned. Liddell confirmed that an anticipated $40 million will ultimately be spent to convert the mall into an exciting destination.
A brief recap of the mall’s past: The Indio Fashion Mall was built in 1974. It did a thriving business with Sears and Harris at its ends, serving as anchors to national retailers like Miller’s Outpost, Foot Locker and GNC. As the valley’s population grew and area demographics changed, the mall failed to expand and keep up with the competition.
Sold in 2003, a new owner changed the name to Fiesta Mall hoping to draw the Hispanic clientele and rebuild a family environment but nothing came to fruition. In 2004, Sears left for Westfield’s larger space and in 2009 Gottschalks, once Harris, closed its doors for good.
Reo Group Properties bought the Indio Mall property in 2010. Reo is an ambitious Chinese company with a plan to create a new gathering place, jobs and interestingly, a pathway to citizenship.
“This is a very exciting project for the local community,” said Dickerson. He has lived in the valley for 12 years. He and his wife raised their two daughters in the CV.
Dickerson is a sustainable general engineering contractor who owns commercial property in Indio one block from the site and is President of a 501(c)3 he started, called “River of Hope,” whose mission is to “Visit the fatherless, widows and those less fortunate in their affliction.” He is energetic and a visionary which is likely why Reo has given him the hands-on responsibility to bring new life to the mall.
The Future
“Indio is the City of Festivals and we want to reflect that energy,” said Dickerson. “It will be a gathering place for locals, college students and festival attendees. We have plans to build a 2,000 seat covered indoor-outdoor amphitheater at the back-end, south side of the existing mall property. We are exploring more complimentary uses to make the mall a dynamic place. We want to have fashion shows, concerts, plays, auto shows. We are considering everything that will serve the community and bring people to the mall.” A 4D movie theater is also being considered.
A potential wider vision of the mall property and surrounding area includes a park and hotel.
As a sustainable contractor, Dickerson is ensuring the building plans are drafted using a net-zero approach. That means the energy consumed by the mall on an annual basis will be equal to the energy created on the site. “We understand the impact high traffic malls have on our local environment and hope to minimize that to the best of our ability.”
“We [Reo and the Indio Mall] are headed for real positive changes,” said Dickerson. “This is a great opportunity for businesses.” For Dickerson, this project is more than just a remodel. As a pre-leasing consultant, he sees it as an innovative way to not only rebuild a once favorite community shopping center and gathering place, but to encourage new business and create jobs. “It’s an investment in people, jobs and the community. Everybody wins with this program.”
The Funding
Velocity Regional Center provides funding and capital from the United States Citizen and Immigrant Services (USCIS) program called EB5 Green Card or EB-5 Investment Visa, Permanent Residence in the United States. EB stands for Employment Based and the number five refers to “fifth preference visa.” Velocity collects and reinvests immigrant investor capitol from foreigners to stimulate US employment.
The way the USCIS program works is: a foreigner must make a new commercial enterprise and invest $1 million or $500,000, depending on the area (The CV is $500,000 territory), that leads to the creation of employment for at least 10 full-time U.S. workers. The applicant must take some minimal active role in the business, which can be direct or indirect.
After five years of maintaining the business and full-time employees, the applicant earns permanent residency in the United States for themselves and immediate family (spouse and any children under the age of 21).
Reo’s purchase and improvements of the Indio Mall is the invested capital in a commercial enterprise affiliated with a regional center — Velocity — by EB-5 investors. This allows Reo to make improvements to the mall and create as many as 380 full-time mall jobs!
Here is what makes this set-up such an opportunity.
The advantage for local businesses is: Velocity pays for the full-time employees and their benefits for the five-year duration! Yes, it’s true. Velocity pays for employees! The USCIS program regulates, monitors and audits Velocity and Reo.
“This is a huge advantage for business! If you have a business with enough capital to pay the mall rent — your employees salaries and their benefits are paid for by Reo for five years,” said Dickerson. “This takes away the tremendous burden of the high cost of having full-time employees.” The EB-5 program allows a company to expand or start with lower risk and uncertainties.
“It’s an incentive program for economically challenged areas. The main purpose is to create full-time employment,” said Liddell. “The funds are used for employment and construction.” Before Velocity, Liddell worked 20 years with minority businesses and is currently a member of the Minority Business Roundtable.
One example of how the program works: If a west valley business wanted to expand to the east valley, but can’t afford to employ more people due to the high cost of full-time wages and benefits, it can with Reo and their Velocity Regional Center investment EB-5 program. The west valley company can now have a location in the east valley with minimum investment and risk.
The only requirement is the business and jobs must be newly created and be a part of the Indio Mall. Reo must have a percentage or stake of the business in order to pay for the full-time help. At the end of the five years, the Reo investment is returned to the business.
“We have to be the employer,” said Liddell. “We are not only providing space and employees, but a partnership. Each business is considered case by case. We look at their business plan, the kind of service they provide, marketing strategy, etcetera and customize a business relationship.”
Velocity’s goal is to help each businesses succeed. They even assist with building a web site and Internet sales. “As a mall, retail is our key focus. It’s about selling products or services — furniture, clothing, accessories.” A business does not have to participate with the HB-5 program to have a location in the mall.
Tenants who already occupy space can take advantage of the opportunity if they like, but may have to open a new business or restructure the company with Reo. “We are very happy with our tenants and eager to work with them,” said Liddell. “We’ll work together as a family — individual owners, the mall and the community to make it a destination for locals and tourists.”
“Tenants don’t have to worry. If they can survive the current state and stick it out, they’ll kick-butt and take names. The mall is going to be revitalized in a powerful way,” promises Dickerson.
Just as other valley malls have found creative and innovative ways to rebuild, if the new Indio Mall comes to fruition, it too will be an example of community building and resourcefulness. If it actually works this time, it’s not a minute to soon.
CVW will continue to monitor the progress of the Indio Mall.
