As discussed in the IDA application, the project is aimed at undertaking improvements to the Mall and the attracting signature retail tenants (SRTs).  SRTs are high-end retailers that generate significantly greater sales per square foot.  They are tenants that differentiate a mall and will likely increase mall sales over the aggregate sales trends.  Attracting SRTs is critical to the future of the Mall.  By “upscaling” itself, Eastview Mall will maintain and strengthen its competitive position in the Rochester area and throughout upstate New York. The project will be carried out in two related phases. Phase 1 involves a projected $12 million of capital improvements and upgrades to existing space in the Mall that will help reposition the tenant mix over the next five years. This is necessary to position the Mall to successfully attract SRTs.  Phase 2 involves $21 million of financial assistance for improvements and inducements to attract signature retail tenants (SRTs) to the improved portion of the Mall. This is projected to result in $40-45 million of private investment by the SRTs starting in 2016 or earlier, and the creation of 100 new permanent jobs. Phase 2 will last for 25 years.

The entire Eastview Mall property is made up of several parcels with different owners and businesses.  The Company owns the main Mall, which is made up of numerous small shops, the food court, the new front entrance, common areas, associated parking, etc. The Company also owns the satellite building that houses Raymour & Flanigan, Viking International, and Ethan Allen, as well as the free standing Citizens Bank building. All these uses are on a single tax parcel (tax account #6.00-1-12.1), which is referred to as the "Mall/Developer Parcel". The L.L. Bean property is identified separately as a sub-parcel of the Mall/Developer Parcel (tax account #6.00-1-12.100/bean).  In addition, the Company owns three other tax parcels at Eastview Mall-- Regal Cinemas (tax account #6.00-1-12.5), the Common Blvd parcel (tax account #600-1-3.5) adjacent to Eastview Commons, and a narrow vacant parcel off Rt. 96 south of the B.J. Wholesale parcel (tax account #600-1-12.8).

There are five other major parcels at Eastview Mall that are adjacent to and are associated with the Company’s properties.  The associated buildings are located on their own "pads" and occupied by the five anchor stores - Macy’s, Bon Ton, Lord & Taylor, J.C. Penney and Sears.  These parcels are individually owned, not under the control of the Company, and are currently not part of this project or application. However, Phase 2 of the project as discussed later may involve the inclusion of one or more of these parcels for improvements related to the attraction of one or more signature retail tenants.

An integral component of the IDA assistance sought for the Eastview Mall project involves a concept called a Full/Fixed Tax Agreement (FTA). Under this structure, and with the consent of the affected tax jurisdictions (Ontario County, Town of Victor and the Victor School District) and the approval of the Ontario County Industrial Development Agency, these tax jurisdictions are being asked to agree to a fixed tax payment program equal to the full taxes that would normally be paid and where the difference, or “increment” between the full taxes and an otherwise negotiated amount, will be used to pay debt service related to the improvements and inducements associated with Phase 2 of the project, or the attraction and development of the SRTs.

Current tax payments for the Company-owned properties (excluding the five independently owned “anchor” parcels) that make up the project total approximately $1,665,000 per year. This includes: (1) Tax Increment Financing (TIF) bond payments from Company-owned properties to the Town of Victor totaling approximately $813,000 per year; and (2) property tax payments from Company-owned properties totaling approximately $852,000 per year.  Before Phase 1 begins, current, or baseline, payments are established that include payments made by Company-owned properties to all the tax jurisdictions during the current tax years (2010 Town/County tax year and 2009/2010 School District tax year), excluding payments being made to the Town TIF program.  This baseline amount is adjusted to include an assumed payment amount from the new LL Bean parcel that was just created using the full assessment amount established by the Town Assessor and the now current tax rates. These baseline payments then increase by 2% for the first year of Phase I, which is the 2012 Town/County and the 2011/2012 School District tax years (based on the next taxable status date).  As such, in the first year of Phase 1 payments totaling approximately $930,000 will collectively go the tax jurisdictions.  For the remaining four years that make up Phase 1, annual payments to the tax jurisdictions will increase by 2% over the previous year.  Also during Phase 1, during tax years 2015 Town/County and 2014/2015 School District, the Town TIF bonds will be retired and additional payments from Company-owned properties that have been going to the Town to retire the bonds will begin to be distributed to the tax jurisdictions.  This amounts to an added total annual payment of approximately $813,000.

Phase 2 is expected to begin in 2016 (or earlier if a SRT is identified sooner) and will include fixed property tax payments that will increase by 3% per year over 25 years.  This will continue to assure certainty in future tax payments with guaranteed annual increases.  Central to Phase 2 is the use of additional future payments beyond that needed for the full/fixed tax payment program, with this amount, or “increment,” used to pay for debt service associated with the improvements needed to attract the new signature retail tenants. Under the full/fixed tax payment program in Phase 2, the total tax payments to the county, town and school district from the Company-owned parcels will grow from approximately $1.9 million in 2016 to over $3.8 million over the following 25 years.

In the current environment where there is increasing pressure to maintain stable tax rates, the FTA will not only assure that the taxes collected from Mall properties are known, but it will assure guaranteed annual increases to the school district, town and county-- 2% in Phase 1 years and 3% in Phase 2 years.  This is important because in some years there has been an actual reduction in tax payments from the Mall as a result of the growing overall assessment level in the community and/or lower property tax rates.

The project will improve the value of Eastview Mall, while adding value to the other businesses in the surrounding area.  Perhaps most importantly, the project will preserve and increase sales tax revenue to the county and to all the towns, villages and cities under the county’s distribution formula.

The nature of the competitive retail market requires continued investment in and “upscaling” of retail centers to maintain and strengthen their market position. The critical point is that not undertaking this project will inevitably lead to a weaker market position for Eastview Mall and over time a significant decline in the value of this retail center. In short, the project is necessary to assure that Eastview Mall continues to be a major economic driver in Ontario County, maintaining and enhancing its competitive position in the Rochester region and establishing itself as the premier upscale destination retail center in upstate New York.