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HARLINGEN — Years after Valle Vista Mall turned into Harlingen’s white elephant, city leaders are taking steps aimed at planning its redevelopment.
Earlier this week, commissioners and Economic Development Corporation board members agreed to hire a law firm to study legal angles standing in the way of redeveloping the mall.
Under an agreement, the EDC’s paying Jackson Walker, the biggest law firm in Texas, $30,000 to study real estate documents as part of a plan aimed at working to buy the mall.
“Hopefully, that would be the end goal — to bring in another owner who has the financial means to catalyze the redevelopment of that property,” Orlando Campos, the EDC’s executive director, said Wednesday.
The Dallas-based law firm experienced in real estate law and land use issues has “expertise in sorting out complicated development programs,” Campos said in an interview.
“They can take a look at all the legal documents impacting Valle Vista Mall and provide us with a layman’s overview of the legal issues impeding redevelopment of the mall,” he said.
Officials expect to receive the law firm’s findings in about three months, Mayor Norma Sepulveda said.
Legal issues stemming from the mall’s multiple ownership are standing in the way of its redevelopment, Campos said.
“We plan to share documents with potential investors,” he said. “It’s valuable information we need for a strategy for the redevelopment of the mall. As an economic development organization, we meet with potential developers and investors interested in the mall but sometimes they hold off because of all the challenges.”
The venture marks the first time city leaders have launched a study aimed at redeveloping the mall.
“This is the first step in taking a closer look at focusing in on the mall,” Campos said.
With its sprawling parking lots nearly empty along Harlingen’s northern gateway, the mall’s standing as one of the city’s biggest eye sores impacting development.
“Obviously, Valle Vista Mall is the main focal point in the community,” Campos said. “Obviously, we don’t own the mall, therefore we don’t have complete control. We know there are some challenges in place that hinder redevelopment.”
In 2018, the Kohan Retail Investment Group, based in Great Neck, N.Y., purchased Valle Vista Mall for $12.5 million before selling the mall’s four major boxes to four groups.
The mall’s four big wings include three storefronts once housing Dillard’s, Sears and Mervyn’s, while J.C. Penney owns the box in which the company continues to operate its store.
“There are several agreements in place, such encroachment agreements and covenant restrictions and conditions,” Campos said.
Now, the mall’s interior, which Kohan owns, is up for sale, Sepulveda said.
“We inherited a challenging situation, with just the interior up for sale,” she posted on Facebook. “We’re committed to working within our capacity to make redevelopment possible. I’ve met with several investors.”
Last year, Kohan put the mall up for sale, listing it for $12 million.
Meanwhile, the mall’s tenants have been struggling with periodic utility and electrical disconnections.
“There is only one water and electrical meter for the entire mall,” Campos said. “When the mall owner fails to pay the bill, they’re disconnected, and that impacts the entire mall.”
Opening in 1983, Valle Vista Mall stood for decades as the area’s premier retail mecca, drawing shoppers from across much of the Rio Grande Valley.
For about 20 years, the mall, amid changing consumer buying patterns and online shopping trends, was losing big-name anchors like Dillard’s and Sears.
By 2002, construction of the Expressway 77-83 interchange was blocking traffic to the mall, driving many shoppers to north Brownsville’s growing retail district.
Then in 2008, city officials offered Valle Vista Mall more than $1.2 million in incentives to help Simon Property Group, the management company which brought the mall to town, upgrade the mall.
By 2017, Washington Prime Group, unable to sell the mall, dumped the property back on lenders who had financed its sale with a $40 million loan, while the Washington group continued to own $27 million.
At that point, ProEquity Asset Management Corp. took over the mall’s management before the Kohan group bought the property for $12.5 million in 2018, when the mall’s vacancy rate was running at about 25%.
On Wednesday, Kohan did not respond to a message requesting comment.
