VIRGINIA BEACH, Va. (WAVY) — Those looking to reinvent Pembroke Mall in Virginia Beach are now turning to city taxpayers for help.
Pembroke Square Associates is asking the city to dedicate $24 million to help build two parking garages as part of their more than $161 million redevelopment plan, which includes construction of a new hotel, apartments and senior living facilities.
Deputy City Manager Taylor Adams briefed City Council on the details of the request Tuesday afternoon. While oftentimes public-private partnerships divide members, most appeared poised to agree with the request.
Brick-and-mortar regional shopping malls have been declining in profitability for several years, mainly due to the rise in internet shopping but also an overdevelopment of retail space.
City Council approved redevelopment plans for the mall, family-owned since 1966, in July 2021. Since then, dozens of longtime tenants have been forced to leave.
“We are committed to the legacy and long-term future of Pembroke Mall by bringing a new vision to
reality for this area,” Ramsay Smith, president of Pembroke Realty Group, said in September as he laid out his vision for a new lifestyle destination.
Phase I of the development will be a 153-unit independent senior living facility managed by Beth Sholom located near Constitution Drive and Jeanne Street. Phase II will be the 324-unit market-rate apartments with first-floor retail on the part of the footprint of the current mall. Phase II will be a 209-room “Hilton Dual Brand Hotel” on the land of the former Suntrust Bank.
In his briefing, Adams said that “this project would not happen but for our investment.”
Pembroke Mall is located in what is known as a “strategic growth area” (SGA) where the plans call for development meant to accommodate larger numbers of people, mixed-uses and parking systems.
Neighboring Towne Center, another public-private partnership, has had free parking for years. Adams said that would be the case in this development as well.
“One hundred percent of our exposure is contingent upon their performance,” Adams said. “The developer will be building our garages as they are building their structures. The new tax revenue will pay for our garages. The public is not out the money.”
The city would be paying roughly $30,000 a parking space, which is what they committed to for building garages at Atlantic Park.
After the $24 million debt is paid off, the extra tax revenue from the new development will go into the city’s general fund.
However, the developer is also agreeing to have the city implement an extra 45-cent “special service district” fee on the property in order to help pay for maintenance of the garage. That 45 cents will be added to the existing annual real estate tax rate for the property.
Councilman Guy Tower said the public shouldn’t view this as the city just giving away money.
“This is an investment by the city. We expect a return on this investment,” Tower said.
Adams estimates nearly $9 million in new revenue the city wouldn’t have otherwise — on top of the revenue from real estate taxes currently being collected on the property — over the 20-year debt repayment period.
Even Councilman John Moss appeared poised to vote to partner with the developer. Moss is often skeptical of public-private projects but said the density for the area is appropriate.
“While I have not been enthused still about subsidies … it is our [SGA] policy … It currently is. And this is the only way we can make that work,” Moss said.
A final vote on the agreement could occur in the first week of April.
