THE ISSUE: The VF Factory Outlet Mall in Story City closes Friday, leaving the future of the site hanging on the outcome of a Feb. 6, 2018, school bond issue.
LOCAL IMPACT: The current mall owner has a history of problems with his properties that have cost cities and taxpayers. The school district has plans to buy the property, pending the outcome of the bond issue. If the bond measure fails and the school district doesn’t build there, what will become of the property? And who will pay for it?
Tenants of the VF Outlet Mall are moving out Friday, and residents of Story City are left with questions about the property’s future.
While residents may have questions about the mall’s future, its future is also in their hands as the Roland-Story County District has a bond issue scheduled for Feb. 6, 2018. If approved, the $5.3 million bond issue would raise the $540,000 the district has offered to pay for the property. If the bond issue passes, the mall would be demolished and the school district would build a new football stadium and track facility on the site. If it fails, the land, which is zoned highway commercial, would be open for others to buy and redevelop.
The road to this point has been bumpy for residents and city officials, who have watched as the mall has fallen into disrepair, with reports of unpaid bills.
The mall’s owner, Kohan Retail Investment Group, is owned by Mehan Kohansiek, who goes by the name Mike Kohan. Repeated telephone messages left for Kohan seeking comment were not returned.
Kohan’s problems with malls spreads well beyond Iowa, with newspaper reports from New York, Illinois, Ohio, Minnesota and Tennessee telling stories of similar problems with unpaid bills, including garbage removal, lawn mowing and natural gas bills.
According to the Toledo Blaze, the Woodville Mall in Northwood, Ohio, was demolished in 2014 by the city after multiple code violations were not addressed.
A county judge ordered the Woodville Mall closed in December of 2011 due to unsafe structural issues. The city filed a lawsuit against the owner and several court hearings were held.
“Northwood officials and county inspectors found numerous problems, including large holes and collapsed areas in the roof, water leaking into public and nonpublic areas of the mall, a partially nonfunctioning fire suppression and alarm system, no heat because of unpaid gas bills, and pervasive mold and mildew,” the Toledo Blade reported in an article titled “Judge orders closing of Woodville Mall.”
The city — and subsequently the taxpayers — paid for the property to be condemned and for the mall to be demolished.
According to an article in the St. Louis Post Dispatch, the Jamestown Mall in Florissant, Mo., had its utilities turned off because the owner didn’t pay the gas bills. The mall was foreclosed on and put up for sale. Kohan said in the article he was working with the gas company and blamed a previous owner for “thousands of dollars in unpaid bills.”
That mall also closed in 2014 and the city took the property and is planning to develop the 142-acre property into housing lots. The housing project was expected to cost $300 million and would be phased in over 15 years.
In Worthington, Minn., the Northwood Mall is in such disrepair that city officials are now set to demolish parts of the mall.
City inspectors found roof leaks, large amounts of mold and an inoperable sprinkler system. Kohan owes back taxes on the property. A court order was necessary for the city to determine the structural integrity of the building.
Near Chicago, the Lincoln Mall has put Kohan at odds with village officials because of long-standing safety violations, including blocked fire exits and no sprinkler system. The village officials had to take Kohan to court and eventually took over the mall to preserve it.
In Rotterdam, N.Y., the Rotterdam Square Mall, another Kohan property, also shut down after he failed to pay power bills for the mall, which led to the electricity being turned off twice and left Kohan negotiating with the power company over the more than $100,000 unpaid balance.
According to the Times Union, Kohan “blamed the situation on a ‘misunderstanding’ over an electric meter.”
In Effingham, Ill., stores frequently face disconnection from public utilities for lack of payment.
Utilities for the mall were disconnected in June of 2012 for nonpayment, according to the Effingham Daily News.
In 2012, Kohan’s Raleigh Springs Mall in Memphis, Tenn., was demolished.
In Aberdeen, Wash., JC Penney and other smaller retailers are leaving the SouthShore Mall and the mall is for sale, according to The Daily World in Aberdeen, Wash.
“It’s not surprising, given what I’ve read about his past ownership of malls in other communities,” said City Administrator Mark Jackson.