Mena (population: 5,534) has a rich history as the county seat of Polk County. Like many other rural communities, Mena once enjoyed a bustling and vibrant downtown, but in recent years has seen its population decrease, as graduating classes move onto the more urban areas in neighboring Arkansas and Oklahoma, leaving vacant buildings behind. One of the larger buildings sits on the main street, Mena Street, but is not a storefront.
The former Mena High School is approximately 60,000 square feet and has sat largely vacant for many years. In 2009, a tornado swept through downtown Mena, destroying a large swath of property, including the high school. Rather than rebuild, the community decided to build a new, modern high school outside of downtown, leaving this building empty. After a few years, local businessman Walter Deetz purchased the building with hopes of turning it into a new jail, as the current jail site at the county building was overflowing. However, community input and discussions determined that something else should populate this great building sitting in the center of downtown, preferably something that could become a catalytic project for Mena. This is where we began our work.
The reimagining of this property involved aligning all the public, non-profit, and private sectors who deal directly with tourism and economic development of the region with the need to grow, attract, and retain talent. The original visioning sessions for the building included everything from residential units to a brewery, retail operations, makers space, commercial kitchen, artist studios, co-work space and classrooms. We needed a developer/consultant to take this to the next level and brought in Greg Nabholz with Nabholz Properties Inc. to assist in developing a conceptual plan and preparing a financial analysis for an investor or investor group to acquire and redevelopment the property. A key part of this analysis is to determine the possible uses for the various portions of the building and what would be the source of the income for these various locations be to generate an adequate return to a potential investor. In addition, an analysis on the sustainability and financial viability of the entities that would be occupying the various locations in the building would need to be addressed on some level. This analysis will focus on how the property can be used on the most flexible basis and to accommodate different types of use that might even occupy the same space but at different times.
With the assistance of Rick Chrisman, the primary local point person for this project and a local restaurant owner, board member of the Mena Downtown Partners and a commissioner of the Mena Advertising & Promotion Committee; Bryan Hebert with MSBI Construction; and Amanda Threlkeld, the director of the EAST program at Mena High School, and her students. Market data, cost estimates, and plans were developed that incorporate the possible uses of the building and land.
Organize Umbrella Entity that will create the “Mena Innovation Hub.” The Innovation Hub is the primary entity who would master lease all or a significant portion of the 1st floor providing.
The following entities are the primary local organizations identified “Partners” that will play various roles in making this development a reality.
- Mena Chamber of Commerce
- Mena Convention & Visitors Bureau / A&P Commission
- Mena Downtown Partners
- Mena Health System
- Mena School District
- City of Mena
- Polk County Library
- Polk County
- University of Arkansas Rich Mountain
- Arkansas Regional Council of the Ouachitas
Q2 – Q4 2019
A partnership of various these entities would be necessary to make the redevelopment of the property feasible as the primary tenant or tenants occupying the first floor will be various components of the envisioned Mena Innovation Hub. Each individual component of the Hub will have its own mix of partnerships based on the development type but there will need to be a high level of coordination for all of them and if these partnerships are structured correctly, then the maximum benefit to all the parties individually as well as Mena and Polk County will be realized.
These primary partners will also coordinate efforts of secondary local, regional, state and federal entities and their respective resources which include:
- Mena Arts related organizations
- Neighborhood Groups
- Mena Downtown Property Owners & Businesses
- Mena Major Employers
- Local, State, and National Foundations
- State and Federal Agencies
Although the specific mix of resources that will fund each component of the plan will differ, there is a wide variety of both capital financing and operational revenue sources from federal, state, and local levels that include the public, private, and non-profit sectors that can be used to make these projects a reality:
- Revenue Bonds
- Federal & State Grants
- Private Contributions
- Contribution of Property
- Private Equity & Debt
- Federal & State Historic Tax Credits
- Federal New Market Tax Credits
- State Tourism Tax Credits
- Energy Retrofit rebates & PACE District Bond Financing
- Permit Fee Waivers
Finalize Plan for the Creation of the Mena Innovation Hub
Q2 – Q4 2019
Working with consultants, coordinating committees, and other legal and accounting sources, create the operating entity that will run the Hub, complete space programming analysis for each component, finalize estimates on capital costs for tenant improvements, furniture, fixtures, and equipment, and operational start-up costs.
Based on the conceptual cost estimates and the options for a variety of uses of this building, this project from an investor/developer standpoint is feasible, however, the financial model does rely heavily on the market demand for the 17 apartments and the successful implementation of a sizeable portion of the Innovation Hub which would lease a significant part of the 1st floor. Because of the unique nature and large size of this development, the following are key considerations that will require the private, non-profit, and public sector coming together help mitigate the risk thereby increasing the chance of the project’s success:
- Acquisition Cost – Current ownership needs to be flexible on how a deal to acquire the property is structured. To maximize the price, taking an ownership interest by contributing part of the acquisition cost and/or a sale-leaseback for a 1 or 2 years for a portion of the building are just two ideas on how a creative strategy for the acquisition cost can be achieved.
- Lease Guarantees – Having local institutions, companies, and/or individuals commit to leasing for at least 1 year a minimum of 10 of the 17 apartments. In addition, a commitment by UA Rich Mountain, Mena Chamber of Commerce, or other partner entity to lease a portion of the building for their direct use ahead of the final plans of the Innovation Hub will be an important consideration as well.
- Bond Financing for Acquisition and Renovation Costs – With recent legislation and latitude cities, counties, and local economic development agencies now have with financing of private developments, this is an option that needs to be pursued. The building project financing could potentially be combined also with the financing of a substantial portion of the Innovation Hub that would leasing part of the building.
If embraced by all parties and implemented properly, this project not only will be a successful real estate development for the investors but more importantly a major catalytic economic development for the City of Mena and Polk County that creates, retains, and attract talent and will the cornerstone for insuring future growth and prosperity to the region.