Urbandale–Des Moines border, Iowa, September 19, 2025
News Summary
A revised plan to build a smaller, multiuse arena at the 66-year-old Merle Hay Mall is advancing as backers seek to retain a $26.5 million state sales and hotel‑motel tax rebate. The project, trimmed to about $41.69 million from roughly $60 million, faces fresh state review and new financing conditions tied to local bond support and tenant agreements. The redesign replaces a lost lead sports tenant with a flexible venue featuring removable ice, an eight‑court volleyball center and event space. Officials must meet several financing and developer deadlines for rebate eligibility amid fiscal and market concerns.
Merle Hay Mall scaled-back arena seeks share of $26.5 million state rebate amid new tenants and fresh review
A revised plan to build a smaller, multiuse arena at a 66-year-old mall on the Urbandale–Des Moines border is moving forward as project backers seek to retain a $26.5 million state sales and hotel‑motel tax rebate. The project, now trimmed from its original scope and cost, faces renewed scrutiny from the state economic development authority and new financing conditions tied to local bond support and signed or pending tenant leases.
What’s new and most important
The mall owner has redesigned the arena into a multifunction facility after the original lead sports tenant withdrew. The scaled-back cost is approximately $41.69 million, down from an initial estimate near $60 million. Local officials plan to issue between $16.3 million and $20 million in bonds to help pay construction costs; those bonds would be backed by the state tax rebate if the modified proposal continues to qualify.
State review and conditions
State agency staff have labeled the project modifications as significant and recommended the full board send the revised proposal through the agency’s formal scoring process. Staff have also proposed a set of conditions the project must meet to keep the rebate eligibility, including firm financing and developer selection deadlines and staged closings for construction and related residential conversion work.
- Secure $41.7 million in financing by the end of March.
- Select a hotel developer by the end of 2027.
- Close construction financing by the end of 2028.
- Select a developer for a planned residential conversion of a mall office building by the end of 2026 and close financing for that conversion by the end of 2027.
Why the plan changed
The arena was initially proposed as a 3,500-seat venue inside the mall’s vacant former department store, anchored by a junior hockey team that planned to replace a damaged, older rink. That lead tenant broke ground on the site in 2022 but withdrew in 2024 after being unable to raise enough funds to cover rising costs. The mall owner then chose to proceed independently and redesign the space to attract multiple sports and entertainment tenants.
New tenants and uses
The revised plan converts the space into a true multiuse arena with removable ice, an eight-court volleyball training center, and flexible floor space for concerts, leagues, tournaments, and community events. Several anchor tenant discussions are underway or reported to be advancing, with the mall owner pursuing agreements that would be filed with the state agency as part of the revised application. A separate, successful pickleball facility opened on-site in 2023 and is cited as proof of strong local demand for sports and recreation space.
Local support and municipal action
The two cities that share the mall’s site have pledged support. One city plans to issue the local bonds mentioned above; both cities have also pledged about $3 million in tax-increment financing to support the project. City governments are scheduled to vote on the updated plan as part of the local approvals process before the state scoring and final decisions move forward.
Fiscal and market concerns
A municipal-commissioned study revised sales tax projections and concluded that building the arena alone would not be enough to reverse the mall’s economic slide. The study found mall sales rose only 1% since 2021, lagging an average inflation rate of about 4.36% during the same period, and projected that foot traffic from the arena would be well short of earlier mall forecasts. The mall owner disputes those findings and says its own research shows millions of visitors in recent years and broader market demand for multiuse sports and entertainment space.
Timeline and next steps
The state agency extended the original start-construction deadline and staff recommended the board accept the modified proposal for scoring on a conditional basis. The scoring committee will report to a due diligence panel, which will make recommendations to the full board. If local votes and the state scoring go in favor of the project, backers hope to resume construction later in the year with a targeted completion timeline set out in prior planning documents.
Project risks
Key risks include meeting the financing deadlines, securing a hotel developer, closing construction financing, and aligning tenant leases. The municipal study’s cautious revenue projections add another layer of uncertainty for bond repayment assumptions and longer-term mall revitalization prospects.
FAQ
Q: What is the size and cost of the revised arena?
A: The remodeled project is a multiuse arena and training center with a projected cost of about $41.69 million. It includes removable ice and an eight-court permanent volleyball facility.
Q: Where would the arena be built?
A: The site is the former large department store space at a 66-year-old mall that straddles the Urbandale–Des Moines border.
Q: What state support is the project seeking?
A: Project backers are seeking to retain a $26.5 million sales and hotel‑motel tax rebate from a statewide allocation program to help back local bonds issued for construction.
Q: What are the main conditions from the state agency for the rebate?
A: Conditions include securing roughly $41.7 million in financing by the end of March, selecting a hotel developer by the end of 2027, closing construction financing by the end of 2028, and meeting deadlines for developer selection and financing of a residential conversion on site.
Q: Who are the expected users or tenants?
A: Project leaders are pursuing multiple anchor tenants, including hockey and volleyball groups and existing sports operators on site. Agreements are in progress and will be part of the state filing.
Q: What are the main concerns about the project?
A: Concerns center on whether the arena alone can spur broad mall recovery, conservative revenue projections from a commissioned study, and the need to meet financing and developer selection deadlines laid out by the state agency.
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Key project features
| Feature | Details |
|---|---|
| Rebate Sought | $26.5 million from state sales and hotel‑motel tax program |
| Estimated Cost | $41.69 million (scaled‑back from ~ $60 million) |
| Local Bond Support | $16.3 million to $20 million planned to be issued by local government |
| Local TIF Support | Approximately $3 million pledged between the two cities |
| Main Uses | Removable ice sheet, eight permanent volleyball courts, flexible event space for concerts and leagues |
| Critical Deadlines | Financing by end of March; hotel developer by 2027; construction financing closed by 2028 |
| Site | Former department store space at a 66‑year‑old mall on the Urbandale–Des Moines border |
Deeper Dive: News & Info About This Topic
Additional Resources
- Des Moines Register: IEDA board reviewing Merle Hay arena plan (Sept. 19, 2025)
- Wikipedia: Merle Hay Mall
- KCCI: Merle Hay Mall plans ice rink and entertainment facilities
- Google Search: Merle Hay Mall arena
- WHO13: Des Moines City Council approves changes to Merle Hay mall hockey arena project
- Google Scholar: Merle Hay Mall arena
- Des Moines Register: White Rabbit arcade may close amid hockey arena delays (June 6, 2025)
- Encyclopedia Britannica: Merle Hay Mall
- Business Record: Merle Hay Mall pursuing lease agreements for proposed arena
- Google News: Merle Hay Mall arena
Author: Construction FL News
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