The first enclosed shopping center of its kind on the South Shore has been sold five times since its opening in 1971. Now a company based in Cincinnati proposes to overhaul it as Hanover Crossing.
HANOVER — A public forum on plans to convert Hanover Mall from an enclosed mall to an open-air shopping center similar to Hingham’s Derby Street Shoppes and The Launch will be held from 6:30 to 8 p.m. Thursday at the former JC Penny at the mall.
The presentation will include discussion of how the new shopping center, Hanover Crossing, will affect schools, water, traffic and a new wastewater plant that could go near the mall.
Hanover Mall General Manager Ed Callahan and Lloyd Sova, vice president of PECO Real Estate Partners, which owns the mall, will outline the plans for the project and take questions.
PECO, of Cincinnati, plans to spend $40 million to transform the aging indoor mall, which was once a mainstay of the town’s economy and now contains mostly empty storefronts. Town officials estimated that the new retail space could generate an additional $1 million in tax revenue and hundreds of retail jobs when it opens in 2021.
Like other malls around the country, Hanover Mall’s decline has multiple causes, chiefly a nationwide trend away from in-person visits to online buying. In the past decade, the mall’s occupancy has dropped from near-100 percent to barely above half, with many tenants now short-term, local businesses.
Macy’s, Sears and Walmart have remained at the mall. One of two preliminary site plans on the town’s web site show the three anchor stores as part of Hanover Crossing. An alternate plan shows only Macy’s and Walmart as anchor stores. The plans include green spaces and entertainment areas, attractions business leaders say are needed for retail stores to compete with online shopping sites.
Peter Forman, president of the South Shore Chamber of Commerce said he expects business growth to strengthen along Route 53. “Depending on what happens there, it will trigger a response outside of the project itself and that will create some new investment,” he said.
The chamber supported PREP in seeking a property tax break from the town last year for the commercial part of the property. PREP will pay taxes to Hanover at the property’s current value, $39.5 million, for 15 years. This tax will be fixed as the property value first dips during construction then rises. After five years, PREP will pay an additional 25 percent of the tax on the actual property value, then 50 percent after another five years. The tax break will expite after15 years.
Reinvigoration of the mall aside, the effect on local businesses is unclear. “Sometimes if you make property more valuable, that actually hurts somebody who’s able to take advantage of low rents,” said Forman.
Janet Bibeau, the owner of Storybook Cove bookstore in the mall, says whether or not her business will stay depends on how much the rent increases.
For the moment, the lead-up to construction has not been helping business. “A lot of people don’t know if we’re still here,” Bibeau said.
The remodel isn’t expected to affect Trader Joe’s, Dick’s Sporting Goods and other stand-alone businesses around the mall, which are doing well. Other stores still remaining in the mall, like Sears and Walmart, aren’t likely to stay, Sova said last year. Demolition and rebuilding is expected to begin in 2020.
Hanover Mall was the first enclosed shopping mall of its kind on the South Shore when it opened in 1971. It has been sold five times since then, most recently for $39.5 million in 2016. At its peak, the mall was sold for $99.4 million in 2007.
Town meeting last year agreed to a tax agreement with PECO, which purchased the mall property for $39.5 million in 2016. The agreement calls for a steadily-decreasing property tax exemption for 16 years, beginning in 2022. The exemption applies only to the property value increase beyond the purchase price. In return, PECO agreed to keep the mall’s value at $39.5 million during construction and to recruit local applicants for new retail jobs.
Along with the retail development, PREP plans to convert the four main buildings on the southeast corner of the property to 297 apartments and sell the land to Hanover Property Co. of Dallas. The buildings were built for commercial use and will need to be reconstructed to meet Hanover’s housing regulations and approved under Hanover’s Village Planned Unit Development bylaw.
Callahan estimates residential property taxes on the finished area would be about $890,000 a year.
Callahan said a new $7 million water treatment plant will be built as part of the project.
Hanover’s available water supply for the project has been of some concern, said Victor Diniak, Hanover’s director of Public Works. “There’s a lot of speculation around town that the town doesn’t have water for new development,” he said. “And that’s just not true.”
Diniak said Hanover is currently able to withdraw 1.93 million gallons of water per day, a level the town has exceeded, and paid a penalty for that excess. The town’s pumping capacity is 2.1 million gallons per day, but actually pumping that much water is not permitted under the state’s Water Management Act.
In a July 9 presentation to Hanover’s Board of Selectmen, Diniak wrote “clustered housing and dense apartments do not appear to a part of the state’s thought process when the Water Management Act was issued… They are now the norm in the greater Boston area and need to be considered in new permits.”
Withdrawal increases have been proposed to Massachusetts Department of Environmental Protection, said Diniak. He said it would be necessary to see a proposed construction plan from PREP before commenting on the ability of Public Works to provide water.
School Superintendent Matthew Ferron said the potential increase of up to 30 children from the apartments will be taken into account in the future. “Any increase in enrollment requires an increase in resources in most cases, but at the moment we have not begun any active planning,” he said.