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 arena plan seeks to keep a $26.5 million state rebate as design, tenants and costs change
What’s happening now: A long-delayed plan to build a multiuse arena inside a 66-year-old suburban shopping mall that sits on the Urbandale–Des Moines border is asking a statewide economic development board to reaffirm a previously awarded $26.5 million tax rebate. The project has been substantially redesigned and reduced in cost, new anchors and sports users have been proposed, and state staff are urging a formal scoring review and several firm financing and development milestones before the rebate is finalized.
Key facts up front
The original arena idea won a $26.5 million award from a statewide contest that distributed $100 million in tax rebates. The property owner — a Chicago-based investment group — argues that building the arena is central to preventing the aging mall from sliding into deeper decline. The revised plan trims the total project cost to about $41.69 million from an earlier roughly $60 million estimate and redesigns the venue for many users rather than a single professional team.
Why the plan changed
The original project centered on renovating a vacant department-store shell into a 3,500-seat arena intended as the home for a junior hockey franchise. That team started construction work in 2022 but withdrew in 2024 after failing to raise enough money to cover post‑pandemic cost increases. After the team left, the mall owner decided to continue with a smaller, multiuse approach that adds an eight‑court volleyball training facility and flexible floor systems including a removable ice sheet. The redesign also includes space for concerts, gym and performance events, and infrastructure improvements elsewhere on the site.
New tenants and uses
Project leaders report talks or tentative agreements with multiple sports tenants, including a college hockey program and another hockey organization, as well as a prominent pickleball operator that opened courts on site in 2023 and has reported thousands of unique users. The new mix of users is meant to widen the pool of visitors and make the venue financially sustainable as a year‑round sports and entertainment hub.
How the financing would work
City-backed borrowing and state rebates are central to the deal. One city plans to issue roughly $16.3 million to $20 million in bonds to help pay construction costs; those bonds would be backed by the state sales and hotel‑motel tax rebate if the redevelopment continues to qualify. The two cities that share the mall have also pledged about $3 million in tax-increment financing (TIF) to support the project.
What the state staff want
State development staff described the revisions as significant and recommended a formal scoring process to determine whether the modified plan still meets program rules for the rebate. Staff proposed that a director appoint a scoring committee that would feed results to a due diligence panel and ultimately to the full board. Staff recommended conditional acceptance if the project hits several deadlines: secure the $41.7 million financing by the end of March; select a hotel developer by the end of 2027; close on arena construction financing by the end of 2028; and pick and finance a residential conversion for an office building on the site between 2026 and 2027.
Questions about economic impact
The city that would issue bonds funded a sales-tax forecast update to reassess the project before returning to the state. That study concluded an arena by itself would not reverse the mall’s fortunes and found mall sales rose only about 1% since 2021 while average inflation ran near 4.36% in the same period, suggesting underperformance versus inflation. The study also forecast lower foot traffic from the arena than the mall’s own estimates. Mall leadership pushed back on those findings, offering higher visitation figures and arguing the combination of new tenants and sports programming will restore activity.
Timing and next steps
The redevelopment has already received an extension of its start‑construction deadline. If the state scoring process approves the modified proposal and the required lease and financing milestones are met, city votes to reauthorize local support are scheduled soon, followed by renewed construction activity later in the year. Project leaders have said they are prepared to move forward once approvals and financing are in place, while state staff continue to press for solid agreements and financing commitments before the rebate is reauthorized.
Context
The site has seen several changes in recent years, including the arrival of indoor play and fitness tenants and the relocation of a major department store. Those shifts prompted the owner to pivot from a single‑user stadium concept toward a broader, multiuse sports and entertainment hub that relies on multiple anchor tenants and flexible facilities.
FAQ
What is the Merle Hay arena proposal?
The proposal is to convert vacant department‑store space at a 66‑year‑old mall into a multiuse arena with removable ice, an eight‑court volleyball center and flexible event space for sports, concerts and other activities.
How much state money is involved?
The project seeks to keep a previously awarded $26.5 million tax rebate from a statewide $100 million program that can back local bonds used for construction.
Who is paying the rest of the costs?
Project financing would include municipal bonds (estimated between $16.3 million and $20 million from one city), $3 million in tax-increment financing from the two cities, private investment by the mall owner, and tenant and developer financing for hotel and residential pieces required under the state conditions.
What changed from the original plan?
The project was scaled down from an estimated $60 million to about $41.69 million, shifted from a single professional-team focus to a multiuser facility, added volleyball courts and flexible spaces, and dropped the original primary tenant when that franchise withdrew in 2024.
What must happen next?
The state needs to score the revised plan under program rules, and the project must meet several deadlines for financing, hotel developer selection and residential conversion deals before the rebate is fully secured.
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Key project features at a glance
| Feature | Detail |
|---|---|
| Awarded state rebate | $26.5 million from a statewide $100 million rebate program |
| Original estimated cost | About $60 million |
| Revised project cost | $41.69 million |
| Local bond support | Planned issuance of $16.3M–$20M from one city; bonds would be backed by the state rebate |
| Additional local support | $3 million in combined tax-increment financing from both cities |
| Facility features | Removable ice sheet, eight permanent volleyball courts, flexible event and performance spaces |
| Major milestones required by state staff | Secure $41.7M financing by end of March; select hotel developer by end of 2027; close construction financing by end of 2028; select residential developer by end of 2026 and close financing by end of 2027 |
| Recent timeline notes | Groundbreaking by original tenant in 2022; tenant withdrew in 2024; pickleball operator opened in 2023; revised approvals and potential construction expected pending state and city approvals |
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 CA News
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