Local economic development leaders are eyeing a tax incentive program to try to entice employers into the largely vacant Cortana Mall and help real estate developers breathe new life into the property.

The bureaucratic wheels are turning toward designating Cortana Mall as a state-recognized Enterprise Zone, which would open the door for potential tax credits in exchange for creating jobs.

The push for an Enterprise Zone is a joint effort of the North Baton Rouge Economic Development District, the Baton Rouge Area Chamber and District 6 Metro Councilwoman Donna Collins-Lewis. 

“Cortana Mall is the elephant in the room,” Jerry Jones Jr., executive director of the North Baton Rouge Economic Development District, said of the 1.4-million-square-foot mall. “But there’s not an easy solution.”

An Enterprise Zone could be used as a tool. But the path to redevelopment also would require overcoming obstacles such as a web of multiple property owners, difficulties in redeveloping such a large retail property and mall covenants that restrict the property to retail use, local real estate professionals said.    

Jones said his board of directors suggested redevelopment ideas such as a conference center with the existing retail spaces as breakout rooms.

“You’d be able to have Mardi Gras balls there,” he said.

An outcome like that or others that might be considered would be years down the road, though.

Rural parishes in Louisiana can expand Enterprise Zones by adding new boundaries, but in urban parishes two census tracts must be swapped, one stricken from an existing zone to form a zone elsewhere, according to the Louisiana Economic Development department.

The Metro Council would first need to approve swapping a more residential census tract inside the existing East Baton Rouge Enterprise Zone with Cortana Mall. Then state leaders would have to approve the swap through the Board of Commerce and Industry.

Enterprise Zones offer employers tax credits up to $3,500 per job created and the possibility of a rebate of state sales and use taxes paid on qualifying materials, machinery, furniture or equipment or a refundable investment tax credit on its capital investment.

By the time the incentives are approved, it's unclear how many stores will be left operating at Cortana Mall, which sits at the intersection of Florida Boulevard and Airline Highway in Baton Rouge. There’s only one major occupant left: Dillard’s, which runs a first-floor clearance center in the former department store it owns.

Five other former anchor buildings at Cortana — Macy's, Sears, J.C. Penney, Mervyn's and Virginia College — are vacant and owned individually.

The interior corridor sections of the mall, along with the former Mervyn's building, are owned by Nevada-based Moonbeam Capital Investments LLC, which did not respond to repeated requests for comment about efforts afoot to form an Enterprise Zone at Cortana.

Several smaller stores still operate inside the mall, along with some nontraditional tenants, including a church. 

The former Macy’s department store is up for sale as is the now-defunct for-profit school Virginia College, both of which closed in recent years. The former Sears location was slated to be sold through bankruptcy court by SRSA Commercial Real Estate but has not yet been sold.

The previous Dillard’s Car Care Center, on the Cortana Mall site, is up for sale by HGI Realty, and land near Florida Boulevard between a Burger King and Raising Cane’s restaurant was listed as no longer available as of June.

“I believe that there is pending interest in the overall mall land, but until some of the mall’s historic governing documents are unwound, it will be hard to program many alternative uses besides retail,” said Ryan Pecot, senior retail leasing and development adviser at Stirling Properties, representing the former Macy’s store. “Best-case scenario is that a single developer purchase all of the anchor buildings and internal mall in order to complete a full redevelopment,” he said.

The disjointed ownership structure is a major roadblock to development rather than location. The site has a steady flow of car traffic each day and existing transportation infrastructure such as bus routes, said Donnie Miller, director of business development at the Baton Rouge Area Chamber.

“It’s been a daunting challenge about how to redevelop it and to do it in a thoughtful way,” Miller said. “There are a lot of possibilities."

For example, there is a way for the Metro Council to allow rezoning of Cortana Mall to support other types of business than retail, but not likely manufacturing. 

There has been interest from companies about the property surrounding Cortana Mall, said Mathew Laborde, CEO of Elifin Realty. Laborde's company is marketing land for sale near the frontage road of Florida Boulevard.

Several national retailers operate stores along the ring road around Cortana.

"Companies are interested but not because its nearby Cortana Mall; it's about how much traffic passes that location," Laborde said. 

In addition, the existing hurdles seem very high, such as the cost for redevelopment. 

“Demolishing the mall to redevelop the site would cost millions of dollars. Renovating the property for an alternate use would also be extremely expensive,” said Keith Richard, vice president of value and advisory services at CBRE, a global commercial real estate leasing business.

Likewise, there are few businesses or organizations looking for such a large space, Richard said.

“Just one department store building is very large for even a megachurch or a school to occupy, and Cortana has six anchor buildings,” he said.

Most brick-and-mortar retail centers built in recent years are much smaller than malls such as Cortana and anchored by grocery stores. Often retailers see physical locations as a showroom and place to pick up items purchased online, he said.

“Retailers are still investing in brick and mortar throughout Louisiana,” he said.

But it's unclear what the mall owner's plans are moving forward. 

In August 2017, Cortana Mall was put up for sale by Moonbeam but later taken off the market. In other cities, Moonbeam has presented master plans for redevelopment but not in Baton Rouge.

When Moonbeam bought Cortana Mall and the former Mervyn’s anchor store in 2013 for a combined $6.15 million, company officials said they believed there was a future for the property as a discount shopping and entertainment destination. They later cited ideas such as health care, fitness club, office and education tenants, while still seeing room for restaurant, retail and entertainment concepts that are needed in the Airline-Florida area.

Moonbeam once owned nearly a dozen older malls across the country but has sold properties in New Jersey, Indiana and Iowa in recent years.

The company has invested in the redevelopment of the 1.1-million-square-foot West Oaks Mall in Orlando, Florida, which has a similar foundation as Cortana Mall with big-box retailers like a Dillards clearance center but still has a J.C. Penney's and a movie theater.

The company leases to municipal entities such as the Orange County Tax Collector and a call center for Sun Pass, a toll program run by the Florida Department of Transportation. Likewise, Bed Bath and Beyond Inc. opened a call center with 500 workers inside the Florida mall and is leasing 35,000 square feet.

But no plans have been pitched for Baton Rouge so far, other than the Enterprise Zone proposed by the North Baton Rouge Economic Development District, the chamber and Councilwoman Collins-Lewis.

Email Kristen Mosbrucker at kmosbrucker@theadvocate.com.