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.
Scaled-back Merle Hay Mall arena seeks share of $26.5 million state rebate as new tenants, revised costs and state review reshape project
The owners of Merle Hay Mall are moving forward with a pared-down plan for a multiuse arena and are asking to keep their award from a statewide tax-rebate competition that originally set aside $26.5 million for the project. The plan has been reworked after the original sports partner withdrew, overall costs were reduced to $41.69 million, and state officials have recommended extra review and a series of conditions before confirming the rebate.
What’s on the table now
The arena would be built inside the former Younkers department store space at the 66-year-old Merle Hay Mall, which sits on the border between Urbandale and Des Moines. The new design shifts from a single-team venue to a multiuse facility that includes a converted ice surface with a one sheet of removable ice and a permanent eight-court volleyball training center. The owners say the redesign also allows for gym space, performances and other events to bring more regular foot traffic to the mall.
Money and backing
The original award of $26.5 million came from a statewide pool of rebates aimed at reinvestment projects. Urbandale plans to issue between $16.3 million and $20 million in bonds to help fund the arena, with those bonds still to be backed by the state sales and hotel-motel tax rebate if the modified plan qualifies. Des Moines and Urbandale have also pledged a combined $3 million in tax-increment financing support toward the project.
State review and conditions
State economic development staff have called the changes to the project significant and recommended that a scoring panel evaluate whether the revised plan still meets the program rules for the tax rebate. Staff asked the director to appoint a committee to score the modified application, with results to go to a due-diligence panel and then to the full board. Several conditions were recommended, including strict deadlines:
- Secure $41.7 million in financing by the end of March of the specified year.
- Select a hotel developer by the end of 2027.
- Close on 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 first proposed as a roughly 3,500-seat home for a junior hockey team that had been operating from an older, damaged arena. That partner began work on the project and broke ground in 2022 but withdrew in 2024 after being unable to raise the extra money needed when post-pandemic inflation pushed costs higher. After the withdrawal, the mall owner decided to proceed on its own and redesigned the project to host multiple sports and entertainment users.
New and returning tenants
Project leaders say they have been in talks with several anchor tenants to fill the new multiuse space. The updated plan references hockey groups and college-level use, and it includes existing and new indoor-sports tenants. One indoor pickleball facility opened on site in 2023 and has recorded strong usage, which owners point to as evidence of demand. Leaders are also pursuing deals with volleyball and other sports organizations to use the permanent courts.
Questions about impact and mall health
The city of Urbandale commissioned an updated study of sales-tax projections and the broader economic impact. That study concluded the arena alone would not be enough to reverse long-term trends at the mall, noting mall sales rose just 1% since 2021 while inflation averaged about 4.36% during the same period. The study also found expected foot traffic from the arena would be lower than the mall’s earlier estimates.
Mall owners pushed back on that analysis, saying their visitor counts and internal research show higher activity and that new tenants and programming will broaden the mall’s customer base. Local city leaders have expressed concern that without reinvestment the mall could decline, while some officials remain cautiously optimistic about the mall’s pivot to sports and entertainment uses.
Timeline and next steps
The project received an extension of the original deadline to start construction. The state review board has been asked to send the revised plan to the scoring process; that review will determine whether the project can keep the awarded tax rebate that helps secure Urbandale’s bond issue. Votes by local city councils to re-approve the amended support and the state scoring process are the immediate next steps. If the project clears those hurdles, backers hope construction can resume later in the year with a target finish in the following phases.
Why it matters
The arena proposal is being watched as an example of how older shopping centers are trying to retool by adding sports, entertainment and housing to draw visitors. The outcome will affect local bond financing, use of tax incentives, and the future of a long-standing regional mall.
Frequently Asked Questions
What is the Merle Hay Mall arena project?
The project is a redeveloped multiuse arena to be built inside the former Younkers space at Merle Hay Mall. The redesigned plan includes a removable ice surface, an eight-court volleyball center, space for other sports and live events, and plans for associated hotel and residential work on the mall site.
How much state money was awarded and what is being asked now?
The project was given a $26.5 million award from a state tax-rebate competition. The mall owner is asking to keep that award while presenting a modified, lower-cost plan for review under the program’s rules.
What are the current costs and who will pay?
The scaled-back project is estimated at $41.69 million. Urbandale plans to issue between $16.3 million and $20 million in bonds to help pay for the arena, backed by the state rebate if approved. Local tax-increment financing commitments total about $3 million from Urbandale and Des Moines.
Who will use the arena?
Plans aim to host multiple users, including hockey groups, college teams, volleyball organizations and community leagues. A pickleball facility already operating at the mall is one of the existing sports tenants showing significant local use.
What conditions did state staff recommend?
State staff asked for a formal scoring of the modified plan and recommended conditions such as securing full financing by a set March deadline, selecting a hotel developer by end of 2027, and closing construction financing by end of 2028. They also set deadlines for residential conversion developer selection and financing.
What are the next decision points?
Local city council votes and the state scoring process are next. If the plan clears local approvals and the state scoring panel, the rebate can be confirmed and construction financing can move forward.
Key project features at a glance
| Feature | Detail |
|---|---|
| State rebate award | $26.5 million from a statewide tax-rebate competition |
| Revised total cost | $41.69 million |
| Local bond support | Urbandale plans $16.3M–$20M in bonds backed by the rebate |
| Local TIF support | $3 million pledged by Des Moines and Urbandale |
| Primary new features | Removable ice sheet, 8 volleyball courts, flexible event space |
| Original arena size | About 3,500 seats in original plan |
| Key deadlines (state conditions) | Financing by end of March (41.7M), hotel developer by end of 2027, construction financing closed by end of 2028 |
| Recent timeline notes | Original partner withdrew in 2024; project redesigned and deadline for start of construction extended |
| Mall age and location | 66-year-old mall straddling 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 NY News
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