The City Council of Balcones Heights, a 1-square-mile bedroom community anchored by Wonderland of the Americas, voted to buy ownership in the shopping mall.
The $5.4 million deal gives the Balcones Heights Economic Development Corp. on behalf of the city a 45.72% ownership stake in the shopping center located at Interstate 10 and Loop 410, and paves the way for redevelopment of the 1960s-era property.
Balcones Heights is financing the purchase through North Carolina-based Truist Bank with a closing set for Nov. 18 and the interest rate locked in at no higher than 3.79%. The 20-year loan comes with the prospect of a balloon payment at 10 years.
As a requirement of financing, the city also agreed to sublease a 15,000-square-foot, second-floor mall space next to a Ross Dress for Less store for use as city offices, court space, or a community center.
The Wonderland acquisition agreement was forged following council approval in February and after two years of public meetings and negotiations between city leaders and Crossroads Mall Partners.
The partnership, led by Sid Weiss, purchased the failing mall in 2009 and turned it into a thriving development with a mix of retail, medical, and entertainment space and a strategy to nurture small businesses with mall kiosks. Since early this year, the mall has served as a central COVID-19 vaccination site supported by University Health.
“This meeting today is making history — something the city has never done before,” Mayor Suzanne de Leon said to the council just prior to Monday’s vote. “Your decision this evening is going to determine the future of our city, and your decision this evening will also determine your legacy.”
The mayor breathed a visible sigh of relief when council members unanimously passed the ordinance approving a resolution that authorized the purchase.
With a resident population of about 3,000 swelling nearly 10 times that during the day, Balcones Heights is situated at a key intersection on the Northwest Side of San Antonio and near the South Texas Medical Center.
The 650,000-square-foot Wonderland mall, built in 1961, occupies a large swath of Balcones Heights, and sales taxes from its stores contribute significant revenue to the city’s $9 million annual budget. Ownership gives Balcones Heights more control over its future.
“You have significant rights in dictating and stating who owns it or who manages it and how it’s operated to make sure this is something that the city’s proud of,” said attorney Clay Binford, who represented the city in the deal.
Terms of the agreement make it possible for the city to purchase additional shares in the property up to 70% in the future, he said.
The city’s capital investment in the property also opens the possibility for future development plans in the sizable mall footprint, including a multifamily residential complex, according to Lorenzo Nastasi, director of economic development and public affairs for Balcones Heights. As part-owners, the city has some say in that development.
“This property is the largest single property in the city,” Nastasi said. “So in addition to the revenue, having a seat at the table as to how that property evolves in the years ahead — this is very key to the city’s ongoing success.”
Councilman Lamar Gillian said he supported the deal because the city’s viability depended upon it, no matter what the risks might be.
“If we do nothing, I don’t think the city will exist in 10 years because we will not be able to make our payments,” Gillian said, citing inflation over his past 17 years on council.
“I think it’s visionary. I hope that 10 years from now I’m looking at it and I’m really smiling, because I think it has a lot of potential.”