The gamble made by Balcones Heights on Wonderland Mall appears to be backfiring. Four years after the city purchased a significant share in the aging shopping center, expecting it to churn out $750,000 in annual profits, officials are facing up to a harsh reality. The expected cash flow has not materialized, with maintenance bills for the old structure gnawing away at funds, as reported by the San Antonio Report.
The small enclave in northwest San Antonio made headlines in 2020 after its city council voted in favor of investing $5.4 million for a 46% stake in Wonderland of the Americas, a move driven by ambitions to generate revenue and lure developers. Now, however, interim city administrator Gilbert Perales is in a bind, stating, “We’re trying to figure out how best we can navigate through all this, inclusive of getting somebody within the existing partnership to either buy us out, or find a solution for us to make the city whole,” according to the San Antonio Report.
Further adding to the complexity of the situation, the shopping center has not delivered on earlier hopes. Maintenance costs for the 60-year-old building's infrastructure, such as elevators, escalators, and heating and air conditioning systems, have consumed much of the anticipated revenue. The city is also facing financial strains from the end of its red-light camera program and rising employee health benefits costs, leading to an increase in property tax rates and a redesign of employee benefits plans.
Mayor Suzanne de Leon, in a risky push for reelection, continues to defend the investment. She stated in an interview, “The partnership protected the city and Wonderland from loss of value, as well as sales and property taxes for the benefit of the city,” De Leon told Six Mile Ranch. Despite the lackluster results, her only caveat for agreeing to sell would be if the city's vision for developing the area is realized, “And of course the dollar amount has to be right,”
Meanwhile, her opponent Johnny Rodriguez, a former mayor himself, told the city council “This is not a very smart move and I would not suggest you do it, because … it is a very high-risk, commercial piece of property and a governmental entity … should never get involved and get into a business in retail development, in commercial development,” he told them. “But they dove into it and now we’re paying the price.”
Lorenzo Nastasi, the city's director of economic development and public affairs, noted the difficulty in attracting new development, citing high construction costs and expensive financing. Yet, there's still hope. Perales is working to boost sales tax-generating businesses to fill the revenue gap, focusing on diversifying the tenant mix beyond the existing medical and dental offices, as reported by the San Antonio Report.
