NORMAL — Town officials expect a new national retailer to use the former Dick's Sporting Goods space — but only after they approve a sales tax rebate.
The Normal City Council will consider forgoing up to $800,000 in future sales tax from stores at two connected shopping centers including Bed, Bath and Beyond, Fresh Market and Petco in exchange for more than $4 million in private spending to improve those centers.
The deal is with Phillips Edison and Co., a Cincinnati shopping center operator that owns both buildings. Company officials will attend Monday's council meeting at 7:30 p.m. on the fourth floor at Uptown Station to describe their plans, said City Manager Mark Peterson.
"They do have a tenant they have been talking with that they are confident, once they commit to the center improvements ... this tenant will execute a lease agreement,” said Peterson.
“I do know who they’re talking about because we’ve researched that tenant and confirmed the sales projections Phillips Edison has given us are legitimate, but I'm not at liberty to say.”
Improvements include, according to town documents:
• $1.5 million to reconfigure other spaces in the southern building, which could house two additional tenants after Office Depot and Shoe Carnival shrink their stores.
• $1 million to fix up the Dick's space.
• $650,000 each for roof and facade improvements.
• $333,000 for parking lot improvements and new signage.
Peterson said work could start this fall and wrap up in two years.
"Maybe within the first year the Dick’s space will be occupied,” he said. "The other spaces, they certainly have candidates, but I don’t think they’ve honed in on a specific candidate, so those could take longer."
Phillips Edison would receive 0.5 percent of sales revenue from the three new tenants for 10 years. That totals $800,000 if those tenants generate $5.6 million in new sales tax revenue over that decade, as the town estimates.
Peterson said the deal is similar to the pact that brought Portillo's to town, in the sense that the incentive depends on the new business being successful. The centers are across the street from Portillo's.
“The attraction of a sales tax rebate is the town will share with the developer new revenue they create, and if they don’t, there’s no expense," he said.
Phillips Edison is also considering adding a "pad site" to the north end of the centers similar in size to a cellphone store or chain restaurant, Peterson said.
He said it's possible Phillips Edison would do the project without town involvement, but that element makes it more attractive to company leadership that decides which shopping centers to spend on.
"Both buildings are pretty old, particularly the one on the south side, and could use some work for a number of infrastructure issues,” said Peterson.
He said that includes putting all of the center on the same grade. Some of it is higher and must be reached by stairs.
"We’re excited to see that space filled again. It’s important retail space in a great location. I’m particularly pleased Phillips Edison is willing to make such a significant investment,” Peterson said.
"The public participation element in the grand scheme is relatively small. ... It makes good sense for the town to proceed. We need to work hard to develop our retail base.”
The meeting was delayed to allow a 7 p.m. uptown tree-lighting ceremony to kick off Illinois State University's homecoming week. Eastbound Beaufort Street to Uptown Circle will be closed to vehicle traffic from 6:30 to 8 p.m.
That event will follow a 5:30 p.m. joint work session between the council and Normal Planning Commission on the town's upcoming comprehensive plan.