ST. CHARLES – A city committee of aldermen gave an initial thumbs up to a $20 million revenue sharing plan with the Charlestowne Mall’s latest owners.
The Government Operations Committee on Monday unanimously voted in favor of recommending a sales tax revenue sharing agreement for SC Main 3800 LLC, the property owners of the Charlestowne Mall. Developer and property manager The Krausz Companies Inc. is representing the group.
The property owners worked with city staff to develop the agreement, which involves a 50-50 split of the new sales tax revenue generated once the redeveloped mall actually opens. While the plan still is in development, the city will continue to retain all of the sales tax revenue received from the mall, said Rita Tungare, director of community and economic development.
The 50-50 split of the new sales tax revenue would last for 20 years, or until the developers receive $20 million in reimbursements, whichever comes first.
The developer is not receiving any initial cash handout of this money, Tungare said Friday.
“There is no up-front risk to the city,” Tungare said. “This incentive is to offset the extraordinary costs that a redevelopment of this magnitude would have.”
There are $12 million in extra construction costs to regrade, demolish and update the mall, according to the city’s executive summary of the agreement. The developer also estimates the cost of bringing in and retaining tenants to be $10 million.
The city’s willingness to work together is a crucial part of the plan, said Jay Krigsman, executive vice president of The Krausz Companies.
The existing mall building has to be reconstructed, at a high cost, to something that meets the current retail market, including open spaces and expansive views, Krigsman said. The revenue sharing will provide a return for the investors and lenders behind the redevelopment, he said.
The Krausz Companies purchased the mall property for more than $9.5 million in November. The company plans to rename the mall The Quad St. Charles and recreate its appearance by late 2015 to a neighborhood feeling and include patio dining outside.
The St. Charles City Council likely will vote on the revenue sharing agreement May 5, Tungare said.