ST. CHARLES – The $20 million revenue sharing agreement with the Charlestowne Mall owners is one of the largest in recent memory for St. Charles, and an important one as well, officials said.
The Krausz Companies Inc. and the city will have a 50-50 split of the future sales tax revenue when the mall relaunches in 2015 as The Quad St. Charles. The revenue sharing would start at the grand opening and last for 20 years, or until Krausz Companies receives $20 million in reimbursements, whichever comes first.
The St. Charles City Council on May 5 unanimously approved the revenue sharing agreement. The sharing plan is only for sales tax revenue of the redeveloped mall, not the current mall revenue.
The city currently retains all of the sales tax revenue from the mall. Krausz Companies is not receiving any advance revenue from the city, said Rita Tungare, the city's director of community and economic development.
Tungare said each incentive plan the city creates is tailored to each specific business development. Other St. Charles businesses that entered into revenue sharing agreements with the city include the motorcycle dealer Windy City Triumph and Costco, which are both located on Randall Road.
The $20 million agreement allows Krausz Companies to make costly updates needed for the redevelopment. 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 amount of money that's required to truly redevelop the mall property would not be justified by the rent that can be collected, especially once the mall first reopens, said Jay Krigsman, Krausz Companies executive vice president.
Some residents were pleased with the city's willingness to work with the mall owners, said St. Charles Ward 2 Alderman Rita Payleitner. The mall is located within her ward.
"When I took office, the No. 1 question I would get was, 'What is the city going to do to help the mall?' " Payleitner wrote in an email. "I'm delighted to have an answer [the tax-sharing agreement] that is so well received."
To learn more about the Charlestowne Mall's redevelopment into The Quad St. Charles, visit www.thequadstcharles.com.