Adam Field experienced sticker shock, or more accurately, sticker skepticism, when he learned about a developer’s expectations for the former Portage Kmart site.
Field, who represents Columbia County on the city of Portage’s Joint Review Board, questioned on Monday a developer’s projection, that the value of the former Kmart site on New Pinery Road would increase almost sixfold if new businesses move in there.
Jon Cameron, financial adviser for Ehlers, a Waukesha-based independent public financing advisory firm, said officials of Lynn Holdings Inc., which owns the former Kmart and Fashion Bug property, have estimated that, if the land is developed as they plan, its value would rise to about $5.2 million.
The value now, according to Cameron, is $897,800.
No one from Lynn Holdings, including the owner, Richard Lynn, was at Monday’s meeting of the Joint Review Board, an entity whose responsibilities entail approving, denying or amending the city’s tax increment financing districts. The board has representation from the city, Columbia County, the Portage Community School District, Madison College and the public.
Lynn has asked the city to create a tax increment district at the site of the former Kmart store, vacant since 2014, and the former Fashion Bug store, vacant since 2013. Without such a district, Lynn has said, he could not afford to refurbish the empty buildings and rent them to retail businesses.
Lynn has presented city officials with artists’ conceptions of what the property might look like if it were developed. The drawings show multiple businesses located in both the former Kmart and Fashion Bug buildings, and an additional structure, which looks in the diagrams like a fast-food restaurant, to be constructed on the site.
Field, a Columbia County supervisor from Portage, said he thought the projection of about $4.3 million in added value sounded overly optimistic.
Cameron said the projection of property value increase comes from the developer, not from him.
“I would tend to agree — it could be a bit of a stretch,” he said. “But it is a large site. Right now, that’s the number we’re working with.”
Portage Mayor Rick Dodd said he thinks the estimate of increased value might be pretty close to accurate, as the property was worth about $3 million when there were active businesses on it.
“You put that new building in, and add additional value, and the $5.2 million might not be so far off, so to speak,” he said.
Dodd said the city isn’t offering Lynn Holdings any money up front. The proposed tax increment district would be set up as a “pay as you go” district, with Lynn getting a portion of the revenue stemming from increases in value only if the value actually goes up as the result of development. And the developer would have to front the money to improve the buildings to make them more marketable to new business tenants.
City Administrator Shawn Murphy said the Kmart building has been empty for four years, with the property’s value going down every year. Lynn Holdings, which acquired the property in 2015, has not been able to attract new tenants, and is not likely to unless the buildings can be fixed up.
That’s why the Portage Common Council gave its tentative approval for the proposed tax increment district earlier this month.
Murphy said it qualifies as a blighted area.
“Without this, we feel that it would remain vacant, would not attract any development, and could have to be torn down,” he said.
Cameron said the Joint Review Board will take up the matter again Sept. 17, this time with more concrete details than are available now, including more precise projections on changes in the property’s value.
The Common Council tentatively plans to vote Oct. 11 on the creation of the district, and the Joint Review Board would convene soon after that to consider ratifying the decision.
All this needs to be done before the end of October, Dodd said, for the tax increment district to be in effect at the beginning of 2019.