Developer Richard Lynn predicted Monday that spring 2019 will be a season of growth on a blighted piece of north Portage property where Kmart used to be.
“We sure will get the whole thing going in 2019,” Lynn said Monday, after the city’s Joint Review Board and Plan Commission both reviewed a proposed tax increment financing district encompassing 13 acres just off New Pinery Road on the north side of Portage.
“I think by spring, you’ll see a lot of heavy equipment,” he said.
After a public hearing in which no one spoke, the Plan Commission unanimously approved the proposed Tax Increment District No. 10.
The tax increment district isn’t a done deal yet, although it got much closer to becoming a reality on Monday. The Portage Common Council is scheduled to consider approval on Oct. 11, and the Joint Review Board – composed of representatives of the various property taxing bodies affected by the proposed district – will decide on final approval on Oct. 29.
Once that final approval happens, Lynn said, the prospective tenants of two existing buildings and two proposed new buildings will start moving toward finalizing their agreements, and disclosure of those tenants’ identities is likely to happen in January.
Steve Sobiek, the city’s director of business development and planning, said he knows who the prospective tenants are, because he’s been working with Lynn for the past two years to land them.
Neither he nor Lynn named names Monday night.
But Lynn said the 86,000-square-foot building that housed Kmart until 2014 will likely be occupied by one tenant, whom he described as a retail entity with a presence in multiple states.
Sobiek said it’s fair to say that the Kmart building tenant will be a large retailer.
“It’s going to fill that building,” he said.
Both the Joint Review Board and the Plan Commission were guided through the 27-page project plan by Jon Cameron of Ehlers, the Waukesha-based consulting firm working with the city on the district’s establishment.
The property, with an equalized value of about $915,000 now, would increase in value by about $4.3 million if it were developed as Lynn plans, Cameron said.
Lynn is projecting that value increase to be incurred in the first year. Cameron is more cautious in his forecast.
“I think the reality is, it would occur over a multi-year period of time,” he told the Joint Review Board.
However, Cameron added, it would be to Lynn’s advantage to make the valuation increase happen as soon as possible, so he can recoup, from the proceeds of increased property taxes, some of the upfront costs for redevelopment.
Jason Adamany, Lynn’s business partner, characterized the proceeds from the tax increment district as “gap” financing – not enough, by itself, to cover the development’s full costs (which are unknown now), but a source in addition to any investments made by the developers and the tenants.
Lynn said current plans call for leaving intact both the Kmart building and the 10,000-square-foot structure that, until 2013, housed the Fashion Bug women’s clothing store.
It’s likely that more than one tenant will occupy the former Fashion Bug building, Lynn said.
What those buildings might need in the way of renovation, he said, would depend on what the prospective tenants might need, and what a city inspector says would be necessary to bring them up to code.
Two new buildings
Besides renovating the existing structures, the project also would include two new buildings. Previous plans had shown just one new building, but Lynn said it had been his plan all along to add two.
One, on 1.25 acres in the parcel’s southwest corner (near the Aldi grocery store, which opened in 2016), would likely be a fast-food restaurant.
The other, for a purpose Lynn declined to disclose on Monday, would go up in what is now a grassy area near the strip mall that includes a Subway restaurant.
City Administrator Shawn Murphy said the projected value increase of $4.3 million factors in not only the refurbishing and occupancy of the existing buildings, but also the proposed new structures.
Adam Field, who represents Columbia County on the Joint Review Board, reiterated the skepticism he expressed at the panel’s July meeting as to the projected valuation increase. He asked whether city officials or Ehlers had done any independent investigation to verify the projection.
Murphy said the actual valuation increase won’t be known until the area is developed, and that development will be governed by an agreement between Lynn Holdings and the city, which will be put in place when the district is created.
“Any increment revision will be based on what is put in the ground,” he said.
By state law, Ehlers said, the maximum lifespan for a tax increment finance district is 27 years.
But if development proceeds as projected, the district will generate increased tax revenue sufficient to recover the city’s costs for the project by 2030 – about a decade before the maximum life of the district.