A long-vacant big-box store in Portage could be included in a new tax increment financing district, in the hope of attracting new retail tenants.
Members of the city’s Plan Commission on Monday said they’re open to including the site on New Pinery Road that formerly included Fashion Bug (closed in 2013) and Kmart (closed in 2014) in an area where revenue generated by increased property value could come back to the developer to help pay for the development.
But that revenue wouldn’t be available up-front to Lynn Holdings, the company that has owned the property since July 2015.
Steve Sobiek, the city’s director of business development and planning, said Richard Lynn, principal owner of Lynn Holdings, is amenable to setting up the TIF district on a “pay as you go” basis — meaning no money would come to the company until the property actually yields increased revenue.
Therefore, said City Administrator Shawn Murphy, the city’s only initial costs would be the legal fees and other fees associated with creating the district.
“It puts the onus on the developer to fund the up-front costs and generate the revenue,” Murphy said.
Jason Adamany, a partner in the venture, said he and Lynn have talked to “multiple” retail entities that might be interested in locating on the site, although he said he could not give any names. Some have expressed interest in occupying all of the 88,000-square-foot former Kmart building, and others want just part of it.
The information packet for the Plan Commission meeting included an artist’s conception of the Kmart building as it might look with three tenants (business names distorted), one of which is shown with a drive-through lane and window.
Adamany said he and Lynn have been trying to find tenants for the buildings since they acquired the property, with no success.
Having the property as a TIF district, he said, would aid in bringing the buildings up to code and making them more desirable.
If the TIF district is created by the beginning of 2019, Adamany said he would be “very surprised” if at least some of the empty buildings are not occupied within two years.
Plan Commission member Peter Tofson asked how sure Adamany was that retailers would locate at the site, given ongoing changes in the retail business environment, such as big-box stores closing due to the popularity of online shopping.
Adamany replied there are retail entities interested in locating in Portage.
However, he added, “There are other cities with empty big-box stores.”
Neither Lynn Holdings nor prospective tenants are able or willing to absorb the full cost of improvements, including not only the existing buildings, but also the parking lot, Sobiek said.
With the exception of the 2016 construction and opening of an Aldi food store on the site, it has been vacant for four years — meaning, Murphy said, that it would be an appropriate candidate for a tax district designated as “blighted.”
It would not be appropriate, Murphy added, to include the property in a recently-created adjacent TIF district just north of the site — a mixed-use industrial-retail area.
Mayor Rick Dodd, chairman of the Plan Commission, said the commission’s agenda for Monday did not include a decision on the proposed TIF district — just a sounding out as to whether commission members are amenable to exploring the idea in more depth. The Common Council would have the final say.
Commission member Mike Charles said he would like to see a developers’ agreement before deciding, but in general he favors further consideration of the district.
Dodd said he leans that way, too, especially since Lynn Holdings officials are willing to have the district set up on a “pay as you go” basis.
“Those buildings have been vacant for quite a while,” Dodd said. “It’s time to get something in them.”