St. Charles expected to approve tax rebate incentives to Blue Goose successor
The St. Charles City Council is poised to approve an economic incentive agreement that would pay up to $2.6 million in tax rebates to new developers of the former Blue Goose Market.
Alderpersons will vote on the agreement at the next city council meeting on Monday.
The downtown lot has been vacant since March 2022, when Blue Goose Market closed after more than 90 years in business.
Now the city is working with developers Swanson Development Group & Fort Union, or SDGFTU, LLC, to bring a new grocer tenant into the downtown.
The city is keeping the name of the proposed "premium nation grocer" under wraps, as the sale of the lot at 300 S. Second St. is still not official. Alderperson Paul Lencioni is the former Blue Goose CEO and still owns the property.
St. Charles officials recommended approval of an economic incentive agreement with the proposed developer, in which a portion of the sales tax produced by the grocery store will go back to the developer.
The developers are looking to receive $2.6 million in sales tax rebates over the next 15 years.
For the first four years of the agreement, the city would pay the developer 100% of the city sales tax and 66.66% of the home rule tax generated by the store.
Beginning in year five, the city will pay the developer 50% of the municipal sales tax and the home rule tax until the 15-year agreement expires, or until the maximum amount of $2.6 million is received by the developer.
According to sales projections, the maximum rebate amount is expected to be achieved in the 12th year of the agreement. The grocer is projected to generate roughly $8.3 million in taxes during the 15-year agreement, with the city receiving a net share of $5.7 million.
The total development cost is estimated to be $10.6 million, including acquisition, construction and financing costs. That does not include the $11.6 million the grocer tenant expects to spend on the interior buildout.
In addition to tax rebate incentives, the city would reimburse the developer for improvements to the surrounding city-owned parking lots. Per the agreement, developers would front the cost for resurfacing and streetscape improvements to their property and city-owned lots along First Street.
Upon completion, the city will reimburse the developer for the actual costs of construction, not to exceed $915,000 in total reimbursements.
Per the incentive agreement, the grocery store must open by May 1, 2026, or the deal will be terminated. If the developer does not invest at least $10 million on the project, the city has a right to reduce the maximum sales tax rebate proportionally.
If the grocer never opens, the city will not release any incentive amount to the developer. But it would reimburse the developer for the improvements to the city-owned parking lot and streetscape.
Also included in the economic incentive agreement was a project timeline, which projects construction to start next spring, and for the grocery store to be open by spring 2025.
Alderperson David Pietryla said the city is a step closer to ensuring it will again have a downtown grocery store. "One that will, no doubt, attract new visitors, enhance our downtown and improve the overall quality of life for our residents," he said.