DANVILLE — A piece of property the city has agreed to buy as part of the Kohl's retail project will not increase Danville's $1.2 million commitment to the project, according to city officials.

The new retail project on North Vermilion Street will include a Kohl's department store that has been scheduled for an October 2012 opening, according to Mayor Scott Eisenhauer. Last week, the Kohl's corporation officially approved a new Danville store, an action the site developer, Continental Properties in Milwaukee, and city officials have been expecting.

The Danville city council Tuesday night approved spending $150,000 to buy a 1.05-acre strip of land on the south end of the Kohl's retail site, which is the former K's Merchandise property at 3707 N. Vermilion St., Danville. The city is purchasing the undeveloped acre from Stephanie W. Spiros, Jerry G. Walker and Jeremy Walker.

Eisenhauer said as the final layout of the development has unfolded, which includes Kohl's as the anchor as well as a junior anchor and an outlot, it became necessary to have the additional 1.05 acre to make the design work to the satisfaction of the city and the developer. Earlier this year, the city approved a $2 million incentive package for the developer, which will own the property and lease to Kohl's and the other yet unnamed retailers. The $2 million is coming from $800,000 in grants from state and federal sources, and a $1.2 million line of credit that the city plans to pay back in five years using the sales and property tax revenue generated by the retail development.

The incentive package will be used by the city to buy the former K's Merchandise property and pay a contractor for demolition, utilities and other site work to prepare it for development. Once that work is complete, the property will be turned over to the developer.

Eisenhauer said the purchase price of the additional 1.05 acres will come from the $1.2 million line of credit and will not increase the city's $2 million incentive package. He said it made sense for the city to purchase the additional strip of land rather than the developer, who will be receiving ownership of the entire site once it's ready for development.

Eisenhauer said it was easier for the city to do the purchase, although city officials did look into having the acre donated.

But, he said, they ran into some issues based on the value of the land, and Internal Revenue Service standards for donations that would make that route more difficult.

"So in the end, we sought to purchase the land outright to include that as part of our contribution in the project toward the developer," he said.

Demolition of the former K's building has started.

Big O Services of Danville was awarded the project with a bid of $280,139.