Danville considers $500,000 incentive for retailer

DANVILLE — Local officials still are not disclosing the name of the national retailer considering a 50,000-square-foot anchor spot at the Village Mall, but aldermen Tuesday night will be considering an agreement that will provide the mall with up to a $500,000 sales tax incentive for the project.

"This is a critical issue," said Cindy Compton, who is manager at the Village Mall but is not directly involved in tenant negotiations between the mall owners and the national retailer. Compton said a deal with the tenant is close, but she could not disclose any further details.

The city council meets at 6 p.m. Tuesday in the municipal building, 17 W. Main St., to consider final approval of the proposed incentive package to help the mall offset its costs in renovating the anchor space, which formerly housed a J.C. Penney and later a Steve and Barry's. The space has been vacant for several years.

According to the proposed agreement, the city would reimburse the mall owners up to $500,000 of their total costs for redeveloping the 50,000-square-foot space. The city will reimburse the mall owners 50 percent of the sales tax generated by the retailer each year for five years, but the total amount each year cannot exceed $100,000. The agreement does not commit any other city revenue, only dollars generated by the retailer.

Based on sales data from the retailer's others stores in the national chain, local officials are estimating that the proposed location at the Village Mall would generate annual sales of $6 million. The city's annual home rule sales tax from that portion of annual sales would be $135,000, according to local officials, in addition to the 1 percent municipal state sales tax, which would generate another $60,000 a year for the city.

So, altogether, city and economic development officials are anticipating the retailer could generate $195,000 a year in sales tax revenue to the city, and for the first five years, per the agreement, the city could be giving up to $100,000 of that back to the mall.

The agreement also includes language protecting the city, such as a requirement that mall ownership sign at least a seven-year lease with the national retailer, which Mayor Scott Eisenhauer said guarantees that the city will have at least two years when it will retain all of the sales tax generated by the retailer.

And if the national retailer closes prior to the end of its lease, the mall owner must reimburse the city 50 percent of its annual payment to the mall for that year and try to find a replacement retailer within 180 days and secure a five-year lease from that replacement retailer.

Local officials said the retailer could open as early as this fall or as late as next spring. The national retailer's average store size, which is 81,909 square feet, rivals the average store sizes of Kohl's and the Bon Ton brand, which includes Carson's, Bergner's and Elder-Beerman. But the national retailer does not have as many stores in its chain, 482, as Kohl's, which has 1,134. But it does have more than Bon Ton, which has 272.

Retailer comparison

The following chart shows average store sizes, local store size, total number of stores and the average sales per square foot of retail chains that either already have stores in Danville, recently opened stores or are planning to open. The "proposed tenant" is the retailer considering an anchor spot at the Village Mall in the former J.C. Penney location. Based on numbers in the chart below, local officials are estimating that the proposed tenant would generate $6 million annually in sales and $195,000 a year in sales tax revenue to the city. On Tuesday, the city council will consider an incentive package for the proposed retailer in which the city would return up to $100,000 a year of that sales tax revenue back to the Village Mall.

 

Retailer Average store size Danville store size **Average sales per square foot  Total # stores as of July 2012
Proposed tenant 81,909 50,000 $101 482
Kohl's 87,198 55,856 $183 1,134
Ross Dress for Less 29,105 28,450 $270 1,174
T.J. Maxx 29,293 24,000 $274 2,970
*BonTon (Carsons) 93,000 77,300 $112 272
**Sears 68,965 63,960 $137 3,848

* Includes Bergner's, Carson's, Elder-Beerman, Boston Store, Hershberger's and Yonkers

** Includes Sears, specialty Sears stores and Kmart Stores

Information provided by Vermilion Advantage. And the sales numbers are as of January 2012 per each chain store's productivity guide.

Sections (2):News, Local

Comments

News-Gazette.com embraces discussion of both community and world issues. We welcome you to contribute your ideas, opinions and comments, but we ask that you avoid personal attacks, vulgarity and hate speech. We reserve the right to remove any comment at our discretion, and we will block repeat offenders' accounts. To post comments, you must first be a registered user, and your username will appear with any comment you post. Happy posting.

Login or register to post comments

Orbiter wrote on May 06, 2013 at 10:05 am

Don't be foolish, Danvillians!  It's absurd to collectively pay for the privilege of having someone sell you stuff.  If any legitimate retailer thought they could profit from sales at that location on the basis of their competitive products and pricing, they would rent it without subsidy.

A taxpayer-sponsored subsidy only serves to bring in a retailer whos products are so ill-suited to the community that they can't be profitable without coercively (e.g., taxes) taking money from non-customers as well as those who would shop there.  It has the side-effect of undermining the customer base of those honest businesses you already have, thus costing jobs and sales-tax income from them.

There's only so much milk in a cow, and squeezing harder won't extract any more of it, and it risks damaging the cow.

Finally, it's laughable the way this article (and perhaps the principals involved) won't disclose the name of the retailer, and instead offer a chart of "possible" retailers. Don't be tricked by this tactic, folks: they're trying to change the question from "should we subsidize a retailer?" to "which retailer could it be?", thus making the former question a foregone conclusion.  Classic ploy of deception!