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.
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|
|Ross Dress for Less||29,105||28,450||$270||1,174|
* 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.