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After Sears, Kmart and JC Penney left Racine, a 134-acre parcel that includes Regency Mall, surrounding out lots and High Ridge Center has become the target of a potential tax incremental finance district in Racine.
The city plans to propose forming a tax incremental finance (TIF) district to help spur development by offering incentives and plan for public improvements to the area. The proposal calls for spending $15.7 million over the course of several phases, which would be predicated on developers coming forward with projects.
How A TIF Works, Why The City Needs It
A TIF district is a development tool municipalities can use to attract business. The way it works is that a financing district is created and a base value of that district is established by the taxing jurisdictions. The increased value of the property is still charged at the base rate, but the district uses the increased tax revenue to pay for the infrastructure projects.
“Limited property reinvestment, increasing vacancy and eroding tax base is a significant cause for concern for the City,” said Mayor John Dickert. “Without an intervention, the retail cluster could continue to erode and leave the area with more vacant properties.
“However, the community can help to turn the tide. With the recent purchase of Regency Mall by Hull Property Group, the city and the area property owners have an opportunity to come together and re-position the area as a vibrant retail destination.”
City officials point to how some retailers are doing well. But with more people buying online and preferring other places to shop, sales volumes for the remaining stores are starting to erode, according to a press release by the city.
New Regency Mall Owner Hopes To Spur Turnaround
Regency has struggled in recent years with the closing of both Sears and JC Penney last year and wrestling with a vacancy rate well north of 25 percent. The mall has had some good news, though; Dunham Sports took over the former Sears space, and three stores – Ross Dress for Less, Party City, and Joann Fabrics – took up residence at the end of the mall where JC Penney was located.
CBL & Associates, parent company of the mall, sold Regency Mall and two other properties to Hull Property Group of Augusta, GA, for $32.25 million. Hull has a reputation for taking over struggling shopping malls and turning them around.
Jordan Brown, business recruitment specialist for the Racine County Economic Development Corporation, said that the intent is to have developers start working on re-positioning their presence in the area through possible expansion projects and attract new development.
RCEDC and the city have been working on this plan since the end of summer, Brown said. However, the project is developer driven, which means the money won’t be spent until the developer creates the increment.
“This our effort in looking at how we want to see this area redevelop,” Brown said. “No money has been spent. And it won’t be spent without the city entering into developer’s agreements and the developer actually creating that increment first.”
TIF 20 Proposal Details, Public Hearing
According to the press release, the plan includes:
- Adoption of the TID plan and formation of the TID will set the base value for all properties in the TID.
- Any additional tax increment value across all taxing jurisdictions (Racine County, Racine Unified School District, Gateway Technical College and City of Racine) would be available to make identified expenditures in the TID plan including incentives and public improvements.
- Any incentive provided would require a developer agreement between the developer and the City that includes agreed upon milestones and metrics to receive incentive assistance.
- All developer agreements are approved by the City of Racine Common Council.
- Creating a business improvement district (BID) is being investigated with property owners and stakeholders. The BID will levy an additional tax on the businesses in the area to fund improvement projects within the district’s boundaries.
A public hearing will be on the proposed TIF No. 20 at the City Plan Commission at 4:15 p.m. March 29 at Racine City Hall, 730 Washington Avenue, room 205.