Brixmor Property Group will receive an additional $1.85 million tax incentive from the city of Naperville if the company is successful in luring a new home goods/furniture retail store to its Block 59 Business District.
While declining to name the store, citing a confidentiality agreement, Brixmor representative Rich Dippolito told the Naperville City Council Tuesday night that “one of the reasons we’re excited about this particular tenant is we believe that it will generate a lot of interest.”
In 2023, as part of the deal to bring the Block 59 development to Naperville, the council approved an agreement under which a business district that would be created to encompass the Brixmor-owner properties: Westridge Court shopping center and the then-proposed Block 59 restaurant/entertainment complex at Aurora Avenue and Route 59.
A special 1% tax would be assessed on sales from the businesses located within the district, which would be reimbursed to Brixmor to help cover the cost of infrastructure required by the new development.
Since July 2023, the district has generated $1.47 million in reimbursement sales tax, which will end either when the total amount reaches $13.4 million or in 23 years, whichever occurs first.
Under the new deal, which is contingent on the undisclosed retailer signing a lease with Brixmor, the reimbursement total will top out at $15.25 million.
“I think it’s important that council realize that this is not extending the time of the business district that’s in place nor is it increasing the tax that’s already in place,” City Attorney Michael DiSanto said. “It’s only increasing the amount of recoverable costs for the developer during the 23 years.”
To make space for the new home goods business, about 28,000 square feet of existing retail space within Westridge Court will be demolished and a 54,000-square-foot building constructed.
“The original intention was to backfill the existing spaces, and that requires a lot less capital,” said Dippolito, Brixmor’s vice president of real estate development.
But with the new home goods retailer, Brixmor is facing heftier-than-expected upfront costs: $1.85 million for the demolition of the existing structure and reinforcement of a shared wall within the remaining adjacent space.
“We hadn’t planned on demoing all of that,” Dippolito said. “We have to replace a lot of the utilities in order to do that, and we have existing tenants we need to work around to replace all of their utilities because they get impacted by this demolition work. So, there’s just a lot of excess cost that we hadn’t originally planned on when we did all our projections.”
A lease with the prospective home goods tenant is likely to be signed by the end of the month. Once the lease is signed, Brixmor intends to move forward with construction.
“I’m concerned that without the additional funding … it doesn’t financially work,” Dippolito said.
“We’re going to have to cut out a lot of the design aspects of it that would make it more appealing. What winds up happening when you really start to strip the budget is you strip out the bells and whistles, and you wind up with something very bland and very simple, and we’re trying to do something really special adjacent to Block 59.”
The request was approved with a 6-2 vote, with council members Ian Holzhauer and Mary Gibson voting against it. Councilman Josh McBroom was absent.
Mayor Scott Wehrli said he was excited by the prospect of bringing a new home goods/furniture store to Westridge Court, noting that it would be a good addition to an area currently dominated by restaurants.
“Naperville’s retail sales tax revenues are leading in a lot of different areas, but we are lagging in that particular sector,” he said. “It’s not because we don’t have customers in our town. I think it’s clearly because our customers are shopping in other cities that have these types of stores.”
Councilman Patrick Kelly noted that increasing the reimbursement cap could lead to the overall business district being paid off faster, which he said makes the deal more appealing.
“Actually, it’s kind of an oxymoron, but if we increase the amount, the time period would likely shorten — at least that’s our city staff’s opinion,” Kelly said. “I would love to shorten it if we can. I just don’t want to do that and have taxpayers pay additional money if the deal is going to happen anyways.”
However, Gibson said she couldn’t support Brixmor’s request when there are things, like the need for more affordable housing, which are a higher priority.
“I think it’s great that new tenants are interested in the business district,” Gibson said. “I’m not sure I can support $2 million extra being paid by the Naperville taxpayers on private property.”
Holzhauer agreed.
“I was actually literally just having a conversation with a local restaurant owner about a month ago about how hard it is going to be for him to pay for the roof repair on his restaurant, and I bet he wishes he could come to the city council and ask for us to do that project,” he said. “This is something we’re talking about as bells and whistles — that’s the petitioner’s words — using $2 million of taxpayer dollars.”
cstein@chicagotribune.com
