St. Charles expected to approve tax rebate incentives to Blue Goose successor

St. Charles City Council is set to approve an economic incentive agreement that would pay up to $2.6 million in tax rebates to new developers of the former Blue Goose Market.

Alderpersons will vote on the agreement at the next City Council meeting June 19, after the Planning and Development Committee recommended approval of the economic incentive agreement, a PUD amendment to allow for a 20 ft. sign and a declaration of covenants, conditions, restrictions and easements, at the June 12 meeting.

The recommendations were approved in three separate 6-1 votes. Alderperson Ron Silkaitis voted no and Alderpersons Ryan Bongard and Paul Lencioni were absent.

The downtown lot has been vacant since March 2022, when Blue Goose Market closed after more than 90 years in business. Now, the city is working with developers Swanson Development Group & Fort Union, or SDGFTU, LLC, to bring a new grocer tenant into the downtown.

The city is still keeping the name of the proposed “premium nation grocer” under wraps, as the sale of the lot at 300 S. 2nd St. is still not official. Lencioni, who is also the planning and development committee vice-chairman and former Blue Goose CEO, still owns the property.

Economic Incentive Agreement

St. Charles officials recommended approval of an economic incentive agreement with the proposed developer, in which a portion of the sales tax produced by the grocery store will be go back to the developer.

The developers are looking to receive $2.6 million in sales tax rebates over the next 15 years.

For the first four years of the agreement, the city would pay the developer 100% of the city sales tax and 66.66% of the home rule tax generated by the store.

Beginning in year five, the city will pay the developer 50% of the municipal sales tax and the home rule tax until the 15-year agreement expires, or until the maximum amount of $2.6 million is received by the developer.

According to sales projections, the maximum rebate amount is expected to be achieved in year 12 of the agreement. The grocer is projected to generate a total of $8.3 million in taxes during the the 15-year agreement, with the city receiving a net share of $5.7 million.

Total development costs are estimated at $10.6 million which includes acquisition, construction and financing costs. The agreement notes that these costs do not include the additional $11.6 million the grocer tenant expects to spend on the interior buildout, as that will not be covered by developers.

In addition to tax rebate incentives, the city would also reimburse the developer for improvements to the surrounding city-owned parking lots.

Per the agreement, developers would front the cost for resurfacing and streetscape improvements to both their own property and city-owned lots along 1st Street. The quality of work and materials would be expected to match the city’s adjacent First Street redevelopment, and developers would be responsible for all future maintenance.

Upon completion, the city will reimburse the developer for the actual costs of construction, not to exceed $915,000 in total reimbursements. The actual costs of construction are expected to be around $700,000, per preliminary estimates by the city.

Per the incentive agreement, the grocery store must open by May 1, 2026, or the agreement will be terminated. If the developer does not invest at least $10 million on the project, the city has a right to reduce the maximum sales tax rebate proportionally.

In the event the grocer never opens, the city would not release any incentive amount to the developer, but would reimburse the developer for the improvements to the city-owned parking lot and streetscape.

Also included in the economic incentive agreement was a project timeline, which projects construction to start next spring, and for the grocery store to be open by spring 2025.

Declaration of covenants, conditions, restrictions and easements

Planning officials also recommended approval of a restated declaration from the developer that modifies the terms of the shared use agreement for city-owned parking lots adjacent to the store parcel. The lot currently has 80 private parking spaces.

According to the current shared use parking agreement, the Blue Goose lot owner is entitled to 31 city-owned spaces in the lots adjacent to the store parcel. The adjusted declaration, if approved, would allow the store 61 city-owned spaces.

The declaration also states that the developers will be responsible for maintenance and repair of driveways, pavement, signage and lighting on all private and adjacent public lots under the agreement.

PUD Amendment

Developers are also proposing the installation of a 20 ft. pylon sign at the northwest corner of the parking lot.

Because the proposed 20 ft., 64 sq. ft. circular sign is in violation of current zoning standards, a PUD Amendment granting deviations from the standard sign height and area requirements is also being recommended for approval.

The St. Charles Plan Commission, which is made up of volunteers from the community and acts in advisory capacity to the City Council, held a public hearing on the development at a May 2 meeting, where several residents voiced support for the proposed grocery store. At the same meeting, the commission voted 7-2 to recommend approval of the PUD amendment to allow for the proposed sign change.

Alderperson and Planning and Development Committee member David Pietryla resides over the downtown district, where the former market is located.

“I’m very happy to have supported the redevelopment proposals regarding the former Blue Goose site,” Pietryla said. “We are another step closer to ensuring that St. Charles will again have a downtown grocery store. One that will, no doubt, attract new visitors, enhance our downtown, and improve the overall quality of life for our residents.”