CITY COUNCIL AGENDA ITEM
ACTION REQUESTED:
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Pass the ordinance approving the first amendment to the Block 59 Business District Plan (Item 1 of 2)
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DEPARTMENT: Transportation, Engineering and Development
SUBMITTED BY: Jennifer Louden, Director and Michael DiSanto, City Attorney
BOARD/COMMISSION REVIEW:
N/A
BACKGROUND:
Brixmor Property Group owns the Block 59 and Westridge Court commercial properties located at the northeast corner of Illinois Route 59 and Aurora Avenue. In 2023 the Block 59 Business District (Business District), encompassing Block 59 and a portion of Westridge Court, was established for the purpose of imposing a 1% sales tax to fund qualified redevelopment improvements.
The following ordinances were passed on March 21, 2023 to establish the Block 59 Business District:
• Ordinance 23-039 designating the Block 59 Business District, approving the Business District Plan (BD Plan), and making a blighted area finding in relation to the Block 59 Business District;
• Ordinance 23-040 imposing a Business District Retailers’ Occupation Tax and Business District Service Occupation Tax for the Block 59 Business District; and
• Ordinance 23-041 approving the Block 59 Business District Redevelopment Agreement (Agreement) between Brixmor and the City of Naperville.
Following establishment of the Business District, staff notified the Illinois Department of Revenue (IDOR) and IDOR began imposing the 1% tax on July 1, 2023. The taxes will be in effect for 23 years or until the payment of the obligations outlined in the BD Plan and Agreement, whichever is earlier. The maximum reimbursement was established at $13.4 million.
Since that time, the developer has completed the qualified improvements and met the requirements outlined in the Agreement to begin receiving disbursement of the business district taxes that have been collected by IDOR and transferred to the City.
DISCUSSION:
Brixmor Property Group has requested an amendment to the Block 59 Business District Plan and Block 59 Business District Redevelopment Agreement to support continued redevelopment within the district. The next phase of development is located within the Westridge Court portion of the Business District. The improvements include demolition of approximately 28,000 square feet of the existing retail center and construction of an approximately 54,000 square foot addition to the remaining space to accommodate a new Class A retail tenant. The project costs for this phase are estimated at $14.2 million. The project is burdened by extraordinary upfront costs of $1.85 million for the demolition of the existing structure and reinforcement of a shared wall within the remaining adjacent space. Brixmor is requesting additional Business District assistance for the $1.85 million.
State statute allows for changes in business district project costs as well as adjustment of costs for inflation. With inflation factored, the proposed increase of $1.85 million in Business District costs represents a minor amendment. The proposed amendment does not alter the Business District boundary, the amount of taxes being imposed, nor does it extend the 23-year term.
To enact the amendment, staff recommends the following actions:
• Pass the ordinance approving the first amendment to the Block 59 Business District Plan; and
• Pass the ordinance approving the first amendment to the Block 59 Business District Redevelopment Agreement.
FISCAL IMPACT:
There is no direct fiscal impact to the City of Naperville. The City anticipates increased sales tax and property tax revenues related to this redevelopment.