ROCHELLE — At its Feb. 12 meeting, the Rochelle City Council unanimously approved a resolution authorizing a professional services agreement with Teska Associates Inc. for $20,000 to conduct a study on potential development tools for the Caron Ridge Shopping Center, the former site of Sullivan's that has been vacant for six years.

The city will explore the tools of a tax increment financing (TIF) district and a business development district, which can help with developing areas that have been vacant for years.

The city already has three TIF districts, which the council expressed satisfaction with at its January meeting. TIF districts grow funds after development is seen in an area based on the difference in improved value. That money is then used to incentivize developers. The city has not had experience in the past with a business development district, which sees development funds raised by an increase in sales tax, specifically only in the district it's located. A sales tax increase at the site of the Caron Ridge Shopping Center would be in .25-percent increments up to one percent. In order for a business development district and sales tax increase, the eventual business that fills the space would have to ask for it.

City Manager Jeff Fiegenschuh said the study and move towards a development tool came after the Sullivan’s Foods company and building changed hands into new ownership. The entire shopping center, including the other businesses in it that are currently active, would be included in the potential TIF or business development district. 

“Honestly, I think we should have looked at this a lot sooner,” Fiegenschuh said. “Sullivan's Foods closed about six years ago. There's been some interest in the building and we had some conversations when the previous owners owned it and nothing came to fruition. It has a new owner and they approached us and there are some national retailers that are looking at that site.”

The idea to perform a study on development tools came after a city brainstorming session on how it could help potential developers. The only current incentive in that part of town is the Lee-Ogle Enterprise Zone, which Fiegenschuh didn’t think would be enough to entice a developer to buy and make improvements to the building.

The city is currently working with the new owners of the Caron Ridge Shopping Center and their broker.

“There are some national retailers that have looked at it and considered it,” Fiegenschuh said. “They've been great to work with and there's definitely interest in that building. For the new owners, why would you want to sit on an empty building with the carrying costs and taxes and not generate any revenue?”

The city manager declined to provide details on what types of national retailers are looking at the building and did not name any specific companies. He only characterized them as retailers that “the community would be proud to have in Rochelle.”

The point of TIF districts are to revitalize properties, and they’re specifically for use on standing buildings and funds can’t be used for new construction. 

“You can use TIFs to refurbish and rehabilitate existing buildings and repurpose them,” Fiegenschuh said. “This location would be a great one for a new TIF. We can work with developers to help subsidize some of their remodeling and repurposing of the buildings. I can't promise that they're going to come here. Part of the reason for this whole process and getting a TIF district is to try to help incentivize it. I don't want to set expectations we can't meet, but we're excited about the potential of those retail outlets and I think the community will be too.”

Fiegenschuh said the city has not ruled out the idea of a business development district for the site. He understands people can be leery of sales tax increases, and said that even if the city decided to go forward with a BDD, it wouldn’t necessarily have to implement the sales tax. 

“You can have a district and just never have the sales tax,” Fiegenschuh said. “It's part of the quote from our consultants, and we should at least look at it since we're paying for it. If a national retail tenant comes in and says, 'Yeah, we want a sales tax and that extra one percent,' we should at least consider it. It's similar to a TIF, the funding mechanisms are just different. A TIF is funded through additional increment in property taxes and a business development district is funded through a one-percent sales tax if it's implemented.”

The city currently has three TIF districts: The Lighthouse Pointe TIF (Walmart area), the Northern Gateway TIF and the Downtown TIF. Fiegenschuh said he believes all three of them have been successful in yielding developments. The Northern Gateway TIF was used to work with Breakthru Beverage and Benny's Corner Market. The Downtown TIF yielded Kennay Farms Distilling’s improvements, along with improvements at several other businesses including Salt 251.

“The Downtown TIF is the fastest-growing TIF we have,” Fiegenschuh said. “It's in part because of folks like the Kennays who have invested millions of dollars into our downtown. Just in terms of dollars, our TIF districts have been very successful. If you look at just the downtown and how alive it's become through the investment of our private sector friends, I think that TIF gets an A+.”

The footprint of a potential incentive tool at the Caron Ridge Shopping Center would be up to the city council. Fiegenschuh said the council is currently looking at the entire shopping center. TIF districts also allow for improvements to parking lots, which the Caron Ridge Shopping Center could use.

The city manager said the Caron Ridge Shopping Center has opportunity for retail growth due to it being in one of the gateways to the community and its proximity to a major intersection, Walmart, and both large commercial and residential areas. Filling the building would alleviate blight concerns. 

The city believes that the longer a building sits vacant, the worse things become for the entire area. Having a national retailer in the space could help other businesses in the area or attract new businesses to the area, Fiegenschuh said. 

The process of the study to determine if the Caron Ridge Shopping Center area is TIF-eligible and the creation of a potential TIF will likely take 6-9 months, Fiegenschuh said. 

“And we've been up front with the broker about that, so they know the timeframe,” Fiegenschuh said. “I don't want to speak for them, but I think if we can come to an agreement on incentives, I don't want to say when they're going to announce, but sooner rather than later. Because that building is sitting vacant. And if the developer has a tenant that wants to come in, they're going to want to come in as soon as we can get an agreement in place with them on those TIF dollars. To create the TIF, it will probably be 6-9 months. I'm excited. I hope that we're able to, at a minimum, put that shopping center into a TIF. And I think it'll help revitalize the area.”