Naperville will add a 1% sales tax to the shopping center businesses at the northeast corner of Route 59 and Aurora Avenue to fund redevelopment as long as the recently renovated stores on the north side are not included.
In a 6-3 vote, the Naperville City Council Tuesday agreed to create a business district encompassing the Westridge Court and Heritage Square shopping centers so the tax can be applied but on a smaller scale than requested by its owner, New York-based Brixmor Property Group.
The firm’s plans for “Block 59? call for the removal of existing buildings, replacement of infrastructure and a redesigned layout that company representatives say will make it a regional upscale dining and entertainment destination featuring a community lawn for events.
To fund the estimated $13.4 million in infrastructure improvements, Brixmor asked the city add a 1% tax to retail and restaurant sales in the two shopping areas. Portillo’s, Chili’s and Arby’s fronting Route 59 and Citibank and Taco Bell on Aurora Avenue would not be included.
But council members said the proposed business district was too large and directed Brixmor to come back with a scaled-back plan that excludes the recently renovated properties on the north.
Rich Dippolito, Brixmor vice president of redevelopment, said in an email that the company appreciates the opportunity to build a “community-centric project” in Naperville.
“We believe Block 59 is not just an economic boost for the city and its residents but a true gateway to Naperville and look forward to continuing to work with the city council to bring this project to fruition,” Dippolito said.
Andrew Balzer, property director for Brixmor, said the two centers offer a combined 700,000 square feet of retail space, but occupancy rates have dropped from a high of 97% to 57% over the last eight years.
Balzer predicted that not only would Block 59 become a destination for people seeking dining and entertainment, it would become a western gateway for the city of Naperville.
The two shopping centers were built in the 1980s by two separate development companies that did not take into account traffic and pedestrian flow between the two sites. That will improve with the reconfiguration, officials said.
Brixmor plans to invest $52.5 million into the redevelopment and another $68.6 million will come from restaurant and entertainment tenants.
Business districts are a tool municipalities can use to spur redevelopment of blighted properties, and several council members were concerned that wouldn’t apply to the northern section of Westridge Court because of recent improvements.
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Balzer said if all of Westridge Court and Heritage Court were included, it would take 10 years to pay off the $13.4 million they spend on infrastructure improvements. If divided, it will take longer, he said.
Councilwoman Nicki Anderson said she frequently shops at the businesses there. “It looks vibrant to me. … I can’t in good conscience call that blighted,” she said.
It makes more sense to limit the district to the corner and the southeastern section, Councilman Patrick Kelly said. It’s impossible to say the northern end is blighted “when you just recently put $4 million into improving those properties,” he said.
Mayor Steve Chirico said the council has approved business districts in the past to support schools, parks and the city’s budget.
“This economy and this business climate right now, I would hate to see us lose this opportunity because this is really something that’s going to make a difference,” he said.
While the Ogden Mall transformation was a huge success for the council, Block 59 makes that project look small, Chirico said.
“This is a much larger business district, much larger, and by any standard, 57% vacancy is a troubled, tired business district,” he said.
Concerns over whether a property is blighted should not be an issue because it’s the state’s job to decide, the mayor said.
“The state will determine if this is blighted. And if it’s not found to be blighted, then this deal’s off; we can’t have a business district,” he said. “It needs to pass their test, not our test. It’s not our rules.”
The added tax won’t be shouldered by Naperville residents alone, Brixmor representatives noted.
Sixty-seven percent of the customers shopping at businesses in the two centers in 2021 and 2022 came from outside Naperville, Balzer said.
City officials also said that even with the additional 1% sales tax, the total tax on food and beverages within the business district would still be a half percent less than restaurants on the other side of Route 59 in Aurora. Retail tax would be a half percent higher.