Sterling OKs redevelopment package for Northland Mall that includes extra 1% sales tax

STERLING – The City Council unanimously voted Tuesday to establish a business development district to assist with the upkeep and development of Northland Mall.

In doing so, the city also set an additional 1% sales tax that applies only to sales at the flagging mall, and all revenue from which will be plowed directly back into its economic development.

The tax will last the life of the BDD, which is 23 years.

The BDD and tax do not apply to Liquor ‘N’ Wine or to either Fifth Third Bank or the under-construction Illinois Central Bank, which are their own properties and do not belong to the mall’s owner, Dr. Jody Johnson of Crowley, Louisiana.

Johnson approached the city about finding ways to attract and finance development of the site at 2900 E. Lincolnway, and favored the creation of the district, City Manager Scott Shumard has said.

In February, the city agreed to pay SB Friedman Development Advisors of Chicago $21,000 to do a BDD eligibility study of the mall. (The city will be reimbursed for the study, with money raised by the new tax.)

It found that Northland meets the state Business Development District and Redevelopment Act definition of “blighted,” in that it has “deteriorating site improvements” and that it “constitutes an economic underutilization” of the area.

Specifically, the study cited cracking or crumbling parking lots, curbs, drive aisles and walkways; damage to interior and exterior walls; water damage on ceilings; and damage to building soffits.

It also found that there were four main areas of redevelopment that need to be addressed: the rehabilitation of existing buildings, infrastructure and capital improvements, finding resources for new development, and site preparation.

Most of those likely would go unaddressed without the creation of a BDD, according to the study.

That means that without the BDD or some other economic development tool, the mall, which also suffers from a lack of development through private investment, could fail.

City officials prefer to see the almost 50-year-old mall prosper, adding revenue to city coffers through sales and property taxes, and by being a productive and attractive development in the city’s busiest business corridor.

The city’s first and only other BDD is the former Kmart site across the street at 2901 E. Lincolnway, which is in the process of being remodeled into Sterling Crossings, a mixed-use development that will feature several national retailers.

Chris Williams, its owner, made his development of the site, which sat vacant for 10 years, contingent upon the city providing economic development incentives. In November, the council provided a similar package for his Highlands Development LLC, which bought the property in 2020 for $1 million.

The businesses at Sterling Crossings also will be subject to an additional 1% sales tax. Highlands will be reimbursed with a share of that revenue – in most cases a 50-50 split, but in some cases with some retailers a 85-15 divide – for 15 years.

A tax increment financing district for that site also was created. Property taxes will be frozen at a base level, and as the value of the property increases, the increase in property taxes will be given to Highland to help pay its development costs. Traditionally, the life of a TIF district also is 23 years.

So far, Williams has signed Marshalls, Old Navy, Five Below and Shoe Sensation, which are set to open in the fall or early next year, he announced in April.

He said at the time that he also is in negotiations with three or four other national chains and also hopes to hear from local and regional businesses that are interested in opening there.