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updated: 12/24/2012 4:59 AM

Proposal may bring legal battle, new taxes to St. Charles

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  • The Charlestowne Mall in St. Charles has a nearly 80 percent vacancy rate.

      The Charlestowne Mall in St. Charles has a nearly 80 percent vacancy rate.
    RICK WEST | Staff Photographer


It's the issue in St. Charles most elected officials don't want to talk about -- and it involves a new tool those same officials hope they don't have to use.

A new study commissioned by the city paves the way for possibly taking the Charlestowne Mall property through the courts. It also includes new taxes to rebuild the property.

The East Gateway Business District Plan puts the words "blighted" and "eminent domain" in writing for the first time in public discussions about the future of Charlestowne Mall.

Fewer than 20 stores are occupied in the large indoor shopping center on Route 64. The nearly 80 percent vacancy rate cited in the study translates to job and sales tax losses for the city. And the taxable value of the mall property is now more than $3 million less than in tax year 2006.

All of those factors join with poor traffic conditions in the commercial area surrounding the mall, deteriorating property conditions and obsolete platting of the land parcels. Taken together, all those factors make a legal case for the city to declare the area blighted, the study says. That's the first step toward the city using eminent domain to take the mall property.

No alderman interviewed for this story wanted to talk about the possibility of using eminent domain for the mall, but it is sure to be a major campaign issue in the spring municipal elections.

Mayor Don DeWitte, who isn't seeking another term, said the conclusion of construction on the Red Gate bridge means the city can -- and should -- turn its main focus to revitalizing the commercial area surrounding Charlestowne Mall.

"Clearly it's a situation that has not gotten any better," DeWitte said. "The mall is the elephant in the room."

DeWitte said all the recent public discussions about the future of the mall sparked real conversation between city officials and current mall ownership for the first time. DeWitte is encouraged by that fledgling relationship, but it hasn't stopped the city from also talking to potential new owners for the mall, or at least for the land the mall sits on.

"There is some interest with regards to redevelopment activity there, but I would only go so far as to suggest that they are merely conversations to this point," DeWitte said. "There is nothing on the drawing board, but there are some interested parties. Those folks need to find out if the mall is a revivable property or if it will require a total knockdown and redesign."

Even if new developers want a clean slate, that doesn't necessarily mean the city would use eminent domain to achieve it, DeWitte said.

"Bottom line, business district funds can be used to acquire property," he said. "But it would be premature to suggest that that is an avenue we are pursuing. It is a tool in the toolbox."

The possible new business district wouldn't involve just a possible legal fight for the mall property. It would likely include the creation of one or two new taxes that would only be imposed on properties in the business district. After creating the business district, aldermen could, in separate votes, create a new sales tax and hotel tax. Those taxes are capped at 1 percent and could only be implemented and raised by 0.25 percent at a time.

The reason for the new taxes would be to create a funding source for redevelopment in the mall area. Indeed, the business district study contemplates $35 million in costs to create and redevelop the area. Some of the money could be used to purchase land and combine parcels. Other money could be used by the city to lure developers to the business district with financial incentives that would beef up the profit margin of investing in the city.

The creation of the taxes would be up to the city council, but DeWitte said he doesn't foresee a need to go to a full 1 percent for either of the two taxes. That's good news for the businesses already operating in the would-be new business district. Still, an additional tax could be seen as an additional threat to the bottom line of those businesses. DeWitte said he doesn't see it that way.

"We're talking about 25 cents on a $100 sale," DeWitte said. "I have a hard time believing that for 25 cents on a $100 expenditure, people are going to drive across town to shop elsewhere. The tax would help redevelop that whole area. As the area improves, the economic environment over there will become increasingly more viable. It's the proverbial tide that lifts all boats."

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