Elgin gives company sales tax rebate to take Wal-Mart site

A company that sells turf maintenance equipment and supplies hopes to buy the former Wal-Mart in Elgin and open a retail store April 1.

Elgin City Council members gave the preliminary OK to a sales tax sharing agreement with Russo Power Equipment, rebating 25 percent of sales tax revenue generated for 10 years by the proposed new store at Randall Road and Royal Boulevard. The site has been vacant since 2012.

Council members voted 9-0 Wednesday and are expected to cast a final vote July 8. The city would also fast-track permits but not waive building or development fees for Russo.

Russo's revenue in its first three years of operation is estimated at $10 million annually, increasing to $20 million annually by the fourth year, city officials said.

Meanwhile, Russo has a pending contract with Wal-Mart to purchase the site and hopes to finalize that in four to six weeks, company President Eric Adams said. "We're in our due diligence period right now," he said.

This would be the almost 50-year company's first store in Kane County after stores in DuPage, Lake and Will counties, Adams said. The company would hire 30 to 40 people in the next six to 12 months.

"Elgin is just a market that we kind of had on our radar for many years, and the timing was just right that we open a location within Kane County," Adams said.

Russo looked at other locations on Randall Road in or near West Dundee, Algonquin and Lake in the Hills, city officials said.

Based on offers by other municipalities, the company initially asked Elgin for a 50 percent sales tax rebate for 15 years, but the city rejected that, city officials said. "Other municipalities are pretty aggressive in trying to attract business. More aggressive than where Elgin is at," Adams said.

Still, the company settled on Elgin because of the site's proximity to Interstate 90, which would make it easy to serve customers including those in Rockford, Adams said.

The majority of previous redevelopment proposals for the former Wal-Mart have been for self-storage facilities, which do not generate any sales taxes to the city.

Wal-Mart - which will not sell the building to any competitors - was seeking $3.8 million for the 118,000 square-foot building and parcel even though the roof is damaged and will require "substantial repairs," city officials said. Russo is considering a purchase at $2.8 million and will be spending $1.5 million in repairs and other improvements, they said.

Russo has a successful track record of repurposing several vacant spaces, such as the former Golf Discount of Chicago store in Naperville and most recently the former Gas City headquarters in Frankfort, Adams said.

The Elgin strip mall has a couple of vacant spaces in addition to Wal-Mart. "We are looking forward to bringing some life in the area," Adams said.