St. Charles rethinking rules for downtown businesses

More offices and banks may soon come to downtown St. Charles as the city looks to stem the proliferation of empty storefronts. But city officials are being cautious about chasing future sales tax dollars out of the city.

The city has special rules for a large portion of the downtown area that prevent landlords from leasing first-floor space to anything other than retail outlets and restaurants. The rules, called an overlay district, came into effect in 2006.

But a slow economy has city officials rethinking the rules even as some landlords ask for help filling their empty spaces.

“Vacancies tend to beget vacancies,” Economic Development Director Chris Aiston said. Retail and restaurants are still the main target for the downtown he added. However, foot traffic from office workers is better than a shuttered storefront.

“The more people that are downtown, the better off we are,” Aiston said.

But both aldermen and city staff said they don’t want to completely end the overlay district and permanently flood the downtown with businesses that don’t bring sales tax dollars to the city.

“Once you lose a retail space to a nonretail user there’s no guarantee that we get it back,” warned Community Development Director Rita Tungare. Fewer sales tax dollars put more pressure on other income streams, like property tax dollars, to cover the city’s expenses.

Indeed, members of the Downtown St. Charles Partnership (an organization of local business owners) said, if anything, they want officials to limit the loopholes in the overlay that allow less retail downtown. City staff can currently allow exemptions to the overlay district rules if they deem a certain property just isn’t conducive to retail or restaurant operations.

That thought pushed aldermen to consider simply shrinking the size of the overlay district to avoid a reworking of the rules. Aldermen said they want more information about the number and location of open storefronts before they decide what to do about the leasing rules. One other idea would involve allowing more exemptions to the overlay rules, bringing in more office space, but with short-term leases that could be revisited when the economy rebounds. Aldermen decided to further investigate changes to rules as part of a big picture look at the long-term plan for future development in the city.