Charlestowne Mall redevelopment plans continue to draw concerns from officials

St. Charles plan commissioners continue to voice concerns about a proposal to redevelop the largely vacant Charlestowne Mall on the city's east side.

During their meeting Tuesday, some plan commissioners voiced concerns about aspects of the plan, including that too many residential units are being planned for the site. Another suggestion was for the developers to ask residents how they would like to see the site redeveloped.

Charlestowne Mall had first opened in 1991 and is now largely vacant. The partnership of S.R. Jacobson Development Corporation and Lormax Stern Development Company LLC. have entered into a purchase agreement for the former Charlestowne Mall property with current owners The Krausz Companies, Inc.

In December 2017, Krausz Companies Inc. closed the interior shops and enclosed mall space at the center. Anchors Von Maur and Classic Cinemas Charlestowne 18 remain in the mall.

Plans call for retaining Classic Cinemas and Von Maur and demolishing the other mall buildings. In their place, 351 apartments in nine three-story buildings would be constructed, along with 209 rental townhouses.

The nearby Cooper's Hawk restaurant and the Starbucks/Verizon building also would be retained. The proposal also calls for 40,700 square feet of new commercial development along Main Street, as well as a 135-room hotel on the site's west side.

Manny Kianicky, with S.R. Jacobson Development Corporation, told plan commissioners how hard it is to redevelop an indoor mall.

"The redevelopment of a vacant enclosed mall is one of the most difficult undertakings in real estate development," he said. "The Wall Street Journal ran an article a few weeks ago describing how none of the options for a mall makeover are easy. Conversions to other uses are complex and capital intensive. Unless there is a great shortage of land in an area, most developers would much prefer to buy land and avoid the expense, time and complexity of tearing down an old mall."

Of the 1,000 enclosed malls still operating in the country, he said about 300 are struggling and will likely close in the next five years because of the "shift in consumer preferences that's occurring in the retail industry."

"The Charlestowne Mall struggled for eight years before closing its doors in 2017," Kianicky said.

He said the challenge is to figure out how to redevelop the mall in an economically feasible way that pays for an estimated $35 million in redevelopment costs while maintaining the existing commercial uses during reconstruction and satisfying the city's desires for something that will serve the needs of the residents of St. Charles.

The developers plan to initially foot the bill for those redevelopment costs. But to make the project financially feasible, he said a tax increment financing district will have to be put in place.

Once a municipality creates a TIF district, its property assessment is frozen and new or increased taxes generated by improvements are used to pay for improvements or other development incentives.

"A tax increment financing district must be established to pay over time for the estimated $35 million cost of demolition and reconstruction of site improvements that are necessary to accommodate many uses for the property," he said. "This is exactly the purpose for which TIFs were created. Without a TIF, the redevelopment of the mall is not financially possible."

In addition, he said a revenue stream must be created to pay for the project's costs. After analyzing the situation, the developers said the revenue stream must come primarily from real estate taxes generated from at least 500 residential units.

"These residences will be the largest source of tax revenue," Kianicky said. "Additional but smaller revenues will come from the new commercial uses."

In response to previous concerns from plan commissioners, the developers have revised their plans.

"Probably the largest concern that we heard from the city was the desire to create an environment that would provide the residents of St. Charles with new entertainment, dining and unique shopping experiences," Kianicky said. "In response to these concerns, we completely redesigned the commercial portion of the redevelopment plan to create such a community hub."

In the proposed mixed-use urban district - located between the nearby Starbucks restaurant and the existing movie theater - are restaurants with outside dining patios, specialty shops, the Von Maur department store, a food truck park, a plaza with seating, an ice cream stand and an amphitheater and event gazebo.

"This new district is pedestrian-oriented with wide sidewalks along the street," he said.

To create the urban district, the developers moved the proposed hotel to the west side of the site. Plan commissioners had suggested that idea.

"Relocation of the hotel provides better visibility from North Avenue and a highly desirable dining opportunity for hotel residents available immediately across the street," plan commissioners said.

In addition, the developers also have redesigned the proposed townhouses in reaction to plan commission concerns.

"The former three-story units have been replaced with two-story townhomes in order to widen their appeal to include an older demographic that would be discouraged by all those stairs," Kianicky said. "We've reduced the buildings from eight units per building to six and four units per building in response to the concern that there were too many units per building."