Council approves tax break for Shopko building, but retail business to share building remains a mystery

Sam Fosness, The Daily Republic, Mitchell, S.D.
·2 min read

Jan. 17—MITCHELL — It remains a mystery as to which retail business is eyeing to open inside the former Shopko building, but the Mitchell City Council approved a Tax Increment Financing District on Tuesday that will help fund renovating the vacant property.

The TIF will fund over $500,000 in renovation work at the Shopko building that was purchased by Krohmer properties, the entity comprising the owners of Krohmer Plumbing.

Council member Jeff Smith thanked the Krohmer family for investing into the 72,000-square-foot building and shared his eagerness to learn which retail store is considering opening in the building.

"I can't wait to find out what retailer it is. I know I've had a lot of people asking me what retail business is looking to open here," Smith said.

The Krohmer family purchased the building in the spring to move their plumbing business into a portion of the property with plans to share the other half of the building with a pair of retail businesses.

The increase in property taxes from the building improvements and new retail businesses within the TIF boundaries is referred to as the "tax increment," which the city would pass on to the developer as it generates over a 20-year window.

The Krohmers purchased the building, located at 1900 N. Main St., for $1.8 million. Since Shopko closed in 2019 after the company filed for bankruptcy, the commercial property has been vacant.

That will soon change, as Krohmer Plumbing will occupy about half of the building while the other half will be occupied by a pair of retail businesses, if plans materialize.

Upon completion of the remodeling project, the assessed value of the property is estimated to increase by $1.4 million. The increased taxable value of the property would generate $27,750 in annual property taxes.

City leaders are pointing to Krohmer's plans as a key first step to sparking a revival of the north side of Mitchell — an area that has seen a steady loss of businesses over the past few years.

According to the TIF project plan, the renovations are anticipated to be complete in the fall of this year.

A TIF district is a public financing method frequently used to aid development of undeveloped areas. Once the district boundaries are drawn, financing is secured for things such as land acquisition, streets, curbs and gutters, and drainage work.

As the district fills up with new buildings, the assessed valuation of the district rises. The taxes on that higher valuation — known as the "increment" — are captured to pay off the financing. That can take up to 20 years.

Some improvements have already been made to the building since the Krohmer family acquired the property in the spring. The planned interior renovations that will be funded with the help of the TIF are intended to meet the specifications for the retail business considering moving into the building.