Developer seeks tax rebates for $2M retail building in Burlington

A Burlington developer has requested up to $550,000 in tax rebates in return for construction of a $2 million to $2.5 million building in the parking lot of the former Wal-Mart building at 3314 Agency St.

Jesse Caston of 3320 Agency LLC on Monday informed the Burlington City Council that plans for the building call for it to be between 7,300 and 8,000 square feet and house up to three yet-to-be-determined retailers and/or restaurants.

Caston suggested that the ready-to-go property, construction of which is tentatively slated to begin this spring and finished next fall, will help to draw in businesses.

"Part of the reason we're coming here is because we had this under contract to sell a year ago," Caston said of the parcel occupying the seldom-used east half of the parking lot outside of Dollar General, Big Lots and Planet Fitness. "They backed out because their tenant wasn't ready to go or went to another market, which begged the question of, if we build it and we have something there for the retailer or a restaurant that says we're looking at 10 markets in the Midwest, Burlington being one of them, as you guys know what happens is they look, and if there's a spot to go in Burlington, they go. If they don't, they move onto the next market."

Caston informed the council that the building's exterior would match that of the 26,000-square-foot neighboring building at 3200 Agency St., including large glass storefronts and stone columns.

3320 Agency LLC purchased both 3320 and 3314 Agency St. for $1.3 million in 2020 and has done extensive work to the existing building's exterior since.

"We put a lot of money into this building here to try to change the look of what was a dilapidated strip mall," Caston said.

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Councilman Bill Maupin expressed concern over whether tenants would be interested in the building and pointed out the one remaining vacancy at 3320 Agency.

"My only concern was we already have one unfilled now," Maupin said. "Why build three more?"

Caston indicated the space in question will not be unfilled for long and that he anticipates there will be an announcement within the next month of a new tenant. The city last month granted a permit for electrical work to be done to the space, including the removal of existing conduits for registers, coolers and freezers.

Per the tax increment financing application, Caston anticipates the project will add $1.5 million in property valuation to 3314 Agency St., as well as generate additional sales tax with the additional tenants.

Should the council grant Caston's TIF request, 3200 Agency LLC would receive up to $550,000 in rebates to be paid out over 10 years, with 75% of the property tax rebated over a five-year period and 100% of the property tax rebated over another five-year period.

"There's two ways to look at it," City Manager Chad Bird told the council. "One, it's adding valuation to our tax base, because he's building a building that does bring value to the community. The other is, what's inside the building, does that matter, and that would be the question for the council. Is it the right type of growth and activity that you want to see? And that's a policy-related type question."

Bird informed council members that they could opt to include stipulations in the TIF agreement that would dictate what types of businesses could be housed in the building.

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"It's going to add valuation in the long run, so I'm to the point where I think we should use whatever tools we have in the toolbox to facilitate growth," councilman Robert Critser said.

Mayor Jon Billups and Maupin also indicated support for moving forward with the TIF process, though no formal action was taken due to it being a work session. Councilman Matt Rinker was not present, but during a previous work session had expressed support for the possibility of using TIF as an incentive for commercial development.

Councilwoman Lynda Murray was opposed on the grounds that it would remove much of the increased valuation from the city's tax rolls for up to 10 years and that it's property that carries a possibility for development with or without TIF.

"I think it's high-demand real estate in a really high-demand area, and I remember that (former city manager) Jim Ferneau pounded into my brain if something's going to be built organically, don't TIF it. So I'm not feeling that maybe we should TIF this property," she said.

Caston said that, without TIF, the proposed building would not be possible as it is currently planned.

"To put the quality into the exterior of the building in what we want to do, we don't want to just make a cinder block building out there. But to actually put the money into it to make it fit within this building with what we did here, as is, without any help, it just doesn't work," he said.

Caston on Tuesday told The Hawk Eye that, with current cost estimates, it would not be feasible for the project to move forward without a TIF agreement.

This article originally appeared on The Hawk Eye: Burlington developer seeks tax incentive for commercial building