In our last blog we highlighted Tony's Finer Foods possible purchase of a vacant Dominick's in Schaumburg, Illinois. Within the structure of the deal, Tony's will receive Tax Increment Financing for the first five years. Today we read a similar article, this time offering a turf maintenance company sales tax rebates for the purchase of a vacant Walmart in Elgin, Illinois.
Russo Power Equipment, with approximately five other Chicagoland stores, will receive 25% of their sales tax back for the first ten years of operation. It is estimated that the store will generate $10 million in sales for the first three years and increase to $20 million it's fourth year. In addition, the city of Elgin will fast-track building permits for the site, which has been vacant since 2012.
The Walmart site is located on Randall Road and Royal Boulevard with close proximity to Interstate 90. The building is 118,000 square feet and listed for $3.8 million. Currently Russo has negotiated their offer to $2.8 million due to the need for extensive improvements estimated at $1.5 million. For more information, visit the Daily Herald Business Ledger article .
As a commercial real estate firm, we have seen a number of transactions, of all sizes, include city tax incentives. While the market is shifting to be more of a seller's market, with vacancy decreasing, cities are still willing to put funds into transactions which will have a significant impact on the local economy. In this case, the city will reap the benefits of the remaining 75% of sales tax (a bird in the hand is better than a bird in the bush!) Additionally, Russo will be hiring approximately 40 employees...which translates to 40 people getting new jobs and investing back into the economy. Finally, a vacant building, especially one so large, can portray a negative image. In the case of Russo, they are willing to spend an additional $1.5 million in building improvements.
Let us know how we can help your business save money on your next real estate transaction!