Target has a bulls-eye on Madison but the developer of the center to be anchored by the national retailer wants some financial help with the project.
The center will need a little more star power in its tenant lineup for that, however.
Mayor Mary Hawkins Butler gives the Minneapolis-based retailer zero chance of getting tax incentives from the city until it upgrades the kind of company it plans to keep at a regional “power” center proposed for Interstate-55 and Main Street.
Bring on a Whole Foods store or, alternatively, an Earth Fare and the city will talk, Hawkins Butler said. “They had been presenting us with wonderful tenants who are not in the Mississippi market,” she said. “It was a ‘Who’s Who.’
But, “the tenant lineup didn’t come to fruition.”
With the impasse, it appears Brentwood, Tenn.-based GBT Realty won’t be breaking ground anytime soon on the first quarter-million-square-foot phase of a retail center, which is to be anchored by Target and surrounded by a set of yet-to- be-announced companion stores. “Frankly, the project hinges on a $4.5 million TIF (Tax Increment Financing),” said GBT Realty’s Craig Cole, citing a mechanism by which the developer would receive $4.5 million to cover public improvements such as roads and utilities, with the money to be repaid by rising property values.
Projections are the $31 million first phase of the center would generate $650,000 a year in new property taxes and $4.6 million in sales taxes, said Cole, GBT’s director of development.
The company also projects 450 new local jobs after the center opens.
Having received word the TIF would not be granted, GBT withdrew its request for Jan. 9 consideration of its final plans and variance requests by the Madison Planning and Zoning Commission.
In a press release issued Jan. 5, GBT argued that the Wal-Mart SuperCenter and other retail on the south side of Main Street had received tax increment financing, including Dick’s Sporting Goods and Best Buy.
“We always look at the TIF as a city investing” in itself, Cole said.
Mayor Hawkins Butler said she is willing to negotiate a TIF once a more attractive tenant lineup is presented.
Hawkins Butler said the city wants a Target and she is trying to work with other developers who can bring in a more power-laden tenant lineup to accompany one.
Timing of a release of the TIF was another sticking point, according to the mayor. Typically, the projects are built and the property values rise above a set cap and money above the cap is put toward a TIF fund. Giving the money upfront is something Madison “has never done,” Hawkins Butler said.
GBT Realty says it has a commitment from Target to anchor the retail center and has conditional commitments for most of the financing for a “dressed up” center that would have a “unique and attractive” architectural theme.
Financing commitments, Cole said, “are contingent upon marketable terms and conditions of the TIF.”
GBT will open a similar center this year in Madison, Ala., and recently completed a 500,000 square-foot retail complex in Spring Hill, Tenn.
In all, GBT has developed more than 20 million square feet of retail space, including grocery-anchored shopping centers, neighborhood centers, single-tenant buildings and regional power centers such as the one proposed for Madison.
Target has scaled back significantly in its construction of new stores but Madison’s population growth and large number of high-income residents make the city a top choice for the retailer, according to Cole. “Madison is a unique market that is really separate from the other areas” around it, he said.
In drawing companion tenants to anchors such as Target, GBT is in talks with national restaurants and retailers, including women’s boutiques and fashion and shoe sellers. Restaurants drawn to such centers are typically national chains and local-regional operations, he said.
“We’re looking for prime tenants,” Cole said.
If GBT can work out its differences with the city, it would expect to break ground this summer and complete the power center in 18 months.
Expansion in a second phase would likely follow, he added. “Development of a new Target-anchored center in Phase 1 would be an incredible catalyst to spur further first-class retail, office or residential development.”