Plans to redevelop the Charlestowne Mall, a defunct suburban shopping mall in St. Charles, stalled for a second time as developers and city leaders struggle to agree on plans for the mostly vacant property.
The most recent buyer to back out of a deal was local developer Urban Street Group. The firm had plans in place with seller Krausz Companies to buy the site but decided to not proceed with the purchase, an announcement from the city of St. Charles said. The reason for Urban Street Group’s decision was not disclosed.
The city, Urban Street Group and Krausz Companies did not respond to requests for comment.
St. Charles city officials are in discussions with Krausz and other prospective developers according to a post on the city’s website.
Earlier this year, St. Charles Mayor Lora Vitek said she was not “ruling out the possibility” of tax incentives for the mall’s redevelopment, though she said Urban Street had not requested any at that point, the Northwest Daily Herald reported.
Malls have presented opportunities for developers to breathe new life into outdated properties but plans can get bogged down by regulatory and financial hurdles. In some places, like Bloomingdale, local governments have taken over mall redevelopment themselves.
A government-led plan doesn’t seem to be in the works yet for the Charlestowne Mall as city officials double down on efforts to attract another buyer.
City pushback
The Charlestowne Mall’s bungled sale came two years after SR Jacobson, another local developer, withdrew a revised redevelopment plan for the property.
In addition to the financial challenge of retrofitting sprawling shopping malls for other uses, plans can sometimes undergo greater scrutiny from local officials and residents than similarly sized developments in urban cores.
The plan included 351 apartments in a three-story, garden-style development, 209 two-story townhomes, a 135-room hotel, 22,000 square feet of new retail space and 18,000 square feet of restaurant space. An existing Van Maur department store and movie theater with separate ownership would remain incorporated in the development.
SR Jacobson withdrew its plans in early 2022, after three presentations to the city and one round of revisions.
The city wanted the firm to scale back the development’s residential use beyond what lenders would support, even with funding set aside in a tax increment financing district or TIF, said SR Principal Manny Kianicky.
A TIF sequesters new property tax revenues from a particular development for use within that project’s immediate area rather than the city at large.
Having a TIF would have helped offset demolition costs, Kianicky said, but a certain level of multifamily development would still be necessary to make the project pencil out.
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“Our core use that was going to be the base of the redevelopment plan was something that the city would not support,” he said.
When a new townhome development adjacent to the property got city approval, the potential competition also threatened the project’s bottom line.