News - Sauk Valley

Sterling council OKs development incentives that will help Kmart site developer

STERLING – The City Council Monday unanimously passed economic incentives for the developer who plans to spend $14 million to redevelop the former Kmart site in the East Lincolnway business corridor.

Chris Williams of Highlands Development LLC, of Kansas City, Missouri, bought the long-vacant property at 2901 E. Lincolnway in 2020 for $1 million. It includes not only the Kmart building, but also two other mostly empty retail/office buildings.

Williams plans to redevelop the site into a mix of business and retail space.

Highlands already redeveloped and leased part of the 50-year-old department store to the Department of Veterans Affairs, which moved its outpatient VA clinic formerly at 406 Ave. C to the new, larger space this January.

Williams plans to turn the rest of the 100,000-square-foot site into commercial space that will include national junior box retailers, national restaurants and other local and regional tenants and has been in “active negotiations” with such.

The passage of this package will move those negotiations along, and “help us posh them across the finish line,” he said Monday.

The building, empty since 2014, needs extensive work inside and out.

In addition to facade work, Highlands plans to re-roof, add energy-efficient upgrades to the lighting and the plumbing, completely redo the parking lot and landscaping, repair and replace damaged concrete and sidewalks and maybe add new buildings, among other things, it said in its redevelopment agreement with the city.

The agreement was contingent upon the city creating the tax increment finance and business development district that includes the site.

“The city’s obligation under the proposed redevelopment agreement is to create tax increment finance and business development districts,” city staff wrote.

“The agreement then calls for nearly all revenues derived from the TIF and BDD to be used to reimburse the developer for costs incurred to redevelop and improve the site from its current condition. "

In addition, Highlands will get a share of the 1% sales tax revenue raised at the site for the next 15 years – in most cases, a 50-50 split, but in some cases with some of the retailers, 85-15.

Passage was all but guaranteed – it’s a plan that’s been in the works for East Lincolnway for some time and will help not only Highlands but also other developers.

TIFs and BDDs are economic development tools that allow money raised through property taxes and other revenue within their boundaries to be used to reimburse developers who take on blighted or underdeveloped areas.

Kathleen Schultz

Kathleen A. Schultz

Kathleen Schultz is a Sterling native with 40 years of reporting and editing experience in Arizona, California, Montana and Illinois.