Pete’s Fresh Market, which completed the purchase of the shuttered Dominick’s grocery store in January, is asking the village of Oak Park for $1.5 million to open the new store by the end of the year.

Documents sent to the village say the store will use the funds “to facilitate renovation of the property” at 259 Lake St. to include façade, landscaping and parking improvements, as well as placing a café in the southeast corner of the building. Pete’s also agrees to have a “targeted” grand opening in the fourth quarter of the year.

The Oak Park Economic Development Corporation interim executive director, John Hedges, said the organization supports the deal.

Village President Anan Abu-Taleb, who serves on the OPEDC Executive Committee, said in a telephone interview that the incentive package is a “good investment and a good return on the investment in a short period of time.”

He said the village could generate the money for the incentive package through a combination of cash from the village and borrowing.

“This is an investment that is worth borrowing for,” he said.

Hedges said in a telephone interview that the deal was part of negotiations with Pete’s from the beginning.

“We didn’t start at [$1.5 million],” he said. “As in any negotiation, you find common ground. They were looking for substantially more.”

Pete’s will make a formal request to the village at the weekly board meeting set for Tuesday.

The packet sent to trustees notes that Pete’s purchased the building and land for $6.25 million. Planned improvements include a gut rehab of the property that would run approximately $5.85 million.

The proposal states the incentive package will make up less than 13 percent of the total cost of the project, which breaks down to $1 of public investment for every $8 in private investment.

Pete’s currently has nine locations in the Chicago area and four new locations planned for Plainfield, Bridgeport and Willowbrook, in addition to the Oak Park location.

Oak Park would not be the only community to provide incentives to the grocery store chain, according to the proposal. Pete’s says that Willowbrook provided $5 million in tax increment financing, Bridgeport provided seven acres of land worth $1.8 million, and the village of Plainfield also contributed seven acres of land.

The proposal also states that several other grocery chains have received similar deals, including:

  • $3.8 million for two acres of land for a Mariano’s in Harwood Heights.

  • $3 million in development costs for a Mariano’s in Westmont.

  • $2 million land subsidy for a Trader Joe’s in Evanston.

  • $1.5 for site improvements for a Mariano’s in Lake Zurich.

  • $1.5 million in development costs for a Mariano’s in Elmhurst.

  • $850,000 for site improvements for an Aldi in Geneva in 2007.

  • $800,000 for site improvements for a Caputo’s Market in Addison.

Oak Park is currently losing $250,000 a year in sales tax revenue due to the closure of Dominick’s, according to the document presented to the village.

It would take the village approximately two years to break even, based on sales and property taxes, if they approve the incentive package, according to the proposal.

Editorial: Paying for Pete’s

     That Oak Park was going to invest something substantial to land Pete’s Fresh Market as an upgrade, not a replacement, for the old Lake Street Dominick’s is no surprise. An incentive package has been under discussion since early on in the family-owned Pete’s bidding process for the Oak Park store. This week, after our press time, a formal proposal was put before the village board for its concurrence.

     The ask is $1.5 million. That’s the price negotiated between Pete’s and the Oak Park Economic Development Corporation. The perspective would be that Pete’s has already paid $6.25 million to purchase the site and plans to spend not quite another $6 million on a gut rehab of the tired store’s interior and exterior. 

     We’re not stunned by the amount requested. Our preference would be that the village’s payout not be in the form of a single check cut just before the grand opening. More typical, we’d say, are economic incentive deals which split the local portion of the sales tax collection over a period of years with the total capped. That would ease cash flow for our strapped village government and it puts Pete’s and Oak Park taxpayers on the same side of the table in working to boost sales numbers. 

     That said, we’d readily support a deal in the price range set out here. With this store empty, Oak Park is forgoing $250,000 annually in sales taxes and weekly leaking grocery shoppers to the Jewel in River Forest. 

     A side note: A few weeks back we urged OPEDC to avoid the temptation to choose a developer for Harlem and South that intended to squeeze 60,000 square feet of retail — reportedly a grocery store — into that mixed-use project.

     We’re happy to say that the “preferred developer” chosen by OPEDC is planning a very small retail footprint and a focus on apartment housing in an 11-story project. Finding balance, especially when Oak Park is pushing so hard on development, is a challenge. This choice feels right.

-May 27, 2014

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