Tax subsidies sought for renovation of old car dealership

Mar. 6—MANKATO — Plans to remodel a former Mankato car dealership into a kitchen and bath store will require tax subsidies to keep the project on track, according to the project developer.

The $2.6 million project aims to transform the property at 1116 North Riverfront Drive, which has been a Honda dealership, a Kia dealership and, most recently, a seller of pontoon boats.

Jake Schrom of Kitchen, Baths and More asked the council last month for tax-increment financing to cover some of the costs of renovation, which were more extensive than initially realized.

"The building needs to be completely remodeled due to lack of maintenance from the previous owner," Schrom wrote in his application to the city. "The entire roof will need to be replaced, along with the parking lot."

Tax-increment financing involves calculating the additional annual real estate taxes an improved property would pay and returning some or all of those added taxes to the developer for a period of 15 years to finance a portion of the development expenses. Under state law, TIF can only be approved by cities if it is determined a project would not be viable without the assistance.

Baker Tilly Municipal Advisors, which serves as Mankato's TIF consultant, concluded — based on return on investment and debt-coverage standards — that the North Riverfront project is feasible only if the city subsidies are included.

The City Council on Monday authorized a public hearing and vote on $203,000 in TIF funding for March 14.

Along with boosting the value of a vacant building, the redevelopment will retain and create jobs, Schrom said.

The estimated full-time employee count for the project is 10 jobs — six retained and four created — with average hourly wages ranging from $18 to $30 per hour, plus benefits.

Schrom told The Free Press in November that his father, Troy Schrom, of Schrom Construction, opened the first Kitchen, Baths and More in 2007 in Janesville and then moved to a new strip mall in Eagle Lake in 2016. Jake Schrom said the business is cramped for space and scattered between the store and two storage locations.

"We explored options for expanding in Eagle Lake, but there just wasn't anything that worked for us," Schrom said. "... This gives us enough storage and allows for more growth, and the traffic on Riverfront is good."

Kitchen, Baths and More currently focuses mostly on design services and purchasing products directly from manufacturers and supplying them to local builders and their customers. Products include cabinets, countertops, flooring, window coverings and more.

The business aims to increase its retail trade at the new location, using most of the 15,000 square feet in the renovated building as a showroom. It will also lease some warehouse space, and about 4,500 square feet will be leased to other businesses.

Assuming the council approves the subsidies in two weeks, construction is expected to begin April 1 and be completed by March 1, 2023.