WATERVILLE — The owners of Elm Plaza, off upper Main Street, are asking the city to create a tax increment financing district in the area that would allow them to expand and improve the plaza and draw more businesses to the site.

In papers filed earlier this month in connection with the TIF district application, the shopping center’s owners said the current lease for the Kmart discount store would not be renewed when it expires next August. That lease includes provisions that the Elm Plaza owners claim limits expansion of the plaza.

But one of the owners of the shopping area said Tuesday talks with Kmart about the lease are continuing.

Bob Rosenthal, who owns Elm Plaza with his family, said the goal is to give the plaza the opportunity to be competitive with the shopping plaza in north Augusta. As part of the TIF, the city would use a mechanism known as a credit enhancement agreement to return to the developer a portion of new taxes generated.

“For whatever income we can produce in the TIF area, the city would get back 50 percent of it, which enables us to go to various retailers and say we can reduce the cost of the lease by so much,” Rosenthal said Tuesday.

Elm Plaza, which marks its 50th anniversary next year, houses several businesses, including Kmart, a Hannaford supermarket, J.C. Penney, Olympia Sports, Maurices, Bull Moose Music and Subway.

Rosenthal said he is seeking to expand the plaza by 100,000 square feet and add new retail businesses, including restaurants, within five to seven years.

“It’s our 50th year next year, and we are intending to expand the center and modernize it,” he said.

As part of the improvements, some buildings might be torn down, he said.

City Manager Michael Roy said he met with Rosenthal recently, and Rosenthal’s lawyer, Jeffrey Herbert, submitted the TIF proposal Sept. 8.

“They’ve submitted a proposed TIF but with no specifics and exactly what (businesses) would go in (at Elm Plaza),” Roy said Monday. “In our view, there’s not enough there to have a substantial discussion about whether we’re going to approve a TIF or not. I am not taking it to the TIF committee until we get more specific information.”

Rosenthal’s TIF proposal says Elm Plaza is the area’s premiere retail shopping center and has undergone seven expansions, which increased the retail space from 84,000 square feet to nearly 300,000 square feet.

It says Kmart has been a major tenant of the plaza since the 1970s and assumed its lease from the original tenant, W.T. Grant & Co., a five-and-dime style chain, that went out of business in 1976.

Under the terms of the Kmart lease, Elm Plaza has been prevented from further expanding the plaza or adding outparcels, the TIF proposal says.

An outparcel is a lot on the outskirts of shopping center property that often is used for additional tenants and is sometimes referred to as a pad.

“Kmart’s lease is set to expire in August of 2015 and will not be renewed, thereby affording the developer the ability to expand and redevelop Elm Plaza,” it says.

Immediately upon expiration of Kmart’s lease, the Kmart space would be upgraded with $3 million to $5 million dollars of capital improvements to accommodate one or more national retail tenants, the proposal states.

However, Rosenthal said Monday that his family is still talking with Kmart about the lease, while also talking with other potential retailers.

Contacted Monday about the lease, Howard Riefs, director of corporate communications for Sears Holdings, which owns Kmart, said his office does “not comment on speculation.”

“Kmart remains committed to the Central Maine community,” Riefs said in an email.

Meanwhile, the Elm Plaza TIF proposal to the city says the developer would add outparcel developments for occupancy in 2016 and beyond that will require an additional $3 million to $5 million in capital improvements.

“Finally, the developer proposes an additional $20 million dollars in capital improvements for the demolition of existing buildings and the addition of up to approximately 100,000 square feet of new retail space that will take place over the next several years,” it says.

“In total, the Elm Plaza and Upper Main Street Redevelopment Project will generate up to $20-$30 million dollars of capital improvement in the district.”

A 20-year TIF created for Upper Main Street in 1996 is due to expire in two years. With a goal of facilitating commercial expansion in the area, the TIF provided a 75 percent return in years one through five and a 50 percent return for the remaining 15 years.

Amy Calder — 861-9247

[email protected]

Twitter: @AmyCalder17

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