Baker Katz LLC, the commercial real estate firm, finalized an agreement with the City of Tomball and the Tomball Economic Development Corporation in September concerning the renovation of the Four Corners Shopping Center at the corner of FM 2920 and Hwy. 249.
The firm, which hopes to have the renovations complete by the end of 2012, has already signed Specs Wines, Spirits and Finer Foods to a lease for 22,000 square feet of the former Kroger building.
"It looks like they are moving forward and are going to do one of their high-end specialty grocery stores," said Kenneth Katz, Baker Katz co-founder.
Katz estimates the renovations will cost approximately $10 million. They include exterior remodeling for each of the major structures on site, landscaping and creating direct access to the plaza from Business 249, FM 2920 and the Hwy. 249 bypass.
The firm is also looking for a tenant to lease the other half of the former Kroger building, another anchor location of roughly 24,000 square feet. Katz will be looking to bring new tenants to other buildings in the center as well, including the vacant building next to Goodwill Industries and Cinema 6.
Baker Katz has advanced all the money for the renovation, but made an agreement with the city where it collects a portion of the increased sales tax revenue that comes in during the next 13 years.
"The city will continue to get everything that it's been getting in terms of property and sales tax revenue," Katz said. "[Baker Katz] will be paid back a small percentage of our investment only out of the increase in that sales tax revenue and only to the extent that we meet certain conditions.
The city capped the total amount of money Baker Katz would collect in additional sales tax revenue at $1.5 million. After the cap is met, or once the agreement ends in 2025, the city will collect all sales tax revenue.
City Manager George Shackelford said this is an important move for the city in its efforts to bring in new businesses.
"This is a big step for us moving forward because sales tax provides the majority of the city's revenue," he said. "We want to bring in some higher class national chains, and these improvements are a worthwhile investment."
After Kroger left the center and the property was foreclosed on in 2010, Katz said it has been in desperate need of a restoration. He said he is dedicated to turning the center around.
"Hopefully this partnership with the city will result in an asset that the city can take pride in for years to come," Katz said.