All that’s left is next month’s big reveal: Which new retailers are coming to Kemah’s now approved $17 million shopping center?

The city council on Wednesday agreed to an incentives package with a Tennessee-based developer to build the 83,900-square-foot retail center at the southeast corner of state Highway 146 and FM 518 adjacent to Wal-Mart.

Jeff Pape, managing director of Brentwood, Tenn.-based GBT Realty Corp.’s shopping center division, said he expects to release the tenant list next month when the 11-acre purchase, now under contract, closes.

The Shoppes of Kemah will include five large stores and four or five smaller shops, Pape said.

“We’re deep in,” he said of negotiations with retailers. “We have about half the leases signed, and we expect to have most of the others signed in the next week or two. Our goal is to close on the property by the first week of May, and at that point, we’ll be over 90 percent leased.”

Site development is expected to begin shortly after the closing.

“The goal is start work next month and begin to go vertical with the buildings in late summer, early fall and continue through the winter,” Pape said. “We expect stores to open in late spring next year.”

National, local retailers

The Shoppes of Kemah will include both locally owned and nationally known retailers, Pape said.

The incentive package the city and developer agreed to involves sales tax revenue going to the developer to pay lenders that are financing the project.

The arrangement falls under Chapter 380 of the state’s Local Government Code, which allows cities to offer sales tax-generated incentives to developers for economic development projects such as commercial and retail centers.

Joiner cited the deal’s benefits for shoppers and for the city’s finances.

“Right now, we have 100 percent of zero sales tax there,” he said, referring to the currently undeveloped parcel west of Wal-Mart.

The incentive package expires in 10 years at the most; Joiner said it could end sooner, contingent on when the developer recoups the costs of the project.

In the meanwhile, Kemah will receive other, non-sales-tax benefits.

“The Shoppes of Kemah will generate $17,000 annually in property taxes,” Joiner said. “Plus, we didn’t waive building permit fees, and those will generate $60,000.”

“There’s also a 1.3-acre piece of property behind the Shoppes of Kemah that the developer is giving to the city.”

He valued that tract at $237,000.

Additionally, under terms of the agreement, GBT Realty will build a two-lane road along the west side of the property, the first length of an eventual corridor between FM 518 and state Highway 96.

Pape and Joiner would not disclose additional details regarding the incentives package.

An attractive market

While Kemah’s full-time population comprises just 2,000 or so people, the bayside city attracts roughly 4 million tourists a year, making it attractive to retailers.

That awareness brought Kemah to the developer’s attention.

“We maintain close relations with a number of national retailers,” Pape said. “One of them told us they wanted to be in Kemah and gave us some intel as to a possible location, and we went from there.”

When the incentive package expires, all sales tax generated by the shops will accrue to Kemah’s coffers. The city’s budget largely depends on such revenue, which allows it to levy — at 21.9 cents per $100 of assessed property value — the second-lowest municipal ad valorem tax rate in Galveston County.

Joiner said the shops’ combined sales taxes are projected to generate roughly $500,000 a year.

(1) comment

Kelly Naschke

State Hwy 164??? How about 146?

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