Eric Brady | The Roanoke Times

Potential developer Richard Wilkinson says to clean up the site could cost between $4 million and $5 million.

An ailing Salem shopping center is set for a major makeover if the city gives final approval for a $3 million tax incentive to a development group -- a first for Salem.

Salem City Council will vote Monday on the agreement with the BET Wilkinson Salem Venture LLC, paving the way for a big-box retailer to move into the West Salem Plaza.

The name of that new tenant has not been released, though for years the chatter in Salem has centered on the home improvement chain Lowe's.

Richard Wilkinson, a partner with the development company, said that a large national retailer could open in the plaza site as early as January 2010, but declined to name it.

To make the deal work, Salem would pay an anticipated $3 million in development grants to BET Wilkinson, according to City Manager Kevin Boggess.

In simple terms, the city will simply return a percentage of the tax revenue the new store generates back to the developer.

In more detail, the city expects its new tenant to generate approximately $600,000 in annual tax revenue. The city would collect $108,935 of that each year after the agreement -- a number based on what the city drew from the plaza in the 2005 tax year, its strongest in recent years.

The remainder would be paid back to BET Wilkinson, up to an optional cap of $500,000 a year.

Salem will probably return everything over its cut to pay off the $3 million as soon as possible, Boggess said. He said the city planned to cover the incentives in five or six years.

Plus, the city has an out if the new store flops: no payments after 10 years.

At its Monday night meeting at city hall, the city council is scheduled to consider the agreement with the development group for the twin parcels, which cover the plaza and former Leas & McVitty tannery property.

Boggess called the deal a crucial investment for the city, since redevelopment would add a "strong business" to the tax rolls and help to flip an underutilized site.

West Salem Plaza has had three or four false starts at renewal before, he said, and the contaminated remnants of the old tannery posed some risks that left previous developers lukewarm.

In advance of construction, the property needs to be leveled and a layer of unusable soil has to be hauled away and replaced, Wilkinson said.

He estimated that costs for site cleanup and "environmental remediation" would fall between $4 million and $5 million.

"In order to get it redeveloped, it became obvious that the city was going to have to help," Boggess said. He added that Salem has not doled out incentives to seal land deals before.

Roanoke, however, has. In the past three years, the city cut multimillion dollar tax incentive deals to make several developments happen, including Ukrop's and Home Depot.

BET Wilkinson -- a partnership between BET Investments of Pennsylvania and Wilkinson Development Corp. of Florida -- intends to close on the Salem property by Wednesday, Wilkinson said.

He cited a confidentiality agreement in declining to name the expected tenant, but said he has worked on projects linked to Target, Home Depot and Lowe's before.

West Salem Plaza currently belongs to the Roanoke investment companies called .com properties and .com II properties.

"I've learned to let these things happen," said Richard Bishop, one of the companies' owners. In March 2007, a deal for the retail center fell apart with an Atlanta developer. "All we want is the money."

Bishop, however, did not name the amount of money the investment companies wanted for the property.

Melinda Payne, Salem's director of planning and development, was optimistic that the project would jump-start growth along the West Main Street corridor.

The project would renovate 22.7 acres of the site, including a portion of South Bruffey Street, while the new business will cover only 13 of them. "That puts us in a better position to market the rest of the site," she said.

Thursday, the parking lot of the West Salem Plaza was empty.

Barricades blocked most entrances and the shopping center was a wall of vacant storefronts and empty windows.

"We've got to do something with that site to make it viable," said Randy Foley, Salem mayor.