A group of developers planning to bring a big-box retailer to a rundown Salem shopping center will collect an anticipated $3 million in tax incentives for the project.

The Salem City Council approved the incentive deal with BET Wilkinson Salem Venture LLC by a 4-0 vote Monday evening. However, the name of the new store slated to replace the West Salem Plaza has not been officially released.

Around Salem, the plaza's new tenant is widely rumored to be the home improvement chain Lowe's. An announcement is expected later this week.

Richard Wilkinson, a partner with the development group, said he had a signed contract with a major national retailer -- "subject to agreeing on two exhibits to the lease."

Kevin Boggess, the city manager, allayed concerns about the agreement while details were still being hammered out. "If the developer never builds anything on the site, we don't pay him a penny," he said.

Salem Mayor Randy Foley said he was confident that developers would bring in an attractive retailer for residents. He stressed the deal was between the city and BET Wilkinson, not the city and a specific store.

The council meeting was not considered a public hearing, and residents did not offer comment.

Wilkinson, however, saluted the council as he left the council chambers: "Thank you so much for your support. We won't let you down."

Prior to the vote, council members raised questions about the effects construction will have on neighboring businesses.

Boggess said that local business owners were invited to bring their concerns to the city and would also be able to review the site plan.

Construction is also anticipated to affect South Bruffey Street, which runs along the side of the plaza. Two residents of the small neighborhood on the street attended with concerns about debris from the site -- which includes contaminated soil from an old tannery.

"Hopefully, they'll keep the dust down," said Hank Jackson, a Salem real estate agent.

Boggess introduced the agreement with an explanation on how the tax incentives will work.

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

More precisely, the city expects to collect about $109,000 in annual tax revenue from its new tenant. Whatever is collected on top of that -- the city estimates about $500,000 -- will be returned to developers.

Boggess has estimated the city will pay off the $3 million in development grants in five or six years.

And there's a "sunset clause" in the deal: The city makes no payments after 10 years.

"Staff believes this is the right thing to do," Boggess said after the meeting. There have been several false starts at redeveloping the parcel and the city had to do something to make a deal attractive, he said.

The new store, expected to be 163,500 square feet, could open as early as January 2010, though construction is expected to take about 18 months.