McHenry City Council Moves Forward with New Tax Districts

The McHenry City Council has taken significant steps towards revitalizing local neighborhoods by approving a contract to explore the establishment of two new Tax Increment Finance (TIF) districts. The council voted 4-2 in favor of the contract with Teska Associates Inc., which has a budget not to exceed $20,000. Alderman Andy Glab of the 2nd Ward and Alderman Chris Bassi of the 4th Ward cast the dissenting votes, while Alderman Michael Koch was absent from the meeting.

During the discussion, Alderman Glab expressed concerns regarding the financial implications of TIF districts, stating, “TIF districts are another way of taxing property taxpayers.” He emphasized the need for a comprehensive vision for the areas targeted for redevelopment before proceeding with TIF establishment. “We need to have a good vision of what we want before we create the TIF,” Glab added.

TIF districts are designed to stimulate economic development by allowing the increased property taxes from new developments to be reinvested back into the district rather than distributed to local taxing bodies. This mechanism can fund public improvements, such as demolishing dilapidated structures. TIFs typically aim to rejuvenate areas that are considered “blighted.”

The City Council initially broached the subject of additional TIF districts in February. The contract with Teska Associates will assess the eligibility of buildings in the proposed areas. Mayor Wayne Jett noted that the study will determine which properties qualify for inclusion in the TIF districts.

The two areas under consideration encompass a total of 353 parcels. The first area runs along Northern Richmond Road, extending from Pearl Street to Blake Boulevard, and includes the Oaks of McHenry. The second area covers Southern and Western Route 120/Main Street, stretching from Millstream Drive to just west of Ringwood Road, flanking both sides of Illinois Route 120.

Currently, McHenry has an existing TIF district that spans from Green Street to Riverside Drive and from Waukegan Road to Pearl Street. Established in 2002 and extended by the state last year, this district is set to expire in 2037. Revenue generated from this TIF has financed projects such as the construction of the McHenry Riverwalk.

City staff have reported that developers have presented various proposals for the proposed areas; however, lacking incentives like TIFs, these initiatives have stalled. Doug Martin, the Director of Economic Development, indicated that the criteria for TIF eligibility include factors such as “excessive vacancies” and overall blight. He pointed out the old Kmart/Sears building on Richmond Road as an example of blighted property, stating, “It is just an eyesore. It barely meets current building code.”

Martin further explained that many parcels on Route 120 are small and shallow, limiting development potential. A TIF could enable developers to consolidate these properties for larger projects. He assured that there are no plans for eminent domain, emphasizing that this initiative is strictly for encouraging private development.

The eligibility study is expected to be completed by December. Following this, additional studies, including a redevelopment plan and public hearings, will occur before the council votes on the establishment of the new TIF districts. Martin expressed optimism, stating, “The goal is to have the TIFs established by the end of March” if the council approves moving forward.