McHenry council opens study of three proposed TIF areas, asks staff to bring outside expert

City staff on Monday outlined preliminary maps for three possible tax-increment financing districts and told the McHenry City Council the step would be a long, technical process that requires outside expertise and time.

City Administrator Suzanne led the overview of how a TIF works as a geographically focused tool that “captures new tax growth generated by improvements within the district and then reinvest[s] that directly into critical infrastructure such as roads, utilities and redevelopment projects,” she said. Economic Development Director Doug Martin then reviewed the three study areas and the specific redevelopment challenges staff said they face.

The Richmond Road area centers on the former Kmart/Sears block and several adjoining shopping centers that staff described as physically and functionally obsolete. Doug Martin said the pair of adjacent centers together include about 150,000 square feet of vacant space and that the former big-box building has sat vacant many years; “the reuse or division of the big‑box building is extremely costly,” he said. West Route 120 includes many undersized former residential lots that are now zoned commercial and would require aggregation or substantially different development formats to be viable. The third, a broad Main Street/Front Street/Bull Valley Road corridor, combines pockets of legacy industrial uses, vacant land and aging commercial parcels that staff called candidates for redevelopment assistance.

Staff emphasized that establishing a TIF district requires a parcel‑by‑parcel feasibility study, joint review board meetings with other taxing districts and legal and consulting work. “This is the very first conversation,” Suzanne said. She estimated a realistic timeline of six months to a year to prepare and implement a district if the council elected to move forward.

Council members pressed staff on taxpayer impact and process. Alderman Glab asked for calculations showing how a TIF would affect the average homeowner’s tax bill and said residents should understand that TIF revenues derive from local property tax growth rather than an outside funding stream. Alderman Bassi said she was “not comfortable having national chains included in the TIF” and questioned whether portions of the proposed areas meet the statutory threshold for ‘‘blighted’’ or ‘‘conservation’’ conditions.

Several council members said they wanted more technical information before making a policy decision. After extended discussion, a majority of the council directed staff to arrange a Committee‑of‑the‑Whole briefing by an outside TIF consultant to explain mechanics (including the “but‑for” requirements, eligible uses and likely costs of consultant work) and to answer council questions. Mayor (unnamed in the record) and staff agreed the presentation should include examples of how other taxing bodies are affected and typical consultant cost estimates; council members asked staff to forward suggested questions in advance to the consultant.

Staff said they would compile materials and reach out to consultants familiar with Illinois TIF law; possible firms mentioned in discussion included those the city has used for redevelopment work. Suzanne told council she would return with a scheduling proposal, cost estimate and list of candidate consultants. In parallel, staff will continue preliminary parcel analysis but did not plan to prepare a formal TIF ordinance until the council gave further direction.

Why this matters: the council’s existing downtown TIF has funded Riverwalk phases and other infrastructure projects; proponents and staff told council that a similar tool could unlock redevelopment of long‑vacant shopping centers and other underused parcels. Critics flagged the risk of shifting future incremental tax growth away from schools and other taxing bodies for the length of a TIF term and asked for clear modeling before any commitments.

Council next steps: staff will solicit and present a consultant for a focused briefing, produce a short fiscal model illustrating tax‑impacts on a sample $300,000 home, and return to the council with a recommended public meeting schedule and, if requested, a formal feasibility contract.