Council approves $1.725 million term sheet to spur downtown housing, draws debate over TIF funding

Waukegan City Council on Feb. 3 approved a memorandum of key terms to support conversion of 200 North County and 38 North Genesee into primarily residential buildings with ground-floor commercial space, authorizing up to $1,725,000 in incentives and directing staff to negotiate a formal redevelopment agreement.

The deal approved by the council includes $900,000 in upfront development assistance and an additional $825,000 to be paid over time from tax-increment financing (TIF) proceeds. Council members amended the term sheet on the floor to specify the $900,000 upfront payment would come from the TIF 8 increment fund and to set a reduced parking permit rate of $35 per month for up to 19 monthly permits for five years.

The move is intended to attract developers to an underused portion of downtown and to begin rebuilding a residential market in the core of Waukegan. The developers estimate the two-building initial phase would create roughly 25 new residential units and add ground-floor commercial space, including shared fitness and co-working areas.

Why it matters: proponents said public incentives are a tool to catalyze a market that has been dormant and to unlock follow-on private investment; opponents warned the city risks draining TIF reserves needed for other capital projects. Alderman Florian summarized council concern about scale: “It’s a pretty big number.”

What the term sheet would provide - Total incentives requested: $1,725,000 (staff summary) - Upfront payment proposed: $900,000 (amended to come from TIF 8 increment fund) - Long-term reimbursement: $825,000 paid from future TIF increment generated by the properties - Other requested incentives: waiver of building permit and inspection fees (staff estimate: ~$42,000 in foregone fees) and a pool of monthly parking permits (19 permits; staff estimated the opportunity cost as roughly $91,000 if full market value were waived) - Developer-estimated construction cost (building-specific baseline used for permit calculation): ~$1,400,000

Council debate and fiscal concerns Council debate focused on two questions: where the $900,000 upfront payment should come from, and whether giving downtown residents discounted or free parking would be an appropriate use of public assets.

Several council members pressed staff and the applicants for clarity about other municipal priorities funded by TIF 8. Alderman Florian warned councilors that drawing down the TIF could limit the city’s ability to pay for other projects, including engineering work and road reconstruction near the lakefront: councilors noted that improvements on Seahorse Drive and other infrastructure needs are eligible TIF uses and might compete for the same funds.

City staff and consultants walked the council through alternatives. A staff member, Noel, told the council that using non‑TIF “wrap” funds was an available option and explicitly recommended it as a possible source: “My opinion is the same as Alderman Turner’s, that it makes more sense to use wrap money for this upfront payment, at least.”

Supporters said the incentives are modest compared with potential long-term benefits. Alderman Turner and others said the city previously invested heavily in downtown infrastructure (including the Genesee Theater and parking garage) and needs private development to follow those public investments. As one proponent put it, the incentive is intended to “establish a market” that will produce more private investment and recurring tax revenue.

Parking and permit pricing Council members asked whether permits provided as part of the incentive could later be charged to tenants. The city’s parking director confirmed regular monthly garage pricing is $80 per month, and staff said a discounted monthly rate of $35 is already used for bulk subscriptions in downtown lots. Alderman Guzman pressed for a monthly permit charge rather than giving long-term free passes and stated the amendment on the floor: “We’ll charge $35 a month. Add that on for the amendment.”

Legal and timing constraints Staff warned that the long-term portion of the package relies on TIF increment produced over time and that extending the life of an existing TIF district (to collect more increment) would require state legislative action and likely the consent of other taxing districts such as the school and park districts. Staff also cautioned that TIF projections differ depending on assumptions; city analysts suggested the requested TIF reimbursements might fall short under conservative projections unless additional sources are used.

Council action and vote Councilors voted to amend the term sheet to designate the $900,000 upfront payment as coming from the TIF 8 increment fund and to set the 19 monthly parking permits at $35 per month for five years. The amended resolution then passed on a roll call vote.

Votes at a glance (items on the Feb. 3 agenda) - Redevelopment term sheet for 200 North County and 38 North Genesee (resolution): Approved as amended (amendment: $900,000 from TIF 8; 19 monthly parking permits at $35/month for five years). Vote (roll call): Bolton Aye; Guzman Aye; Martinez Aye; Felix Aye; Newsom Nay; Turner Aye; Donenworth Aye; Florian Nay. Outcome: approved. - Ordinance approving variances from lot coverage for 230 Stewart Avenue: Approved by the Community Development Committee (voice/roll-call recorded during committee). Outcome: approved. - Resolution approving a professional services agreement with S.B. Friedman Development Advisors, LLC for advisory services related to Parking Lot B, $29,500: Moved and discussed in committee; council later advanced related downtown redevelopment items. Outcome recorded in committee as advancing (committee approval). - First amendment to lease with Gillian Marine Construction LLC (portion of water plant parking lot): Discussed in committee; council later moved the item forward and approved with direction to consider weight limits and delivery restrictions at council stage. Outcome: committee recommended approval; council acted per agenda sequence. - Ordinance amending the liquor code to create a Class E1 license and update fees: Approved. Outcome: approved. - Ordinance amending seasonal tavern license dates (to October 15): Approved. Outcome: approved. - Resolution approving agreement with Municipal GIS Partners Inc. for GIS services, $90,000: Approved. Outcome: approved. - Ordinance requiring bird‑friendly glass on city-owned facilities for new construction/renovations above second floor: Approved. Outcome: approved.

What happens next Staff will draft a comprehensive redevelopment and incentive agreement based on the approved term sheet; that agreement will return to the council for final approval and more detailed terms on reimbursements, performance milestones, parking permit rules and any fee waivers.

The council’s decision resets the timeline for the two downtown conversion projects and triggers negotiations and due diligence; council members who opposed the measure said they will monitor how the city sources the $900,000 and how the TIF balance is managed to protect other planned infrastructure work such as Seahorse Drive engineering and repairs.