McHenry’s City Council took its first step this week toward adding two Tax Increment Finance districts, approving a contract to determine the eligibility of the areas in mind.

The contract with Teska Associates Inc. – not to exceed $20,000 – was approved on a 4-2 vote, with Ald. Andy Glab, 2nd Ward, and Ald. Chris Bassi, 4th Ward, both voting no. Ward 6 Ald. Michael Koch was not in attendance.

TIF districts “are another way of taxing property tax payers,” Glab said before his no vote. “It is not a lot of money for residents but it affects everybody’s property taxes when you create a TIF.”

He wants to see a plan for the areas in place before approving anything.

“We need to have a good vision of what we want before we create the TIF,” Glab said.

A TIF district is a tax subsidy that allows the new, higher property taxes generated by redevelopment within the district to be channeled back into the property rather than distributing those funds to the taxing bodies. Excess moneys in the TIF can be used for public improvements, including demolition of existing structures.

Generally, TIFs are designed to help redevelop otherwise “blighted” areas.

The Council first talked about additional TIF districts in February.

What the new study will do is determine “what buildings can be used in the TIF or not,” Mayor Wayne Jett said. There are about 353 total parcels in the two areas being looked at, which include:

• Northern Richmond Road: from Pearl Street to Blake Boulevard, west to Blake Boulevard, and east to the Oaks of McHenry.
• Southern and Western Route 120/Main Street: west of Millstream Drive to just west of Ringwood Road, along both sides of Illinois Route 120, including Main Street, and south to Mill Street and Front Street, continuing just south of Lillian Street and north to the northern boundary of Althoff Park and City Center Business Park.

McHenry has an existing TIF district covering an area roughly from Green Street to Riverside Drive and Waukegan Road to Pearl Street. First approved in 2002, it was extended by the state last year and now is set to end in 2037. The downtown TIF excess funds have paid for construction of the McHenry Riverwalk.

Developers have come to city staff with ideas for development in the proposed areas, but without incentives – like a TIF – they have not moved forward, said Doug Martin, director of economic development.

Criteria considered for whether properties are eligible for a TIF consideration includes “excessive vacancies” as well as general blight, Martin said.

“If you look at the old Kmart/Sears building, it is just an eyesore. It is blighted property,” Martin said of the building on Richmond Road. “It barely meets current building code.”

On Route 120 heading west, many of the parcels are small, shallow lots, Martin noted after Monday’s meeting. With a TIF in place, a developer could aggregate some of those properties into a larger development.

That does not mean anyone, including the McHenry City Council, is looking for any kind of eminent domain project, Martin said.

“This is strictly for private development to come in,” Martin said.

He hopes to see the results of the eligibility study by December, Martin added. More studies, including a redevelopment plan, and public hearings, would follow before any vote is taken on establishing new TIF districts.

“The goal is to have the TIFs established by the end of March” if the Council approves going forward, Martin said.