The east side of McHenry along the Fox River is outside of the downtown tax increment financing district, and that section of town is not eligible for other city business incentives either.

That’s why McHenry Mayor Wayne Jett suggested a sales tax rebate for McHenry County restauranteur Niko Kanakaris as he looks to renovate the former Vickie’s Place.

The mayor said Kanakaris approached him several months ago about acquiring the building at 1211 N. River Road and what help might be available.

“There are not many opportunities for that property” by way of economic development, Jett told the McHenry City Council this week. “This is the only option as far as incentives go.”

When initially polled on the sales tax incentive idea, several alderpersons suggested they were cold to a deal.

“To get a sales tax rebate ... would be inappropriate,” as the building was only just vacated, 4th Ward Alderwoman Chris Bassi said.

However, after further discussion, some who were initially skeptical said city staff should come back with suggestions on how to help Kanakaris with the $1.175 million in work he plans for the 55-year-old building.

“I want to hear more numbers,” 6th Ward Alderman Michael Koch said. “I would like to hear final details.”

Other businesses outside the TIF district have received sales tax rebates in lieu of TIF help, including nearby Munson Ski and Marine.

That deal, approved by the City Council in 2022, returns half the sales tax collected to the business for up to 20 years or $500,000, whichever comes first. So far, the city has sent $44,733 back to the marina, Director of Economic Development Doug Martin said.

The Munson family purchased the long-shuttered marina at Lincoln Road and the Pearl Street bridge in 2020. According to the agreement, $4.35 million was spent rehabbing that property.

Other concerns for the former Vickie’s property is its parking capacity. Martin voiced his concern that the Vickie’s parking lot does not offer enough spaces for what could become a busier location.

Both he and Kanakaris have talked to neighboring homes and businesses about possible parking help, but Kanakaris said he wasn’t that worried because the use – a restaurant – is not changing.

He also plans to keep the current interior building capacity at fewer than 100 people. More than that, and he’d need to install a sprinkler system, Kanakaris said.

Although extensive repairs were made following a flood in December 2022 caused by frozen pipes, Kanakaris said he plans to gut the kitchen as part of the renovations.

“The kitchen needs to be gutted down to the studs and redone,” he said. “It was suited to [the former restaurant], but we are looking for a larger volume.”

City staff also will look at guidelines for outdoor acoustic or amplified music, with The Courthouse Tavern’s music permit as an example. McHenry limits that location to outdoor amplified music on one Friday, Saturday or Sunday night each month from May 1 through Oct. 31.

Acoustic music, without amplification, is allowed on a similar schedule but with no limit on the number of times each month.

Kanakaris expressed a willingness to work with the city on acoustic versus “piped” or amplified music, saying, “We don’t want neighbors getting mad and calling police.”