McHenry set to formalize ‘handshake deal’ with developer Shodeen

No concrete development plans exist for either the former McHenry wastewater treatment plant site on the Fox River or 2¼ acres of vacant downtown city-owned land nearby – yet.

A proposed agreement between the city and Geneva-based Shodeen Group LLC would give the two until March 31, 2025, to determine what that plan could be.

Set for a consent agenda vote at Monday’s McHenry City Council meeting, the proposed “standstill agreement” indicates that the city will not market the two sites to other developers. Instead, the city would actively work on a plan with Shodeen, City Manager Derik Morefield said.

“It is a ‘breathing room’ commitment to each other, that we will be partners for redevelopment on this property,” Morefield said. “It is a formalized handshake that we are committed to working with each other for some sort of redevelopment plan.”

The city has been working with Shodeen “behind the scenes” for some time, Morefield said. Those discussions included a March 2021 executive session in which the council discussed pursuing additional land or structure purchases adjacent to city-owned land, according to the agreement.

The Fox River Valley is Shodeen’s “sandbox,” and McHenry is part of that, company president David Patzelt said.

“We like doing mixed-use [developments] in downtowns, and McHenry has a downtown that wants to grow and expand, and we could be a part of that,” Patzelt said.

McHenry has sought a developer for the 7.2-acre wastewater treatment plant site, at 3302 Waukegan Road, for several years, including soliciting developers for proposals in both 2019 and 2021. The city paid for the plant’s demolition in late 2020 to help attract development there.

The second piece of property referred to in the agreement lies between Fox River tributary Boone Creek, Route 120 and Green Street. The City Council approved of purchasing the last piece of that in February.

McHenry “assembled a sizable amount of property with access to [Route] 120” in downtown with that purchase, Morefield said.

Morefield called the available city parcels “two of the most significant development opportunities in the downtown.”

“We have had these properties for many years. We have done [requests for proposals], and nothing has been produced” by developers, Community Development Director Ross Polerecky said.

“We got a couple informal proposals, more ‘kicking the tires’ kinds of things ... nothing to take action on. That didn’t get the responses that we wanted,” Morefield said.

A November 2021 luxury apartment proposal brought to the council for the treatment plant site, which sits on the southwest bank of the Fox River, was turned down. At the time, council members cited concerns about the density and transient renters.

Shodeen has had its eye on McHenry but does not typically go through the request for proposal process some towns seek to find developers. Instead, “we want to partner and work together with [communities] to develop what the plan needs to be,” Patzelt said.

It is a ‘breathing room’ commitment to each other, that we will be partners for redevelopment on this property.”

—  McHenry City Administrator Derik Morefield

The agreement outlines that both parties will seek “available grants and funds from state, federal and private sources” to offset the cost of improvements for public access and use.

There is also a time element to consider, Morefield said. McHenry’s downtown tax increment financing district was set to expire in 2025. In December, it was extended for another 12 years by the Illinois General Assembly.

“If we don’t start something ... the clock is running on the TIF,” Morefield said.

If a proposal can be designed, approved and built, the development will have more time to benefit from the TIF, he said.

It is possible that another developer could ask about the property before a deal is reached, Polerecky said. That could be a possibility with any development project, he added.

Shodeen, he said, has a reputation for quality construction and approached McHenry.

“Shodeen has shown interest in our community, and we want to give them time” to determine the best plan, Polerecky said.

It is likely that a McHenry project, if ultimately approved by both sides, would be mixed use, Patzelt said. That mixed use could be restaurants, retail, commercial, parking, housing or boating related and tie into McHenry’s Riverwalk.

“Those are all elements on our pallet,” Patzelt said. “We now need to blend them together for a successful project that is financeable.”