Crystal Lake to vote on economic incentive deal for Crystal Court shopping center

The Crystal Lake City Council will vote Tuesday on a $14 million economic incentive agreement that could transform the mostly empty Crystal Court shopping center into a residential and commercial area.

The proposed site, called Water’s Edge, would have apartments, townhomes, restaurants, retail stores, an outdoor public area and possibly a hotel.

Crystal Court, located on Northwest Highway adjacent to Three Oaks Recreation Area, has been nearly empty for more than a decade, its decline beginning when Walmart relocated in 2007. Plans for redevelopment have been in the works for over three years.

Developer Heartland Real Estate Partners requested $14 million in tax increment financing assistance for the project. The Crystal Lake City Council established a TIF district – a special type of taxing district that earmarks newly accrued property taxes for economic development – in June 2022.

The entire 33-acre area is expected to cost almost $20.5 million to develop, according to Heartland Real Estate Partners documents.

It’s been a long, altruistic process to make this a world-class project for Crystal Lake.”

—  Haig Haleblian, Crystal Lake mayor

Developers asked for $6 million each to fund residential infrastructure and commercial development and another $2 million for commercial infrastructure.

According to city documents, the developer “would hold all the financial risk” in the project. Crystal Lake would use TIF revenue to reimburse eligible expenses from the project.

Developers would be able to get a promissory note from the city after the work is completed, Crystal Lake Community Development Director Katie Cowlin sad. That note can then be redeemed once the property tax value accrues and in the meantime, the developer can hold the note in its investment portfolio, monetize it by selling it to a third-party or pledge the note as collateral.

The city does not guarantee that TIF revenue would cover all of the eligible expenses.

The 23-year life of the TIF would run through 2045. An extension would require approval from the Illinois General Assembly.

Crystal Lake School District 47 and Community High School District 155 can receive up to 40% of any new property taxes collected in the TIF on residential property to cover costs of students residing in the area.

During the City Council meeting, which takes place at City Hall, 100 W. Woodstock St. and will be livestreamed online, city council members will vote on the required zoning changes and a redevelopment agreement, which lays out the terms of the economic incentive package.

Final development plans include 12 apartment buildings totaling 240 one- and two-bedroom units. There also would be 20 rental townhomes.

Retail outlets, sit-down restaurants and fast-casual restaurants are anticipated to fill the 42,300 square feet of retail space. A hotel is also proposed in the plan that could include 60 to 120 rooms.

A triangle-shaped outdoor public space would be owned and maintained by the city once construction is complete. The space could have a pavilion, public art and sculptures, games and seating areas.

Outdoor private areas for residents include a clubhouse, a pool, two dog parks, sand volleyball courts and pickleball courts.

Developers hope to have final zoning approval by November, according to City Council documents. If that happens, residential construction could start in May and be completed by May 2026. Commercial building construction is expected to start in 2025 and be completed in 2026.

The big-box store buildings would be demolished this fall or spring, Cowlin said.

Crystal Lake Mayor Haig Haleblian said he loves the aesthetic of the plan and is excited for the project to move forward. He said that it’s been almost four years of the city working with developers and owners to create the plan.

“It’s been a long, altruistic process to make this a world-class project for Crystal Lake,” Haleblian said. " I think we’ve got it right.”