February 19, 2025
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With empty stores and big boxes, McHenry eyes new tax districts to spur redevelopment outside downtown

Council to hear ideas at Tuesday meeting

By Janelle Walker
The intersection of Main Street and Route 31on Wednesday Feb. 12, 2025, The McHenry City Counsel is proposing a new Tax Increment Financing District on Rt 31 from the old roller rink to 120, and from 120 to the strip mail that contains the old K-Mart building and including Main Street from 31 to Crystal Lake Road.

The intersection of Main Street and Route 31 is seen Wednesday Feb. 12, 2025. The McHenry City Council is proposing a new tax increment financing district on Route 31 from the old roller rink to Route 120, and from 120 to the strip mail that contains the old Kmart building and including Main Street from 31 to Crystal Lake Road. (Gregory Shaver/Gregory Shaver )

McHenry has tried a few things in recent years to attract redevelopment in areas outside if its core downtown, Economic Development Director Doug Martin said.

But the city’s success with those projects has been limited.

“It was never enough,” Martin said of the programs in place now.

On Tuesday, Feb. 18, the city staff is set to present the McHenry City Council with ideas on three, or possibly four, new tax-increment financing districts, or TIFs. The regular Monday meeting was moved to Tuesday because of the Presidents Day holiday.

“This is our effort to revitalize outside of the downtown with economic incentives to bring additional investment,” City Administrator Suzanne Ostrovsky said of the discussion.

The former K-Mart building on Wednesday Feb. 12, 2025, in McHenry The McHenry City Counsel is proposing a new Tax Increment Financing District on Rt 31 from the old roller rink to 120, and from 120 to the strip mail that contains the old K-Mart building and including Main Street from 31 to Crystal Lake Road.

The former Kmart building is seen Wednesday Feb. 12, 2025, in McHenry The McHenry City Council is proposing a new tax increment financing district on Route 31 from the old roller rink to Route 120, and from there to the strip mail that contains the old K-Mart building and including Main Street from 31 to Crystal Lake Road. (Gregory Shaver/Gregory Shaver )

Tuesday’s presentation is “a very initial discussion ... to gauge the council’s appetite for continuing the conversation,” she said.

Other than TIFs, existing programs to spur rebuilding have not been able to attract and retain developers, Martin said.

“As director of economic development, the calls I get are about incentives and does the city offer incentives for development. Everyone is looking for incentives,” Martin said.

“Everyone is looking for incentives.”

—  Doug Martin, McHenry economic development director

A TIF district is a tax subsidy that allows the new property taxes generated by redevelopment within the district to be channeled back into the property rather than distributed to the taxing bodies. Excess moneys in the TIF can be used for public improvements.

McHenry now has one 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 has paid for construction of the McHenry Riverwalk.

The areas that could be put into new TIF districts include West Route 120 (Elm Street), Richmond Road and Main Street, Martin said. A possible Route 120 TIF could allow undersized lots with individual storefronts on each to be redeveloped into large developments with commercial spaces sized for what small businesses need, Martin said.

“There is fast traffic and a lot of small lots. If they were redeveloped into mixed use, I am more confident” for their futures, he added.

“We do have a lot of small businesses that are looking for location ... that have located on 120 because of availability,” Ostrovsky said, but added that availability doesn’t always translate to good visibility for the businesses.

A Richmond Road TIF would focus on now-empty big box stores that date from about the 1980s and 1990s.

Along Route 31 (Richmond Road) south of Blake Road, McHenry has 150,000 square feet of vacant shopping center space, including the long-shuttered Kmart building, Martin said. A mixed-use, planned unit development including housing, retail and business uses there was proposed in the recently approved McHenry comprehensive plan.

McHenry has attempted to attract users to these empty spaces – one of the programs that has had limited success, Martin said. The vacant building incentive program allows a business to move into a building that has been unoccupied for at least three years to receive a tax abatement for the first five years. Rita’s Italian Ice on Route 120 used that program as part of that building’s renovation.

Buildings like the Kmart are obsolete now, he said. “The building is in terrible condition, and the reality is it is a teardown.”

A Main Street TIF area could be split in two, with the northern end around McHenry’s third downtown area and the southern end focusing on Route 31 starting at Bull Valley Road.

A TIF centered on McHenry’s southern Route 31 corridor may have to wait until after the Illinois Department of Transportation rebuilds the road with four lanes by the end of the decade.

“If you do [a TIF] at the same time you can lose years in the TIF increment” because of delayed development of the adjoining land, Martin said.

Mayor Wayne Jett said he does not want to wait that long to jump-start redevelopment around Main Street.

“Main Street cannot wait anymore” for development help, Jett said. “We can put something in that area that is viable.”

The McHenry Metra Station on Wednesday Feb. 12, 2025, The McHenry City Counsel is proposing a new Tax Increment Financing District on Rt 31 from the old roller rink to 120, and from 120 to the strip mail that contains the old K-Mart building and including Main Street from 31 to Crystal Lake Road.

The McHenry Metra Station on Wednesday Feb. 12, 2025, The McHenry City Counsel is proposing a new Tax Increment Financing District on Rt 31 from the old roller rink to 120, and from 120 to the strip mail that contains the old K-Mart building and including Main Street from 31 to Crystal Lake Road. (Gregory Shaver/Gregory Shaver )

City staff and Jett said they understand that not everyone is on board with using TIF to attract redevelopment, but that it’s now largely expected.

The mayor called it “the reality of the situation.” He said the city “regularly loses development to surrounding communities because they can provide the assistance developers need to make their numbers work.”

There was a hotel that showed interested in McHenry “but they needed a TIF” to make it work, said Jeff, adding that company now is building in another McHenry County community. “They backed out because they can’t make it work without a TIF.”

Jett is running for his third term against Council member Chris Bassi. The local election is April 1.

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