McHenry seeks new development proposals on former wastewater treatment site after rejecting luxury apartments

After the McHenry City Council turned down a proposal to build 218 apartment units across five stories at the site of a former wastewater treatment plant along the Fox River, the city may try to attract new pitches for owner-occupied units.

Mayor Wayne Jett on Monday said he “was amazed” that a majority of the council was against moving forward developer Lynmark Group’s proposal and giving a green light to city staff to negotiate a potential tax increment finance deal to help fund the construction of the development.

Lynmark, based in New York, wanted to build 43 studio units that would have rented for $1,350 a month, 98 one-bedroom units that would have rented for $1,650 and 77 two-bedrooms that would have rented for $1,950. Its proposal was the only received by the city after officials asked for bids to develop the now-vacant property, City Manager Derik Morefield said.

“They could have been the nicest apartments in McHenry County,” Jett said.

The city – which still owns the property and the adjacent boat slips that combined are appraised at almost $1.5 million, according to the city – put more than $1 million into demolishing the wastewater structures. Half of those demolition costs were covered by a state grant the city received for the project, Morefield said.

McHenry issued a request for redevelopment proposals before the wastewater structures were removed and received no viable responses for the property, Morefield said, so the city decided to use taxpayer dollars to remove the wastewater facilities and issued another one after it was closer to ready for new construction.

“To me looking at it, in my position, that’s what the market wants is that type of [housing] product there. In this case, it didn’t jive with what the majority of council wanted,” Morefield said Wednesday of the rental housing proposal.

The lack of competing proposals for the site surprised 1st Ward Alderman Vic Santi, who said he would not support moving forward on the Lynmark proposal for now. Others against proceeding included 4th Ward Alderman Ryan Harding, 6th Ward Alderman Patrick Devine and 2nd Ward Alderman Andy Glab.

Concerns were expressed by elected officials as well as multiple neighboring residents with increased traffic flow to the site – it sits at a dead end on Waukegan Road by the river – as well as that Lynmark planned to make it rental housing instead of owner-occupied units.

Lynmark’s director of Midwest operations, Brad Friedman, tried to convince the council there is a strong demand in McHenry for apartments, as documented by a city consultant earlier this year who told local officials hundreds of rental units could be built in the city annually over each of the next several years without weakening the market.

“I mean, this is a riverfront property. It’s walkable to your downtown. You have a great downtown. You have a great vibe. I think these units are going to be in high demand. There is demand for apartments. People want to be transient these days,” Friedman said.

Residents of the condominiums on Waukegan Road just west of the site opposed the rental aspect of the housing. Some said they felt that the street was not built to handle the additional traffic the new housing would create. They also pointed to the nearby high school, formerly known as McHenry East High School, that draws significant amounts of traffic twice a day when classes begin and are dismissed.

But Jett, during an interview, pointed out the high school now hosts only freshman, meaning less traffic than before, as sophomores through seniors all attend what was previously West Campus on Crystal Lake Road.

“When this gentleman talks about transient residential rental, we are definitely opposed to something like that. We feel what is essential for that property is homeownership,” said Anthony Esposito, a McHenry resident and president of the homeowners association for the condominiums.

Bobbi Baehne, another resident of Waukegan Road who unsuccessfully ran for the 1st Ward aldermanic seat earlier this year, also opposed the proposal.

Some of the residents were also against the city providing any incentives to the developer in terms of tax increment financing district, or TIF, benefits, which are a mechanism the city can use to steer property tax revenues generated within district boundaries to improvements in the area to help foster economic growth.

The developer was requesting such assistance, which could have helped fund the project’s construction.

Jett noted the city could have negotiated with Lynmark regarding the size and scale of its proposed housing to potentially quell worries about traffic, but is now unable to with council’s direction to start from scratch with soliciting new development proposals.

Morefield said a discussion of the site’s future will be added to an upcoming City Council meeting agenda so the aldermen can provide input on their vision for the site.

“This will allow us to help ensure that we have a clearer understanding of what may be acceptable to them,” Morefield said.

He plans for the city to update the request for development proposals with specifications based on council’s guidance and release it with a due date for responses set for sometime early next year.