Future of former McHenry sewer plant site on Fox River envisioned differently by city leaders

A restaurant, condos, a mix of both retail business and housing, a boutique hotel or even a new city park and concert venue were all ideas brought up by local officials last week for McHenry’s vacant former wastewater treatment site.

It sits on the bank of the Fox River on a dead end of Waukegan Road, and the city has put more than $1 million into demolishing the previous sewer plant facilities, with half of those costs covered by state funding.

But so far, the McHenry City Council hasn’t attracted a redevelopment proposal its members like, and little consensus exists among the elected officials about the best path forward for the publicly owned waterfront property.

The council this fall shunned a proposal from a luxury apartments developer to build more than 200 housing units on the site, even as a city-hired consultant’s report this year identified a significant unmet need for rental housing in the McHenry market area.

The same consultant also specifically highlighted the water treatment site as suitable for a three-story apartment building consisting of around 100 units. The preliminary proposal turned down by the city would have been five stories.

“The most important thing is that at some point something happens there,” McHenry City Administrator Derik Morefield said Tuesday. “Sitting there in its current state as a vacant site generates zero revenues for the municipality.”

That means a public use like a park facility is likely off the table, he said, as the property sits within the city’s tax increment finance, or TIF, district. The TIF territory was drawn about 20 years ago with the goal of helping fund the eventual redevelopment of the wastewater site.

The city will have to petition the state to extend the life of the TIF, which expire after 23 years, in order to keep it as a financial tool available to aid in the wastewater site’s redevelopment, Morefield said.

But before the city solicits the private sector for more redevelopment bids, Morefield hopes the council can form a majority on what specifically it would like to see built on the wastewater site, so city staff can better guide developers who show an interest in the property as they draft proposals.

After ideas as far apart as a park use, lodging and a combination of housing and retail uses on the site were mentioned by council members last week, Morefield said Tuesday he plans to ask the council to discuss their hopes for the site again next month.

The apartments proposal the city turned down was the only bid the city received on its last request for proposals.

So far, it looks like the council is closest to agreeing that the site should contain some kind of housing, but that it should be owner-occupied rather than rentals, such as townhomes or condos.

But gaining such a housing proposal has its own set of hurdles to overcome, namely that the market for constructing those types of homes has flattened recently while interest in rental housing has exploded, as 5th Ward Alderman Shawn Strach pointed out.

In fact, there are currently purchase offers on condo properties in McHenry County that would convert them from owner-occupied homes into apartment rentals.

“As much as we don’t want to see high-density use, multi-family use, it is the trend. It is the direction the industry is going. This council needs to realize the industry is shifting, the housing market is shifting and we’re going to see more and more of homeownership being a lesser build in the future,” Strach said. “At this point all the things that have been thrown on the table are ideal, but I do think we are going to have to be open to other types of industry.”

Alderwoman Sue Miller, of the 7th Ward, said she thinks having a business component on the site is important and it should be conducive to boaters on the river pulling up. She is open to seeing housing built there in conjunction with a commercial component to make it financially feasible for a developer.

“This is on the Fox River, and the Fox River has a lot of boat traffic and a lot of tourist traffic,” Miller said. “When I look at it from the river side of the property, apartments were an idea. But shouldn’t it be a mixed-use development with some commercial, some opportunity to take advantage of the boat traffic and have a stopping place, a destination?”

Morefield said he could request the council hold multiple additional discussions about their goals for the site if next month’s talk also fails to build a consensus.