McHenry council advances draft TIF plans, asks for EAV, housing-study and tax-impact details

McHenry — City council members on Thursday reviewed draft redevelopment plans for three proposed tax increment financing districts — West Route 120, Downtown/Main Street and Richmond Road — and asked staff and consultants for more data before moving to final hearings and votes.

Consultant Pete Iozu of Teska Associates told the council that eligibility studies show the proposed areas qualify as conservation areas and that redevelopment plans are nearly finished. "The Route 120 plan is about 90% done," Pete said, adding that he is finalizing budgets and map adjustments and will supply draft reports to staff "within a matter of days." He also warned that the TIF act is specific about allowable expenditures and that the tool is primarily designed for infrastructure, demolition or rehabilitation rather than routine incentives for new construction.

Why it matters: TIFs divert future property-tax increments from taxing districts into a project fund for up to 23 years; council members said they want clear estimates of equalized assessed value (EAV) and potential impacts on residents and school and library districts before approving boundaries. Alderman (name recorded in roll call as) Miller recused herself from Richmond Road discussion because she owns property within the proposed Richmond Road TIF.

Council members focused on several recurring questions. Alderman Bassi asked why national chain parcels — McDonald's, Burger King, AutoZone and others that sit inside the proposed boundaries — were included. "Are we just increasing the property value of multinational corporations?" she asked. Staff responded that inclusion is partly to ensure contiguity and that any future incentive for a given parcel would be considered case-by-case; establishing a TIF does not obligate the city to grant incentives to every property in the district.

On the Route 120 district, Pete and city staff explained that a housing-impact study is mandatory if the TIF contains more than 75 residential units in total or if redevelopment would displace 10 or more residents. "I'm not suggesting there will definitely be displacement," Pete said, "but because the area contains more than 75 residential units, we have to do the housing study."

Legal and fiscal mechanics were debated. Staff explained 'pay-as-you-go' redevelopment agreements that place most initial risk on developers and allow the city to reimburse eligible costs as increment is realized. The council also heard that contiguous TIFs can 'port' funds between adjacent districts for eligible projects, though any such movement must be carefully documented and coordinated with affected taxing bodies.

Public commenters urged caution. Beatrice Walter, speaking as a former McHenry resident, asked why the city would not hold a referendum for a general corridor-improvement plan and raised traffic-safety concerns at key intersections on Routes 120 and 31. Mary Mahady, McHenry Township assessor, warned that shifting high-value properties into a TIF reduces the pool of property tax dollars available to lower city tax rates and urged the council to explain the trade-offs in public hearings.

Next steps: Staff said they can finalize draft maps and EAV tables and will schedule joint review board meetings with affected taxing bodies and public hearings (Route 120 will require two hearings because of the housing study). Final ordinances to establish the TIFs would return to council for vote after those steps.

The council paused the TIF discussion to convene an executive session on personnel matters.