LAKEWOOD – Commercial development near the intersection of Routes 47 and 176 is so crucial to the future of Lakewood that the Village Board agreed to buy 43.8 acres there for $600,000.
The board voted this week to approve a real estate sale agreement with Harvard State Bank to buy the bank-owned land using reserve funds.
Buying the land will allow the village to control how it’s developed, Village President Erin Smith said.
It also makes Lakewood a landlord and property-tax payer.
Once the village owns the land, it can begin cleaning up the property to make it more marketable and working with the Illinois Department of Transportation to improve the intersection there.
The property is at the southwest intersection of Route 47 and Pleasant Valley Road. In 2010, McHenry County SportsPlex LLC announced plans to build a $46 million sports complex there but wasn’t able to get financing for the project. Some Pleasant Valley Road residents had opposed development in the area.
Smith said the deal made sense for the village because the land was available and relatively cheap.
Officials said the $600,000 price was “substantially less” than the most recent appraisal of the property, but they couldn’t immediately provide the Northwest Herald with the date and amount of the appraisal.
Lakewood’s agreement with Harvard State Bank is similar to a mortgage, but there are some key differences.
Village officials will make a down payment of $60,000 and plan to borrow the remaining $540,000 at a rate of 4 percent for a 10-year period. There is no penalty for paying off the loan early, but if the village is able to sell the land for a profit within the next five years, it will have to split the profit with Harvard State Bank, according to a village memo.
As part of the deal, the village agreed to take over two bank-negotiated leases on the property. One lease is for the home on the property and the other is for 30 acres of farmland. If the property isn’t sold and the leases continue for the next 10 years, Lakewood would make a $4,500 profit. The leases will bring in $118,000 in revenue while property taxes and interest on the purchase would cost $113,500, according to city documents.
Smith said the goal isn’t to make a profit. She said the Village Board might even consider selling the property to a potential developer for less than it’s worth as an incentive to build in the village. Official wants to see commercial development that would generate sales tax, making the village less reliant on property taxes to pay for services.
Smith said the deal was “cost neutral” and no new taxes would be levied to pay for it. She emphasized that it was different from the village’s purchase of RedTail Golf Club in that respect.