McHenry City Council members will consider permanently reducing impact fees during a meeting Monday.
In September 2018, the city agreed to reduce impact fees by 50% in an effort to spur development on about 300 plots in various housing complex lots throughout McHenry. Municipalities throughout McHenry County have gone the same route to encourage development.
It was in 2018 that developers with the Oaks of Irish Prairie and Legend Lake subdivisions asked the city for a reduction. The Patriot Estates, Liberty Trails and Lincoln Hills subdivisions also were eligible.
Municipalities collect impact fees from developers that then go to various taxing bodies such as the police department, schools or park and library districts to offset the costs of additional residents.
In 2004, McHenry determined that the value of 1 acre of improved land was $107,586, and impact fees were based off those costs. Under the new proposed formula, the value of that same acre of land would be $80,000.
City officials hired Harrison and Associates Inc., a land use and valuation consulting company, to recommend an appropriate fee schedule moving forward.
“Unfortunately, over the past several years, the single-family residential development market has been decimated,” Frank Harrison of Harrison and Associates said in a letter to the city. “Between 2008 and the current date, the market for single-family residences, particularly new single-family residences, has been reduced significantly.”
Many builders were left with potential subdivisions for which there was no market, resulting in foreclosure and bankruptcy, Harrison said.
“To date, there is no meaningful market for undeveloped subdivisions in eastern McHenry County, regardless of the level of improvements in the subdivision,” he said.
Under the new fee structure, developers of single-family detached homes would pay between $3,929 and $9,041 in impact fees, depending on the number of bedrooms in each home. That number is down from fees ranging from $7,826 to $15,267.
Developers of attached single-family homes such as townhomes and duplexes could pay fees between $2,144 and $7,164, down from the original fee range of between $3,297 and $14,120.
Apartment developers would pay between $2,265 to $6,337, down from the original fee range between $3,517 and $12,551. The fewer number of bedrooms in each unit, the less the impact fee would be.
The council will meet at 7 p.m. Monday at the municipal building, 333 S. Green St.