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The City Council of Crystal Lake, Illinois, has approved a 1% sales tax increase on purchases made within the commercial section of the new Water’s Edge mixed-use development, marking the city’s first-ever Business District designation.
The ordinance passed with a 6–1 vote on Tuesday and will remain in effect for 23 years, generating revenue that will be used to reimburse the developer for eligible construction-related expenses. The additional tax is separate from a previously agreed $14 million incentive package, further solidifying the city’s commitment to revitalizing the former blighted site.
A New Tax Zone in Crystal Lake
Located along Route 14, the Water’s Edge development features residential and commercial components. While residents have already begun occupying the residential units, commercial construction is ramping up. The sales tax for shoppers within the district will now reach 9.5%, one of the highest rates in McHenry County.
City officials, including Community Development Director Kathryn Cowlin, noted that this is the city’s first use of the Business District mechanism, an economic development tool allowed under Illinois law. It is designed to stimulate private investment by redirecting a portion of sales tax revenue toward eligible development costs.
Debate Over Necessity
Despite the support from city leaders, not all residents were convinced.
Don Kountz, a Crystal Lake resident, expressed skepticism during the public hearing. “Everything that has been unsanitary or unsafe has been knocked down,” he said, questioning whether the area still qualifies as “blighted” and whether more public support is warranted.
City officials emphasized that the Business District designation is aimed at long-term economic sustainability, and that any reimbursed funds must be tied to documented, qualified costs.
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