‘This was a good decision we made’: Mellody Farm paying off in Vernon Hills
TIF district could be dissolved 14 years early
Nearly eight years ago, the question in Vernon Hills was whether a hefty upfront village incentive to ignite development on prime open property at Milwaukee Avenue (Route 21) and Townline Road (Route 60) would be worth the investment.
Turns out the luxury apartments and bevy of stores and restaurants developed on the northeast corner as Mellody Farm have exceeded expectations.
So much so that the tax increment financing district created for Mellody Farm — one of three in the village — may be retired 14 years early.
“That was a good decision we made ... to say the least,” Mayor Roger Byrne said during a recent overview of the village’s three TIF districts.
Vernon Hills Town Center TIF established in 2002 for the southern gateway area at Milwaukee and Route 45 is running its course. The success of the third, established in late 2020 to help reinvent and repurpose Hawthorn Mall, is to be determined.
“Overall, the village is satisfied with the performance of our three TIF districts in generating development and economic activity,” said Finance Director Thomas Lyons.
“In all three instances, TIF was successful in incentivizing the development of either vacant or underperforming properties that otherwise would have been less feasible to develop without this tool,” he added.
Using TIFs can be controversial because property taxes paid to government bodies are frozen when the district is created. However, property taxes generated by the increased value (the increment) are directed to a special fund to be used for land acquisition, extending utilities or other eligible development-related costs.
The Mellody Farm TIF increment has grown 77% per year, Lyons said. The frozen assessed value of land used for taxing purposes was about $291,000. The 2024 EAV estimate is about $46.6 million.
Current projections show the TIF fund balance will exceed the $16.3 million outstanding debt in the 2026 fiscal year and once all costs and obligations have been paid and any surplus distributed, the district could be dissolved.
“We’d be ending 14 years early,” he said.
In January 2017, village officials agreed to reimburse developer Regency Centers $20 million to cover a portion of the public improvements and land costs associated with Mellody Farm.
The 55-acre parcel was among the last large piece of developable land in the commercial-heavy village. But only 33 acres were usable and it had been on the market for years at an estimated $30.5 million.
Regency developed a 272,242-square-foot shopping center anchored by Whole Foods and developer/contractor Focus built The Atworth at Mellody Farm, a 260-unit luxury apartment building.
“They created a significant amount of tax increment by building a more upscale shopping center with high-quality materials, finishes, landscaping and streetscape elements,” said John Melaniphy, president of Chicago-based retail consultant Melaniphy & Associates Inc., which has advised the village since 1990.
Attention to detail and upscale facilities and amenities, and the residential portion of the project are key to Mellody Farm’s success, he added.
According to Melaniphy, tenants including Nordstrom Rack, Whole Foods, REI and HomeGoods appeal to a wide variety of consumers. Also, a significant portion of leasable area is allocated to restaurants, which generate higher property taxes per square foot and greater sales tax than conventional retail, he added.
For example, the Lazy Dog restaurant at Mellody Farm is among the strongest performers in the chain’s portfolio with sales well above the benchmark, Melaniphy said.