property tax incentive

Background

After structural changes reduced the value of the Cook County Class 9 program, a number of housing stakeholders—nonprofit developers, SRO owners, neighborhood developers, new construction developers, affordable housing advocates, and others—were working independently to develop property tax incentives for their specific housing type.

The Preservation Compact convened these groups to develop a single proposal that would provide meaningful property tax relief for multifamily rental properties. The property tax incentive in the affordable housing omnibus bill emerged from this process. The final policy replicates many of the successful elements of the Class 9 program and includes an additional threshold that will be more attractive in higher-cost areas.

Perhaps as a result of its collaborative origin, this incentive received support from a diverse array of stakeholders, including the Cook County Assessor’s Office, Cook County, the City of Chicago, the Housing Action Illinois, Illinois Housing Council, Metropolitan Planning Council, Enterprise Community Partners, Chicagoland Apartment Association, Illinois REALTORS, Illinois Rental Property Owners Association, Elevate Energy, National Multiple Sclerosis Society and others.

The incentive structure creates and preserves affordable housing by reducing a property’s post-rehab or post-construction assessed value. Specifically, the legislation creates a property tax incentive for buildings with seven or more residential rental units that:

• Are new construction or undertake qualifying rehabilitation to replace major building systems, improve health and safety, energy efficiency, accessibility and/or other physical conditions, and
• Keep a portion of units affordable to households at or below 60% of Area Median Income (AMI). Click here to view City of Chicago and Cook County AMI charts and click here to view rents affordable to households earning 60% of AMI.

The incentive establishes three tiers of affordability and property tax relief:

• If property owners agree to hold 35% or more of their units at affordable levels, they are eligible to receive a 35% decrease in assessed value; and
• If property owners agree to hold at least 15% of their units at affordable levels, they can receive a 25% reduction in their assessed value.
• See incentive summary table for a 20% affordability tier that is available on a more limited basis.

Property owners who comply with the terms of the program can receive the reduction outlined in Tiers 1 and 2 for ten years, and they can renew their participation for two additional 10-year terms (30 years total) if the Department of Buildings certifies they are in good condition.