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Recent Amendments to Tax Incentives

by Steven Kandelman

On March 23, 2017, the Cook County Board passed new amendments to the incentive tax ordinances. (Secs. 74-46, 74-62 thru 74-73 of the Cook County Code) The intended recipients of many of the Assessor’s tax incentives are owners and/or tenants who agree to purchase and/or inhabit distressed properties that are undergoing new construction or properties that are undergoing substantial rehabilitation.  For example, distressed commercial or industrial properties that have experienced chronic vacancy of at least 12-24 consecutive months would benefit from these tax incentives which would provide a lower level of assessment over a 12-year-period.  Levels of assessment of 25% of fair market value would be reduced to a 10% level for the first 10 years of the tax incentive period; 15% in Year 11; and 20% in Year 12.  For a commercial property, the standard property worth $1,000,000 would be assessed at $250,000 without the incentive benefit, whereas, with the benefit, the property would only be assessed at $100,000 or 150% less.

The recent changes to the tax incentive ordinance include the following amendments:

1) Applicants seeking an incentive would have to supply “Economic Disclosure Statements” which must include a list of all the real estate that the applicant owns within the county and their Permanent Index Numbers (PINs) and a disclosure of ownership interests and certification that the applicant is not delinquent on paying their property taxes;
2) The definition of “employer” has been changed to include “any person or entity that employs twenty or more employees,” meaning the County’s living wage requirements will only apply to employers who have 20 or more employees working at the property in order to be eligible for the incentive;
3) Employees who work at properties that receive tax incentives would have to be paid “a living wage” regardless of ownership;
4) The ordinance in support of the project must describe the redevelopment objective of the municipality and the intended use of the property;
5) Rather than requiring protracted “formal” municipal authority subject to the Open Meetings Act, “authorized officers” designated by the municipality can expedite a “letter of support” to include with incentive applications for properties located in Industrial Growth Zones and Retail Corridors;
6) All incentive class (6b, TEERM (Temporary Emergency Economic Recovery Modification Program), 6b, SER (Sustainable Emergency Relief Program), 7a, 7b, 7c, and 8) incentives can be revoked.  The ordinance previously only allows Class 7c incentives to be revoked;
7) Recipients of tax incentives processed through the Cook County’s Bureau of Economic Development (BED) must enter into an agreement with the Chicago Cook Workforce Partnership to work directly with the individual applicants or entities seeking the incentive in order to fill job openings and vacancies for a period of at least seven business days from the date job vacancies are opened; and
8) All property tax incentives received by the Cook County Assessor that require a Cook County Board of Commissioners Resolution of support will have to pay a $1,000 filing fee, except Class 7a projects, where the total development costs are less than $1,000,000.  All property tax applications received by the Cook County Assessor that require a Resolution of support from the Economic Development Advisory Committee (EDAC) will have to pay a filing fee of $2,500 except for Class 7c projects where the total development costs are less than $1,000,000.

“Cook County Committee Preview: Tax Break Changes, FOIA Friendliness and Federal Funding” by A.D. Quig of [email protected] (March 22, 2017)

These changes were sponsored by Commissioner Chuy Garcia to ensure the beneficiaries of the property tax incentives are delivering on promised jobs and making building improvements or re-occupying formerly vacant property and that the property owners conform with the county’s wage requirements and statutory rules for workers’ rights.  Other proponents have said that these amendments increase transparency and prevent fraud.