Two bills sponsored by Illinois Senate President John Cullerton (D-Chicago) and aimed at incentivizing affordable housing development are currently making their way through the General Assembly. If passed, the bills would provide a 10-year incentive for new and existing developments that set aside at least 20 percent of units for affordable housing occupancy.
Under the terms of Senate Bill 2259, an owner of a residential property committing at least 20 percent of his or her newly constructed or rehabilitated rental units would secure a tax break equal to the difference between the year when the incentive was sought – known as the base year – and the equalized assessed value after construction or improvements for the first two years after construction. Developers would be eligible for an 80-percent reduction in equalized assessed value from the base year during the third and fourth years, 60 percent in the fifth and sixth years, 40 percent for the seventh and eighth years, and 20 percent for the final two years.
SB2259 was first read in May before being referred to the Assignments Committee the same day.
According to Scott Tapley, vice president and senior investment officer for First Mid-Illinois Bank & Trust, the incentive would largely result in Illinois homeowners paying the difference.
“Using property taxes to fund ‘affordable housing’ is like trying to lift yourself up by pulling on your own boots,” Tapley said. “Illinois property taxpayers are already shouldering some of the most burdensome tax rates in the nation.”
Eight representatives in the statehouse have backed House Bill 2168, which calls for a 25-percent property tax incentive for multifamily owners that set aside at least 15 percent of their units for affordable housing. HB 2168 provides a tax incentive of up to 35 percent from the year’s assessed value if landlords set aside 35 percent of their units for affordable housing.
“Property tax is one of the least equitable, most unfair taxes because property ownership has no direct relationship with income,” Tapley said. “It is sad that someone can live modestly, pay off a mortgage, and then have to move out of the house in their old age due to an unaffordable property tax bill. Economics 101 teaches that rising costs equal less demand. If raising property taxes has no negative impact on housing sales, then Springfield should fix all of the state's budget problems right now with a massive property tax increase.”