102ND GENERAL ASSEMBLY
State of Illinois
2021 and 2022
HB0805

 

Introduced 2/10/2021, by Rep. Curtis J. Tarver, II

 

SYNOPSIS AS INTRODUCED:
 
35 ILCS 200/15-178 new

    Amends the Property Tax Code. Provides for a reduction in the assessed value of newly-constructed or rehabilitated rental property if the owner of the residential real property commits that, for a period of 10 years, at least 15% of the multifamily building's units will have rents that are at or below maximum rents and are occupied by households with household incomes at or below maximum income limits. Provides that the chief county assessment officer of a county with 3,000,000 or more inhabitants shall establish such a program. Sets forth application requirements and the amount of the reduction. Effective immediately.


LRB102 12720 HLH 18059 b

FISCAL NOTE ACT MAY APPLY
HOUSING AFFORDABILITY IMPACT NOTE ACT MAY APPLY

 

 

A BILL FOR

 

HB0805LRB102 12720 HLH 18059 b

1    AN ACT concerning revenue.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Property Tax Code is amended by adding
5Section 15-178 as follows:
 
6    (35 ILCS 200/15-178 new)
7    Sec. 15-178. Reduction in assessed value for affordable
8rental housing construction or rehabilitation.
9    (a) The General Assembly finds that there is a shortage of
10high quality affordable rental homes for low-income and
11very-low-income households throughout Illinois; that owners
12and developers of rental housing face significant challenges
13building newly constructed apartments or undertaking
14rehabilitation of existing properties that result in rents
15that are affordable for low-income and very-low-income
16households; and that it will help Cook County and other parts
17of Illinois address the extreme shortage of affordable rental
18housing by developing a Statewide policy to determine the
19assessed value for newly constructed and rehabilitated
20affordable rental housing that both encourages investment and
21incentivizes property owners to keep rents affordable.
22    (b) Any county with 3,000,000 or more inhabitants shall
23implement a special assessment program to reduce the equalized

 

 

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1assessed value of all eligible newly-constructed residential
2real property or qualifying rehabilitation to all eligible
3existing residential real property in accordance with
4subsection (c) for 10 taxable years after the newly
5constructed residential real property or improvements to
6existing residential real property are put in service. Any
7county with less than 3,000,000 inhabitants may decide not to
8implement this special assessment program upon passage of an
9ordinance by a majority vote of the county board. Subsequent
10to a vote to opt-out of this special assessment program, any
11county with less than 3,000,000 inhabitants may decide to
12implement this special assessment program upon passage of an
13ordinance by a majority vote of the county board. Property is
14eligible for the special assessment program if and only if all
15of the following factors have been met:
16        (1) the property consists of a newly-constructed
17    multifamily building containing 7 or more rental dwelling
18    units or an existing multifamily building that has
19    undergone qualifying rehabilitation containing 7 or more
20    rental dwelling units;
21        (2) except as defined in subparagraphs (E), (F), and
22    (G) of paragraph (4) of subsection (d) of this Section,
23    prior to the newly-constructed residential real property
24    or improvements to existing residential real property
25    being put in service, the owner of the residential real
26    property commits that, for a period of 10 years, at least

 

 

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1    15% of the multifamily building's units will have rents as
2    defined in this Section that are at or below maximum rents
3    and are occupied by households with household incomes at
4    or below maximum income limits; and
5        (3) the property meets the application requirements
6    defined in subsection (d).
7    (c) The amount of the reduction shall be calculated as
8follows:
9        (1) if the owner of the residential real property
10    commits for a period of at least 10 years that at least 15%
11    but fewer than 35% of the multifamily building's units
12    have rents at or below maximum rents and are occupied by
13    households with household incomes at or below maximum
14    income limits, the assessed value of the property used to
15    calculate the tax bill shall be reduced by an amount equal
16    to 25% of the assessed value of the property as initially
17    determined by the assessor for the property in the current
18    taxable year for the newly-constructed residential real
19    property or based on the improvements to an existing
20    residential real property; and
21        (2) if the owner of the residential real property
22    commits for a period of at least 10 years that at least 35%
23    of the multifamily building's units have rents at or below
24    maximum rents and are occupied by households with
25    household incomes at or below maximum income limits, the
26    equalized assessed value of the property used to calculate

 

 

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1    the tax bill shall be reduced by an amount equal to 35% of
2    the assessed value of the property as initially determined
3    by the assessor for the property in the current assessment
4    year for the newly constructed residential real property
5    or based on the improvements to an existing residential
6    real property.
7    (d) Application requirements.
8        (1) In order to receive the reduced valuation under
9    this Section, the owner must submit an application
10    containing the following information to the chief county
11    assessment officer for review in the form required by the
12    chief county assessment officer:
13            (A) the owner's name;
14            (B) the postal address and permanent index number
15        of the parcel;
16            (C) a deed or other instrument conveying the
17        parcel to the current owner;
18            (D) written evidence that the new construction or
19        qualifying rehabilitation has been completed with
20        respect to the residential real property, including,
21        but not limited to, copies of building permits, a
22        notarized contractor's sworn affidavit, and
23        photographs of the interior and exterior of the
24        building after new construction or rehabilitation is
25        completed;
26            (E) written evidence that the residential real

 

 

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1        property meets local building codes, or if there are
2        no local building codes, Housing Quality Standards, as
3        determined by the United States Department of Housing
4        and Urban Development;
5            (F) a list identifying the affordable units in
6        residential real property and a written statement that
7        the affordable units are comparable to the market rate
8        units in terms of unit type, number of bedrooms per
9        unit, quality of exterior appearance, energy
10        efficiency, and overall quality of construction;
11            (G) a written schedule certifying the rents in
12        each affordable unit and a written statement that
13        these rents do not exceed the maximum rents allowable
14        for the area in which the residential real property is
15        located;
16            (H) documentation from the administering agency
17        verifying the owner's participation in a qualifying
18        income-based rental subsidy program as defined in
19        subsection (e) of this Section if units receiving
20        rental subsidies are to be counted among the
21        affordable units in order to meet the thresholds
22        defined in this Section;
23            (I) a written statement identifying the household
24        income for every household occupying an affordable
25        unit and certifying that the household income does not
26        exceed the maximum income limits allowable for the

 

 

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1        area in which the residential real property is
2        located;
3            (J) a written statement that the owner has
4        verified and retained documentation of household
5        income for every household occupying an affordable
6        unit; and
7            (K) any additional information consistent with
8        this Section as reasonably required by the chief
9        county assessment officer, including, but not limited
10        to, any information necessary to ensure compliance
11        with applicable local ordinances and to ensure the
12        owner is complying with the provisions of subparagraph
13        (F) of paragraph (4) of subsection (d) of this
14        Section.
15        (2) The chief county assessment officer shall notify
16    the owner as to whether or not the property meets the
17    requirements of this Section. If the property does not
18    meet the requirements of this Section, the chief county
19    assessment officer shall provide written notice of any
20    deficiencies to the owner, who shall then have 14 days
21    from the date of notification to provide supplemental
22    information showing compliance with this Section. If the
23    owner does not exercise this right to cure the deficiency,
24    or if the information submitted, in the sole judgment of
25    the chief county assessment officer, is insufficient to
26    meet the requirements of this Section, the chief county

 

 

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1    assessment officer shall provide a written explanation of
2    the reasons for denial.
3        (3) The chief county assessment officer may charge a
4    reasonable application fee to offset the administrative
5    expenses associated with the program.
6        (4) The reduced valuation conferred by this Section is
7    limited as follows:
8            (A) The owner is eligible to apply for the reduced
9        valuation conferred by this Section beginning in the
10        first assessment cycle after the effective date of
11        this amendatory Act of the 102nd General Assembly
12        through December 31, 2031. If approved, the reduction
13        will be effective for the current assessment year,
14        which will be reflected in the tax bill issued in the
15        following calendar year. Owners that are approved for
16        the reduced valuation under this Section before
17        December 31, 2031 shall, at minimum, be eligible for
18        annual renewal of the reduced valuation during an
19        initial 10-year period if annual certification
20        requirements are met for each of the 10 years, as
21        described in subparagraph (B) of paragraph (4) of
22        subsection (d) of this Section until December 31,
23        2041.
24            (B) Property receiving a reduction outlined in
25        this Section shall continue to be eligible for an
26        initial period of up to 10 years if annual

 

 

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1        certification requirements are met for each of the 10
2        years, but shall be extended for up to 2 additional
3        10-year periods with annual renewals if the owner
4        continues to meet the requirements of this Section,
5        including annual certifications, and excluding the
6        requirements regarding new construction or qualifying
7        rehabilitation defined in subparagraph (D) of
8        paragraph (1) of this subsection.
9            (C) The annual certification materials in the year
10        prior to final year of eligibility for the reduction
11        in assessed value must include a dated copy of the
12        written notice provided to tenants informing them of
13        the date of the termination if the owner is not seeking
14        a renewal.
15            (D) If the property is sold or transferred, the
16        purchaser or transferee must comply with all
17        requirements of this Section, excluding the
18        requirements regarding new construction or qualifying
19        rehabilitation defined in subparagraph (D) of
20        paragraph (1) of this subsection, in order to continue
21        receiving the reduction in assessed value. Purchasers
22        and transferees who comply with all requirements of
23        this Section excluding the requirements regarding new
24        construction or qualifying rehabilitation defined in
25        subparagraph (D) of paragraph (1) of this subsection
26        are eligible to apply for renewal on the schedule set

 

 

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1        by the initial application.
2            (E) The owner may apply for the reduced valuation
3        if the residential real property meets all
4        requirements of this Section and the newly-constructed
5        residential real property or improvements to existing
6        residential real property were put in service on or
7        after January 1, 2015. However, the initial 10-year
8        eligibility period shall be reduced by the number of
9        years between the placed in service date and the date
10        the owner first receives this reduced valuation.
11            (F) The owner may apply for the reduced valuation
12        within 2 years after the newly-constructed residential
13        real property or improvements to existing residential
14        real property are put in service. However, the initial
15        10 year eligibility period shall be reduced for the
16        number of years between the placed in service date and
17        the date the owner first receives this reduced
18        valuation.
19            (G) Owners of a multifamily building receiving a
20        reduced valuation through the Cook County Class 9
21        program on December 31, 2019 shall be deemed
22        automatically eligible for the reduced valuation
23        defined in this Section in terms of meeting the
24        criteria for new construction or substantial
25        rehabilitation for a specific multifamily building
26        regardless of when the newly-constructed residential

 

 

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1        real property or improvements to existing residential
2        real property were put in service. If a Cook County
3        Class 9 owner had Class 9 status revoked on or after
4        January 1, 2017 but can provide documents sufficient
5        to prove that the revocation was in error or any
6        deficiencies leading to the revocation have been
7        cured, the chief county assessment officer may deem
8        the owner to be eligible. However, owners may not
9        receive the both the reduced valuation under this
10        Section and the reduced valuation under the Cook
11        County Class 9 program in any single assessment year.
12        In addition, the number of years during which an owner
13        has participated in the Class 9 program shall count
14        against the number of remaining years eligible for the
15        reduced valuation as defined in this Section.
16            (H) At the completion of the assessment reduction
17        period described in this Section, the entire parcel
18        will be assessed as otherwise provided in State law.
19    (e) For the purposes of this Section,
20    "Affordable units" means units that have rents that do not
21exceed the maximum rents as defined in this Section.
22    "Household income" includes the annual income for all the
23people who occupy a housing unit that is anticipated to be
24received from a source outside of the family during the
2512-month period following admission or the annual
26recertification, including related family members and all the

 

 

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1unrelated people who share the housing unit. Household income
2includes the sum total of the following income sources: wages,
3salaries and tips before any payroll deductions; net business
4income; interest and dividends; payments in lieu of earnings,
5such as unemployment and disability compensation, worker's
6compensation and severance pay; Social Security income,
7including lump sum payments; payments from insurance policies,
8annuities, pensions, disability benefits and other types of
9periodic payments, alimony, child support, and other regular
10monetary contributions; and public assistance, except for
11assistance from the Supplemental Nutrition Assistance Program
12(SNAP). "Household income" does not include: earnings of
13children under age 18; temporary income such as cash gifts;
14reimbursement for medical expenses; lump sums from
15inheritance, insurance payments, settlements for personal or
16property losses; student financial assistance paid directly to
17the student or to an educational institution; foster child
18care payments; receipts from government-funded training
19programs; assistance from the Supplemental Nutrition
20Assistance Program (SNAP).
21    "Maximum income limits" means the maximum regular income
22limits for 60% of area median income for the geographic area in
23which the multifamily building is located for multifamily
24programs as determined by the United States Department of
25Housing and Urban Development and published annually by the
26Illinois Housing Development Authority.

 

 

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1    "Maximum rent" means the maximum regular rent for 60% of
2the area median income for the geographic area in which the
3multifamily building is located for multifamily programs as
4determined by the United States Department of Housing and
5Urban Development and published annually by the Illinois
6Housing Development Authority. To be eligible for the reduced
7valuation defined in this Section, maximum rents are to be
8consistent with the Illinois Housing Development Authority's
9rules; or if the owner is leasing an affordable unit to a
10household with an income at or below the maximum income limit
11who is participating in qualifying income-based rental subsidy
12program, "maximum rent" means the maximum rents allowable
13under the guidelines of the qualifying income-based rental
14subsidy program.
15    "Qualifying income-based rental subsidy program" means a
16Housing Choice Voucher issued by a housing authority under
17Section 8 of the United States Housing Act of 1937, a tenant
18voucher converted to a project-based voucher by a housing
19authority or any other program administered or funded by a
20housing authority, the Illinois Housing Development Authority,
21another State agency, a federal agency, or a unit of local
22government where participation is limited to households with
23incomes at or below the maximum income limits as defined in
24this Section and the tenants' portion of the rent payment is
25based on a percentage of their income or a flat amount that
26does not exceed the maximum rent as defined in this Section.

 

 

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1    "Qualifying rehabilitation" means, at a minimum,
2compliance with local building codes and the replacement or
3renovation of at least 2 primary building systems. Although
4the cost of each primary building system may vary, to be
5approved for the reduced valuation under paragraph (1) of
6subsection (c) of this Section, the combined expenditure for
7making the building compliant with local codes and replacing
8primary building systems must be at least $8 per square foot
9for work completed between January 1, 2021 and December 31,
102021 and in subsequent years, $8 adjusted by the Consumer
11Price Index for All Urban Consumers, as published annually by
12the U.S. Department of Labor. To be approved for the reduced
13valuation under paragraph (2) of subsection (c) of this
14Section, the combined expenditure for making the building
15compliant with local codes and replacing primary building
16systems must be at least $12.50 per square foot for work
17completed between January 1, 2021 and December 31, 2021 and in
18subsequent years, $12.50 adjusted by the Consumer Price Index
19for All Urban Consumers, as published annually by the U.S.
20Department of Labor. "Primary building systems", together with
21their related rehabilitations, specifically approved for this
22program are:
23        (1) Electrical. All electrical work must comply with
24    applicable codes; it may consist of a combination of any
25    of the following alternatives:
26            (A) installing individual equipment and appliance

 

 

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1        branch circuits as required by code (the minimum being
2        a kitchen appliance branch circuit);
3            (B) installing a new emergency service, including
4        emergency lighting with all associated conduits and
5        wiring;
6            (C) rewiring all existing feeder conduits ("home
7        runs") from the main switchgear to apartment area
8        distribution panels;
9            (D) installing new in-wall conduits for
10        receptacles, switches, appliances, equipment, and
11        fixtures;
12            (E) replacing power wiring for receptacles,
13        switches, appliances, equipment, and fixtures;
14            (F) installing new light fixtures throughout the
15        building including closets and central areas;
16            (G) replacing, adding, or doing work as necessary
17        to bring all receptacles, switches, and other
18        electrical devices into code compliance;
19            (H) installing a new main service, including
20        conduit, cables into the building, and main disconnect
21        switch; and
22            (I) installing new distribution panels, including
23        all panel wiring, terminals, circuit breakers, and all
24        other panel devices.
25        (2) Heating. All heating work must comply with
26    applicable codes; it may consist of a combination of any

 

 

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1    of the following alternatives:
2            (A) installing a new system to replace one of the
3        following heat distribution systems:
4                (i) piping and heat radiating units, including
5            new main line venting and radiator venting; or
6                (ii) duct work, diffusers, and cold air
7            returns; or
8                (iii) any other type of existing heat
9            distribution and radiation/diffusion components;
10            or
11            (B) installing a new system to replace one of the
12        following heat generating units:
13                (i) hot water/steam boiler;
14                (ii) gas furnace; or
15                (iii) any other type of existing heat
16            generating unit.
17        (3) Plumbing. All plumbing work must comply with
18    applicable codes. Replace all or a part of the in-wall
19    supply and waste plumbing; however, main supply risers,
20    waste stacks and vents, and code-conforming waste lines
21    need not be replaced.
22        (4) Roofing. All roofing work must comply with
23    applicable codes; it may consist of either of the
24    following alternatives, separately or in combination:
25            (A) replacing all rotted roof decks and
26        insulation; or

 

 

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1            (B) replacing or repairing leaking roof membranes
2        (10% is the suggested minimum replacement of
3        membrane); restoration of the entire roof is an
4        acceptable substitute for membrane replacement.
5        (5) Exterior doors and windows. Replace the exterior
6    doors and windows. Renovation of ornate entry doors is an
7    acceptable substitute for replacement.
8        (6) Floors, walls, and ceilings. Finishes must be
9    replaced or covered over with new material. Acceptable
10    replacement or covering materials are as follows:
11            (A) floors must have new carpeting, vinyl tile,
12        ceramic, refurbished wood finish, or a similar
13        substitute;
14            (B) walls must have new drywall, including joint
15        taping and painting; or
16            (C) new ceilings must be either drywall, suspended
17        type, or a similar
18        (7) Exterior walls.
19            (A) replace loose or crumbling mortar and masonry
20        with new material;
21            (B) replace or paint wall siding and trim as
22        needed;
23            (C) bring porches and balconies to a sound
24        condition; or
25            (D) any combination of (A), (B), and (C).
26        (8) Elevators. Where applicable, at least 4 of the

 

 

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1    following 7 alternatives must be accomplished:
2            (A) replace or rebuild the machine room controls
3        and refurbish the elevator machine (or equivalent
4        mechanisms in the case of hydraulic elevators);
5            (B) replace hoistway electro-mechanical items
6        including: ropes, switches, limits, buffers, levelers,
7        and deflector sheaves (or equivalent mechanisms in the
8        case of hydraulic elevators);
9            (C) replace hoistway wiring;
10            (D) replace door operators and linkage;
11            (E) replace door panels at each opening;
12            (F) replace hall stations, car stations, and
13        signal fixtures; or
14            (G) rebuild the car shell and refinish the
15        interior.
16        (9) Health and safety.
17            (A) install or replace fire suppression systems;
18            (B) install or replace security systems; or
19            (C) environmental remediation of lead-based paint,
20        asbestos, leaking underground storage tanks, or radon.
21        (10) Energy conservation improvements undertaken to
22    limit the amount of solar energy absorbed by a building's
23    roof or to reduce energy use for the property, including,
24    but not limited to, any of the following activities:
25            (A) installing or replacing reflective roof
26        coatings (flat roofs);

 

 

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1            (B) installing or replacing R-49 roof insulation;
2            (C) installing or replacing R-19 perimeter wall
3        insulation;
4            (D) installing or replacing insulated entry doors;
5            (E) installing or replacing Low E, insulated
6        windows;
7            (F) installing or replacing WaterSense labeled
8        plumbing fixtures;
9            (G) installing or replacing 90% or better sealed
10        combustion heating systems;
11            (H) installing Energy Star hot water heaters;
12            (I) installing or replacing mechanical ventilation
13        to exterior for kitchens and baths;
14            (J) installing or replacing Energy Star
15        appliances;
16            (K) installing or replacing Energy Star certified
17        lighting in common areas; or
18            (L) installing or replacing grading and
19        landscaping to promote on-site water retention if the
20        retained water is used to replace water that is
21        provided from a municipal source.
22        (11) Accessibility improvements. All accessibility
23    improvements must comply with applicable codes. An owner
24    may make accessibility improvements to residential real
25    property to increase access for people with disabilities.
26    As used in this paragraph (11), "disability" has the

 

 

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1    meaning given to that term in the Illinois Human Rights
2    Act. As used in this paragraph (11), "accessibility
3    improvements" means a home modification listed under the
4    Home Services Program administered by the Department of
5    Human Services (Part 686 of Title 89 of the Illinois
6    Administrative Code) including, but not limited to:
7    installation of ramps, grab bars, or wheelchair lifts;
8    widening doorways or hallways; re-configuring rooms and
9    closets; and any other changes to enhance the independence
10    of people with disabilities.
11        (12) Any applicant who has purchased the property in
12    an arm's length transaction not more than 90 days before
13    applying for this reduced valuation may use the cost of
14    rehabilitation or repairs required by documented code
15    violations, up to a maximum of $2 per square foot, to meet
16    the qualifying rehabilitation requirements.
 
17    Section 99. Effective date. This Act takes effect upon
18becoming law.