Illinois General Assembly - Full Text of SB2259
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Full Text of SB2259  101st General Assembly




State of Illinois
2019 and 2020


Introduced 5/23/2019, by Sen. John J. Cullerton


35 ILCS 200/15-178 new

    Amends the Property Tax Code. Provides for property tax incentives for newly-constructed or rehabilitated rental property if the owner of the residential real property commits that, for a period of 10 years, at least 20% 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, and the chief county assessment officer of a county with less than 3,000,000 inhabitants shall establish such a program upon passage of an ordinance by a majority vote of the county board. Sets forth application requirements and the amount of the reduction. Effective immediately.

LRB101 12553 HLH 60938 b






SB2259LRB101 12553 HLH 60938 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. Property tax incentives for affordable rental
8housing construction or rehabilitation.
9    (a) The chief county assessment officer of any county with
103,000,000 or more inhabitants shall, and the chief county
11assessment officer of any county with less than 3,000,000
12inhabitants shall upon passage of an ordinance by a majority
13vote of the county board, establish a tax incentive program for
14eligible newly-constructed residential real property or
15qualifying rehabilitation to all eligible existing residential
16real property in accordance with subsection (b). The program
17shall apply during the construction period and for 10 taxable
18years after the newly-constructed residential real property or
19improvements to existing residential real property are put in
20service. Property is eligible for the program if and only if
21all of the following factors have been met:
22        (1) at the conclusion of the new construction or
23    qualifying rehabilitation, the property will consist of a



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1    newly-constructed multifamily building containing 6 or
2    more rental dwelling units or an existing multifamily
3    building that has undergone qualifying rehabilitation
4    containing 6 or more rental dwelling units;
5        (2) except as defined in subparagraphs (D), (E), and
6    (F) of paragraph (4) of subsection (c) of this Section,
7    prior to the newly-constructed residential real property
8    or improvements to existing residential real property
9    being put in service, the owner of the residential real
10    property commits that, for a period of 10 years after the
11    newly-constructed residential real property or
12    improvements to existing residential real property are put
13    in service, at least 20% of the multifamily building's
14    units will have rents as defined in this Section that are
15    at or below maximum rents and are occupied by households
16    with household incomes at or below maximum income limits;
17    and
18        (3) the property meets the application requirements
19    defined in subsection (c).
20    (b) The incentives shall be calculated as follows:
21        (1) during the construction period and for the first
22    and second taxable year after the property or improvements
23    are placed in service, the property is entitled to a
24    reduction in its equalized assessed value in an amount
25    equal to the difference between the equalized assessed
26    value in the year for which the incentive is sought and the



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1    equalized assessed value for the property in the base year;
2        (2) for the third and fourth taxable year after the
3    property or improvements are placed in service, the
4    property is entitled to a reduction in its equalized
5    assessed value in an amount equal to 80% of the difference
6    between the equalized assessed value in the year for which
7    the incentive is sought and the equalized assessed value
8    for the property in the base year;
9        (3) for the fifth and sixth taxable year after the
10    property or improvements are placed in service, the
11    property is entitled to a reduction in its equalized
12    assessed value in an amount equal to 60% of the difference
13    between the equalized assessed value in the year for which
14    the incentive is sought and the equalized assessed value
15    for the property in the base year;
16        (4) for the seventh and eighth taxable year after the
17    property or improvements are placed in service, the
18    property is entitled to a reduction in its equalized
19    assessed value in an amount equal to 40% of the difference
20    between the equalized assessed value in the year for which
21    the incentive is sought and the equalized assessed value
22    for the property in the base year; and
23        (5) for the ninth and tenth taxable year after the
24    property or improvements are placed in service, the
25    property is entitled to a reduction in its equalized
26    assessed value in an amount equal to 20% of the difference



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1    between the equalized assessed value in the year for which
2    the incentive is sought and the equalized assessed value
3    for the property in the base year.
4    (c) Application requirements.
5        (1) In order to receive benefits under this Section,
6    the owner must submit the following information to the
7    chief county assessment officer for review in the form
8    required by the chief county assessment officer:
9            (A) the owner's name;
10            (B) the postal address and permanent index number
11        of the parcel;
12            (C) a deed or other instrument conveying the parcel
13        to the current owner;
14            (D) written evidence that the new construction or
15        qualifying rehabilitation has been completed with
16        respect to the residential real property, including,
17        but not limited to, copies of building permits, a
18        notarized contractor's sworn affidavit, and
19        photographs of the interior and exterior of the
20        building after new construction or rehabilitation is
21        completed;
22            (E) written evidence that the residential real
23        property meets local building codes, or if there are no
24        local building codes, Housing Quality Standards, as
25        determined by the United States Department of Housing
26        and Urban Development;



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1            (F) a list identifying the affordable units in
2        residential real property and a written statement that
3        the affordable units are comparable to the market rate
4        units in terms of unit type, number of bedrooms per
5        unit, quality of exterior appearance, energy
6        efficiency, and overall quality of construction;
7            (G) a written schedule certifying the rents in each
8        affordable unit and a written statement that these
9        rents do not exceed the maximum rents allowable for the
10        area in which the residential real property is located;
11            (H) documentation from the administering agency
12        verifying the owner's participation in a qualifying
13        income-based rental subsidy program as defined in
14        subsection (d) of this Section if units receiving
15        rental subsidies are to be counted among the affordable
16        units in order to meet the thresholds defined in this
17        Section;
18            (I) a written statement identifying the household
19        income for every household occupying an affordable
20        unit and certifying that the household income does not
21        exceed the maximum income limits allowable for the area
22        in which the residential real property is located;
23            (J) a written statement that the owner has verified
24        and retained documentation of household income for
25        every household occupying an affordable unit; and
26            (K) any additional information as reasonably



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1        required by the chief county assessment officer,
2        including, but not limited to, any information
3        necessary to ensure compliance with applicable local
4        ordinances and to ensure the owner is complying with
5        the provisions of subparagraph (E) of paragraph (4) of
6        this subsection.
7        (2) The chief county assessment officer shall notify
8    the owner as to whether the property meets the requirements
9    of this Section. If the property does not meet the
10    requirements of this Section, the chief county assessment
11    officer shall provide written notice of any deficiencies to
12    the owner, who shall then have 30 days from the date of
13    notification to provide supplemental information showing
14    compliance with this Section. If the owner does not
15    exercise this right to cure the deficiency, or if the
16    information submitted, in the sole judgment of the chief
17    county assessment officer, is insufficient to meet the
18    requirements of this Section, the chief county assessment
19    officer shall provide a written explanation of the reasons
20    for denial.
21        (3) The chief county assessment officer may charge a
22    reasonable application fee to offset the administrative
23    expenses associated with the program.
24        (4) The benefit conferred by this Section is limited as
25    follows:
26            (A) The owner is eligible to apply for the benefit



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1        conferred by this Section beginning January 1, 2020
2        through December 31, 2029. If approved, the reduction
3        will be effective for the current taxable year, which
4        will be reflected in the tax bill issued in the
5        following taxable year.
6            (B) In the year prior to the final year of
7        eligibility for the reduction in assessed value,
8        written notice must be provided to tenants informing
9        them of the date of the termination.
10            (C) If the property is sold or transferred, the
11        purchaser or transferee must comply with all
12        requirements of this Section in order to continue
13        receiving the reduction in assessed value.
14            (D) The owner may apply for the benefit if the
15        newly-constructed residential real property or
16        improvements to existing residential real property
17        were put in service on or after January 1, 2015.
18        However, the 10-year eligibility period shall be
19        reduced by the number of years between the placed in
20        service date and the date the owner first receives this
21        benefit.
22            (E) The owner may apply for the benefit within 2
23        years after the newly-constructed residential real
24        property or improvements to existing residential real
25        property are put in service. However, the 10-year
26        eligibility period shall be reduced for the number of



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1        years between the placed in service date and the date
2        the owner first receives this benefit.
3            (F) Owners of a multifamily building receiving a
4        benefit through the Cook County Class 9 program on
5        December 31, 2019 shall be deemed automatically
6        eligible for the benefit defined in this Section in
7        terms of meeting the criteria for new construction or
8        substantial rehabilitation for a specific multifamily
9        building regardless of when the newly-constructed
10        residential real property or improvements to existing
11        residential real property were put in service. If a
12        Cook County Class 9 owner had Class 9 status revoked on
13        or after January 1, 2017 but can provide documents
14        sufficient to prove that the revocation was in error or
15        any deficiencies leading to the revocation have been
16        cured, the chief county assessment officer may deem the
17        owner to be eligible. However, owners may not receive
18        the both the benefits defined in this Section and the
19        Cook County Class 9 program in any single taxable year.
20        In addition, the number of years during which an owner
21        has participated in the Class 9 program shall count
22        against the number of remaining years eligible for the
23        benefit as defined in this Section.
24            (G) At the completion of the assessment reduction
25        period described in this Section, the entire parcel
26        will be assessed as otherwise provided in State law.



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1    (d) For the purposes of this Section,
2    "Affordable units" means units that have rents that do not
3exceed the maximum rents as defined in this Section.
4    "Base year" means the taxable year prior to the first year
5of the construction period.
6    "Construction period" means a period of not more than 3
7consecutive tax years during which the dwelling units are being
8newly-constructed or the qualifying rehabilitation is taking
10    "Household income" includes the annual income for all the
11people who occupy a housing unit that is anticipated to be
12received from a source outside of the family during the
1312-month period following admission or the annual
14recertification, including related family members and all the
15unrelated people who share the housing unit. Household income
16includes the sum total of the following income sources: wages,
17salaries and tips before any payroll deductions; net business
18income; interest and dividends; payments in lieu of earnings,
19such as unemployment and disability compensation, worker's
20compensation and severance pay; Social Security income,
21including lump sum payments; payments from insurance policies,
22annuities, pensions, disability benefits and other types of
23periodic payments, alimony, child support, and other regular
24monetary contributions; and public assistance, except for
25assistance from the Supplemental Nutrition Assistance Program
26(SNAP). "Household income" does not include: earnings of



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1children under age 18; temporary income such as cash gifts;
2reimbursement for medical expenses; lump sums from
3inheritance, insurance payments, settlements for personal or
4property losses; student financial assistance paid directly to
5the student or to an educational institution; foster child care
6payments; receipts from government-funded training programs;
7assistance from the Supplemental Nutrition Assistance Program
9    "Maximum income limits" means the maximum regular income
10limits for 60% of area median income for the geographic area in
11which the multifamily building is located for multifamily
12programs as determined by the United States Department of
13Housing and Urban Development and published annually by the
14Illinois Housing Development Authority.
15    "Maximum rent" means the maximum regular rent for 60% of
16the area median income for the geographic area in which the
17multifamily building is located for multifamily programs as
18determined by the United States Department of Housing and Urban
19Development and published annually by the Illinois Housing
20Development Authority. To be eligible for the benefit defined
21in this Section, maximum rents are to be reduced by the owner
22based on the Illinois Housing Development Authority's rules
23regarding tenant payment of utilities; or if the owner is
24leasing an affordable unit to a household with an income at or
25below the maximum income limit who is participating in
26qualifying income-based rental subsidy program, "maximum rent"



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1means the maximum rents allowable under the guidelines of the
2qualifying income-based rental subsidy program.
3    "Qualifying income-based rental subsidy program" means a
4Housing Choice Voucher issued by a housing authority under
5Section 8 of the United States Housing Act of 1937, a tenant
6voucher converted to a project-based voucher by a housing
7authority or any other program administered or funded by a
8housing authority, the Illinois Housing Development Authority,
9or another State agency, or a unit of local government where
10participation is limited to households with incomes at or below
11the maximum income limits as defined in this Section and the
12tenants' portion of the rent payment is based on a percentage
13of their income or a flat amount that does not exceed the
14maximum rent as defined in this Section.
15    "Qualifying rehabilitation" means, at a minimum,
16compliance with local building codes and the replacement or
17renovation of at least 2 primary building systems. Although the
18cost of each primary building system may vary, to be approved
19for the benefit under this Section, the combined expenditure
20for making the building compliant with local codes and
21replacing primary building systems must be at least $8 per
22square foot for work completed between January 1, 2020 and
23December 31, 2020 and, in subsequent years, $8 adjusted by the
24Consumer Price Index for All Urban Consumers, as published
25annually by the U.S. Department of Labor. "Primary building
26systems", together with their related rehabilitations,



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



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



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1        (4) Roofing. All roofing work must comply with
2    applicable codes; it may consist of either of the following
3    alternatives, separately or in combination:
4            (A) replacing all rotted roof decks and
5        insulation; or
6            (B) replacing or repairing leaking roof membranes
7        (10% is the suggested minimum replacement of
8        membrane); restoration of the entire roof is an
9        acceptable substitute for membrane replacement.
10        (5) Exterior doors and windows. Replace the exterior
11    doors and windows. Renovation of ornate entry doors is an
12    acceptable substitute for replacement.
13        (6) Floors, walls, and ceilings. Finishes must be
14    replaced or covered over with new material. Acceptable
15    replacement or covering materials are as follows:
16            (A) floors must have new carpeting, vinyl tile,
17        ceramic, refurbished wood finish, or a similar
18        substitute;
19            (B) walls must have new drywall, including joint
20        taping and painting; or
21            (C) new ceilings must be either drywall, suspended
22        type, or a similar
23        (7) Exterior walls.
24            (A) replace loose or crumbling mortar and masonry
25        with new material;
26            (B) replace or paint wall siding and trim as



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1        needed;
2            (C) bring porches and balconies to a sound
3        condition; or
4            (D) any combination of (A), (B), and (C).
5        (8) Elevators. Where applicable, at least 4 of the
6    following 7 alternatives must be accomplished:
7            (A) replace or rebuild the machine room controls
8        and refurbish the elevator machine (or equivalent
9        mechanisms in the case of hydraulic elevators);
10            (B) replace hoistway electro-mechanical items
11        including: ropes, switches, limits, buffers, levelers,
12        and deflector sheaves (or equivalent mechanisms in the
13        case of hydraulic elevators);
14            (C) replace hoistway wiring;
15            (D) replace door operators and linkage;
16            (E) replace door panels at each opening;
17            (F) replace hall stations, car stations, and
18        signal fixtures; or
19            (G) rebuild the car shell and refinish the
20        interior.
21        (9) Health and safety.
22            (A) install or replace fire suppression systems;
23            (B) install or replace security systems; or
24            (C) environmental remediation of lead-based paint,
25        asbestos, leaking underground storage tanks, or radon.
26        (10) Energy conservation improvements undertaken to



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1    limit the amount of solar energy absorbed by a building's
2    roof or to reduce energy use for the property, including
3    any of the following activities:
4            (A) installing or replacing reflective roof
5        coatings (flat roofs);
6            (B) installing or replacing R-49 roof insulation;
7            (C) installing or replacing R-19 perimeter wall
8        insulation;
9            (D) installing or replacing insulated entry doors;
10            (E) installing or replacing Low E, insulated
11        windows;
12            (F) installing or replacing WaterSense labeled
13        plumbing fixtures;
14            (G) installing or replacing 90% or better sealed
15        combustion heating systems;
16            (H) installing or replacing direct exhaust hot
17        water heaters;
18            (I) installing or replacing mechanical ventilation
19        to exterior for kitchens and baths;
20            (J) installing or replacing Energy Star
21        appliances;
22            (K) installing low VOC interior paints on interior
23        finishes;
24            (L) installing or replacing Energy Star certified
25        lighting in common areas; or
26            (M) installing or replacing grading and



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1        landscaping to promote on-site water retention.
2        (11) Accessibility improvements. All accessibility
3    improvements must comply with applicable codes. An owner
4    may make accessibility improvements to residential real
5    property to increase access for people with disabilities.
6    As used in this paragraph (11), "disability" has the
7    meaning given to that term in the Illinois Human Rights
8    Act. As used in this paragraph (11), "accessibility
9    improvements" means a home modification listed under the
10    Home Services Program administered by the Department of
11    Human Services (Part 686 of Title 89 of the Illinois
12    Administrative Code) including, but not limited to:
13    installation of ramps, grab bars, or wheelchair lifts;
14    widening doorways or hallways; re-configuring rooms and
15    closets; and any other changes to enhance the independence
16    of people with disabilities.
17        (12) Any applicant who has purchased the property in an
18    arm's length transaction not more than 90 days before
19    applying for this benefit may use the cost of
20    rehabilitation or repairs required by documented code
21    violations, up to a maximum of $2 per square foot, to meet
22    the qualifying rehabilitation requirements.
23    Section 99. Effective date. This Act takes effect upon
24becoming law.