SB1740sam001 98TH GENERAL ASSEMBLY

Sen. Donne E. Trotter

Filed: 3/15/2013

09800SB1740sam001 LRB098 10538 HLH 43130 a

AMENDMENT TO SENATE BILL 1740

AMENDMENT NO. ______. Amend Senate Bill 1740 by replacing everything after the enacting clause with the following:

"Section 5. The Property Tax Code is amended by adding Section 15-174 as follows:

(35 ILCS 200/15-174 new)

Sec. 15-174. Residential foreclosure to affordable housing assessment freeze law.

This Section may be cited as the Residential Foreclosure to Affordable Housing Assessment Freeze Law.

(a) Beginning January 1, 2014 and ending June 30, 2022, the chief county assessment officer shall reduce the assessed value of the improvements to residential real property to 10% of the assessed value of those improvements for 5 taxable years, if and only if all of the following factors have been met:

(1) the improvements are residential;

(2) the parcel was purchased or otherwise conveyed to the taxpayer after January 1 of the taxable year;

(3) the parcel was purchased by the holder of a mortgage on the foreclosed parcel that was the subject of a judicial sale which occurred after January 1, 2008, or the parcel was ordered by a court of competent jurisdiction to be deconverted in accordance with the provisions governing distressed condominiums as provided in the Condominium Property Act;

(4) the transfer from the holder of the prior mortgage to the taxpayer was an arm's length transaction, in that the taxpayer has no legal relationship to the holder of the prior mortgage;

(5) an existing, residential dwelling structure of no more than 6 units in counties with a population of 3,000,000 or more, or 12 units elsewhere in the State, is present on the parcel, and that residential dwelling was unoccupied at the time of conveyance, or the parcel, including any number of units, was ordered by a court of competent jurisdiction to be deconverted in accordance with the provisions governing distressed condominiums as provided in the Condominium Property Act;

(6) the taxpayer does not occupy or intend to occupy the residential dwelling as his or her principal residence;

(7) the taxpayer immediately secures the residential dwelling in accordance with the requirements of this Section;

(8) the rehabilitation completed by the taxpayer is sufficient to bring the improvements into compliance with Housing Quality Standards employed by the U.S. Department of Housing and Urban Development, along with all State and federal requirements, including without limitation lead based paint and asbestos remediation;

(9) rehabilitation is completed within 18 months of conveyance;

(10) the parcel is clear of unreleased liens and has no outstanding tax liabilities attached against it; and

(11) after rehabilitation is complete, the taxpayer charges no more for rent than the fair market rent for the life of the benefit conferred by this Section. "Fair Market Rent" means the annual determination made by the U.S. Department of Housing and Urban Development of the maximum allowable rent in each area that can be charged under its rental assistance programs. The Illinois Housing Development Authority (the "Authority") shall make this information available on its website.

(b) For purposes of this Section, "secure" means that:

(1) all doors and windows are closed and secured using: secure doors; windows without broken or cracked panes; commercial-quality metal security panels filled with like-kind material as the surrounding wall; or plywood installed and secured in accordance with local ordinance; at least one building entrance shall be accessible from the exterior and secured with a door that is locked to allow access only to authorized persons;

(2) all grass and weeds on the vacant residential property are maintained below 10 inches in height, unless a local ordinance imposes a lower height;

(3) debris, trash, and litter on any portion of the exterior of the vacant residential property is removed in compliance with local ordinance;

(4) fences, gates, stairs and steps that lead to the main entrance of the building are maintained in a structurally sound and reasonable manner;

(5) the property is winterized when appropriate;

(6) the exterior of the improvements are reasonably maintained to ensure the safety of passersby; and

(7) vermin and pests are regularly exterminated on the exterior and interior of the property.

(c) In order to be eligible for and receive benefits conferred by this Section, and in addition to any information required in rules promulgated by the Authority, the taxpayer must submit the following information to the Authority for review:

(1) the owner's name and, if the owner is a corporation, limited liability company, or any organization organized under the laws of the State of Illinois, a Certificate of Good Standing issued by the Secretary of State;

(2) the postal address and permanent index number of the parcel;

(3) a Certificate of Sale indicating that the judicial foreclosure sale of the parcel occurred after January 1, 2008;

(4) a deed or other instrument conveying the parcel from the foreclosure sale purchaser to the current owner;

(5) a bid from a licensed, insured, and bonded contractor for the proposed scope of work, and a cost estimate by an unrelated third party;

(6) evidence that the parcel is clear of unreleased liens and has no outstanding tax liabilities attached against it; and

(7) a sworn statement indicating that all conditions of this Section have been met, including that the rent will not exceed fair market rent, as defined in this Section, and that the property will be maintained in keeping with housing quality standards for the life of the assessment freeze period; and

(8) additional information as set forth in rules adopted by the Authority.

The Authority shall notify the taxpayer of whether or not the parcel meets the requirements of this Section. If the parcel does not meet the requirements of this Section, the Authority shall provide written notice of all deficiencies to the taxpayer, who will then have 14 days from the date of notification to provide supplemental information that shows compliance with this Section. If the taxpayer does not exercise this right to cure the deficiency, or if the information submitted, in the sole judgment of the Authority, is insufficient to meet the requirements of this Section, the Authority shall provide a full written explanation of the reasons for denial. A taxpayer may subsequently reapply for the benefit if the deficiencies are cured at a later date.

(d) If a parcel meets the requirements of this Section, the Authority or its authorized agent shall arrange to physically inspect the improvements on the parcel. Only parcels in need of substantial rehabilitation are eligible for the benefit conferred by this Section. "Substantial rehabilitation" must minimally include the replacement or renovation of at least 2 primary building systems. Although the cost of each system may vary, the combined expenditure for the systems must be at least $5 per square foot, adjusted by the Consumer Price Index for All Urban Consumers, as published annually by the U.S. Department of Labor. The following are the primary building systems, together with their related rehabilitations, specifically approved for this program:

(1) Electrical. All electrical work must comply with applicable codes, it may consist of a combination of any of the following alternatives:

(A) installing individual equipment and appliance branch circuits as required by code (the minimum being a kitchen appliance branch circuit);

(B) installing a new emergency service, including emergency lighting with all associated conduit and wiring;

(C) rewiring all existing feeder conduits ("home runs") from the main switchgear to apartment area distribution panels;

(D) installing new in-wall conduit for receptacles, switches, appliances,equipment, and fixtures;

(E) replacing power wiring for receptacles, switches, appliances, equipment and fixtures;

(F) installing new light fixtures throughout the building including closets and central areas;

(G) replacing, adding, or doing work as necessary to bring all receptacles, switches, and other electrical devices into code compliance;

(H) installing a new main service, including conduit, cables into the building, and main disconnect switch;

(I) installing new distribution panels, including all panel wiring, terminals, circuit breakers, and all other panel devices.

(2) Heating. All heating work must comply with applicable codes, it may consist of a combination of any of the following alternatives:

(A) installing a new system to replace one of the following heat distribution systems:

(i) piping and heat radiating units, including new main line venting and radiator venting; or

(ii) duct work, diffusers, and cold air returns; or

(iii) any other type of existing heat distribution and radiation/diffusion components;

(B) installing a new system to replace one of the following heat generating units:

(i) hot water/steam boiler;

(ii) gas furnace; or

(iii) any other type of existing heat generating unit.

(3) Plumbing. All plumbing work must comply with applicable codes. Replace all or a part of the in-wall supply and waste plumbing; however, main supply risers, waste stacks and vents, and code-conforming waste lines need not be replaced.

(4) Roofing. All roofing work must comply with applicable codes, it may consist of a combination of any of the following alternatives:

(A) replacing all rotted roof deck and insulation;

(B) replacing or repairing leaking roof membrane (10% is suggested minimum replacement of membrane); restoration of the entire roof is an acceptable substitute for membrane replacement.

(5) Exterior doors and windows. Replace the exterior doors and windows. Renovation of ornate entry doors is an acceptable substitute for replacement.

(6) Floors, walls, and ceilings. Finishes must be replaced or covered over with new material. The following items define replacement or covering materials acceptable under these guidelines:

(A) floors must have new carpeting, vinyl tile, ceramic, refurbished wood finish, or a similar substitute;

(B) walls must have new drywall, including joint taping and painting;

(C) new ceilings must be either drywall, suspended type, or a similar substitute.

(7) Exterior walls.

(A) replace loose or crumbling mortar and masonry with new material;

(B) replace or paint wall siding and trim as needed;

(C) bring porches and balconies to a sound condition; or

(D) any combination of (A), (B), and (C).

(8) Elevators. Where applicable, at least 4 of the following 7 alternatives must be accomplished:

(A) replace or rebuild the machine room controls and refurbish the elevator machine (or equivalent mechanisms in the case of hydraulic elevators);

(B) replace hoistway electro-mechanical items including: ropes, switches, limits, buffers, levelers, and deflector sheaves (or equivalent mechanisms in the case of hydraulic elevators);

(C) replace hoistway wiring;

(D) replace door operators and linkage;

(E) replace door panels at each opening;

(F) replace hall stations, car stations, and signal fixtures;

(G) rebuild the car shell and refinish the interior.

(9) Health and safety.

(A) install or replace fire suppression systems;

(B) install or replace security systems; and

(C) environmental remediation of lead-based paint, asbestos, leaking underground storage tanks, or radon.

(10) Energy conservation improvements undertaken to limit the amount of solar energy absorbed by a building's roof or to reduce energy use for the property, including any of the following activities:

(A) installing or replacing reflective roof coatings (flat roofs);

(B) installing or replacing R-38 roof insulation;

(C) installing or replacing R-19 perimeter wall insulation;

(D) installing or replacing insulated entry doors;

(E) installing or replacing Low E, insulated windows;

(F) installing or replacing low-flow plumbing fixtures;

(G) installing or replacing 90% sealed combustion heating systems;

(H) installing or replacing direct exhaust hot water heaters

(I) installing or replacing mechanical ventilation to exterior for kitchens and baths;

(J) installing or replacing Energy Star appliances;

(K) installing low VOC interior paints on interior finishes

(L) installing or replacing fluorescent lighting in common areas; or

(M) installing or replacing grading and landscaping to promote on-site water retention.

(e) Parcels approved under this Section shall be inspected by the Authority or its authorized agent again upon written notification by the taxpayer that rehabilitation is complete. The Authority, by rule, may require proof in the form of a contractor's sworn statement or other third party certification that the rehabilitation was completed. Upon such notification, the Authority or its authorized agent shall inspect the parcel to ensure that it meets the minimum requirements of Housing Quality Standards employed by the U.S. Department of Housing and Urban Development. No parcel will be eligible for the benefit conferred by this Section unless:

(1) the Substantial Rehabilitation was completed within 18 months of acquisition; and

(2) the improvements on the parcel for which the benefit conferred by this Section are sought were inspected by the Authority or its authorized agent prior to rehabilitation and the Authority issued written notification from the Authority that it met the requirements of this Section with regard to that inspection;

(3) the improvements on the parcel for which the benefit conferred by this Section are sought were inspected by the Authority or its authorized agent after rehabilitation and the improvements met the requirements of this Section with regard to that inspection, including that the improvements met Housing Quality Standards requirements.

(f) The Authority shall provide notification of the outcome of the final inspection to the owner and the chief county assessor. The reduction outlined in this Section shall be activated when the owner provides notice to the chief county assessment officer and county clerk that rehabilitation is complete and meets the required standards. Additional details on the activation process shall be provided in rules adopted by the Authority.

(g) An owner is eligible to apply for the benefit conferred by this Section beginning 18 months after the effective date of this Section and through December 31, 2017. If approved, the reduction will be effective for the current taxable year, which will be reflected in the tax bill issued in the following taxable year.

(h) The reduction outlined in this Section shall continue for a period of 5 years, and may not be extended or renewed for any additional period.

(i) At the completion of the assessment freeze period described here, the entire parcel will be assessed as otherwise provided in this Code.

(j) The Illinois Housing Development Authority may adopt rules and charge a reasonable application fee in connection with this Section.

(k) The benefit conferred by this Section will be effective in the event of a transfer of ownership during the period of the assessment freeze, so long as all requirements of this Section continue to be met.

Section 99. Effective date. This Act takes effect January 1, 2014.".