Summary_Of_Cook_County

Cook County Tax Incentive Program

The real estate tax burden on commercial, industrial and multi-family rental housing in Cook County is extremely high. In large part, this is because Cook County assesses industrial, commercial and multi-family properties at much higher levels than single-family homes. Although property taxes throughout the United States generally average two to three percent of a property’s fair market value, the effective tax rate in Cook County can approach six or seven percent of a business property’s fair market value.

To reduce this extraordinary tax burden on business properties located in Cook County and to level the playing field, the Cook County Assessor’s Office has administered a tax incentive program which can reduce taxes by as much as 50%. They were established to stimulate a specific type of new growth (i.e. affordable housing) or growth in areas of economic need. Recent modifications to the program have made these incentives even more attractive. What follows is a brief overview of the available incentives and the property types to which they pertain. However, as indicated below, the application process and rules governing the program are quite complicated. Accordingly, legal counsel familiar with the programs should be retained as

Landmark (Class L)

Designed to encourage the preservation and rehabilitation of historically and architecturally significant commercial, industrial, multi-family residential and non-for-profit buildings in designated historic or landmark districts.

The building must be designated as a landmark and its owner must invest at least 50% of the building’s current market value - as determined by the Assessor - in its rehabilitation.

Assessed at

16% of its market value for the first ten years, at 23% in the eleventh year and at 30% in the twelfth year.
Renewable.

Environmental (Class C)

Designed to encourage the re-development of contaminated industrial or commercial properties, which require environmental remediation before they can be developed or become functional operating properties.

To qualify for the Class C incentive, the applicant must remediate the site in accordance with a remediation plan approved by the Illinois Environmental Protection Agency. In addition, the remediation costs must total at least $100,000, or alternatively, 25% of the fair market value of the property, whichever is less.

Assessed at

For twelve full years, with the first ten years at 16% instead of 36% (industrial) or 38% (commercial) assessment level, year eleven at 23% and year twelve at 30%.
Industrial buildings are renewable.

Section 8 (Class S)

To preserve project-based Section 8 multifamily rental housing to retain the stock of decent, safe and affordable housing for low- and moderate-income households in Cook County.

Assessed at

16% level instead of 30% for qualifying Section 8 units only
Renewable

Non-for-profit (Class 4)

Non-residential real estate owned and exclusively used by non-for-profit corporation in the furtherance of the purposes set forth in its charter.

Assessed at

30% of fair market value
No expiration date so long as property remains owned and used by a not-for-profit corporation in furtherance of its charter.

Industrial (Class 6b)

The Class 6b Incentive is the most successful and widely utilized of the Cook County real estate tax incentives. It applies to any industrial building or project, and is available for either new construction, the substantial rehabilitation of existing industrial structures, or the substantial reoccupancy of "abandoned" industrial property (buildings which have been vacant and unused for at least 24 months).

To qualify for the incentive, the property must have an industrial use (manufacturing or warehousing) and be approved for the incentive by the local municipality in which the property is located.

Assessed at

16% for the first 10 years, 23% for the eleventh year and 30% for the twelfth year.
Renewable

Class 7a and 7b

Intended to encourage, in areas determined to be "in need of commercial development", commercial projects with total development costs, exclusive of land, that do not exceed $2 million and would not be economically feasible without the incentive.

Assessed at

16% for the first 10 years, 23% for the eleventh year and 30% for the twelfth year.

Class 8

This incentive is designed to encourage industrial and commercial development in areas of the County which are experiencing severe economic stagnation.

Assessed at

16% for ten years, 23% in year eleven and 30% in year twelve rather than 36% and 38%

Multifamily Residential (Class 9)

This incentive is designed to encourage the rehabilitation and new construction of multifamily rental housing so as to increase and improve the stock of affordable housing for low and moderate income households in Cook County.

To qualify, the property must consist of seven units or more
used primarily for low and moderate income households
located in a targeted area, as defined by the most recent census, in which 51% of the residents are low or moderate income persons
A percentage of the property’s units must be leased at rents that are affordable to low and moderate income persons or households
The rehabilitation must be substantial and meet specific requirements as set forth by the Assessor
Application for the Incentive must be filed prior to start of construction or rehabilitation
Annual reports and notices must be filed to prove that the property continues throughout the length of the Incentive to provide affordable housing as defined by the Assessor

Assessed at

16% instead of 33 1/3 % level of assessment for ten years from the date of completion of rehabilitation
Upon application and approval by the Assessor, the property may be eligible for up to two additional ten year periods

If you have any questions or would like additional information regarding any of the incentives, please contact Jeff Brown.

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