100TH GENERAL ASSEMBLY
State of Illinois
2017 and 2018
HB5865

 

Introduced , by Rep. Sara Feigenholtz

 

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

    Amends the Property Tax Code. Provides for a reduction in the equalized assessed value of 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. Sets forth application requirements and the amount of the reduction. Provides that the chief county assessment officer of any county with 3,000,000 or more inhabitants shall, and the chief assessment officer of any county with less than 3,000,000 inhabitants may, make such reductions. Effective immediately.


LRB100 21586 HLH 38631 b

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

 

 

A BILL FOR

 

HB5865LRB100 21586 HLH 38631 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 chief county assessment officer of any county with
103,000,000 or more inhabitants shall, and the chief assessment
11officer of any county with less than 3,000,000 inhabitants may,
12reduce the equalized assessed value of newly-constructed
13residential real property or qualifying rehabilitation to
14existing residential real property in accordance with
15subsection (b) for 10 taxable years after the newly constructed
16residential real property or improvements to existing
17residential real property are put in service, if and only if
18all of the following factors have been met:
19        (1) the property consists of a newly-constructed
20    multifamily building containing 6 or more rental dwelling
21    units, or an existing multifamily building that has
22    undergone qualifying rehabilitation containing 6 or more
23    rental dwelling units;

 

 

HB5865- 2 -LRB100 21586 HLH 38631 b

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

 

 

HB5865- 3 -LRB100 21586 HLH 38631 b

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

 

 

HB5865- 4 -LRB100 21586 HLH 38631 b

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

 

 

HB5865- 5 -LRB100 21586 HLH 38631 b

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

 

 

HB5865- 6 -LRB100 21586 HLH 38631 b

1        (3) The chief county assessment officer may charge a
2    reasonable application fee to offset the administrative
3    expenses associated with the program.
4        (4) The benefit conferred by this Section is limited as
5    follows:
6            (A) The owner is eligible to apply for the benefit
7        conferred by this Section beginning January 1, 2019
8        through December 31, 2028. If approved, the reduction
9        will be effective for the current taxable year, which
10        will be reflected in the tax bill issued in the
11        following taxable year. Owners that are approved for
12        the benefit under this Section before December 31, 2028
13        shall, at minimum, be eligible for annual renewal of
14        the benefit during an initial 10-year period, as
15        described in subparagraph (B) of paragraph (4) of
16        subsection (c) of this Section benefit until December
17        31, 2037.
18            (B) Property receiving a reduction outlined in
19        this Section shall continue to be eligible for annual
20        renewal for an initial period of up to 10 years, but
21        shall be extended for up to an additional 10-year
22        period with annual renewals if the owner continues to
23        meet the requirements of this Section, excluding the
24        requirements regarding new construction or qualifying
25        rehabilitation defined in subparagraph (D) of
26        paragraph (1) of this subsection.

 

 

HB5865- 7 -LRB100 21586 HLH 38631 b

1            (C) The application materials in the year prior to
2        final year of eligibility for the reduction in assessed
3        value during the initial 10-year period and any
4        additional 10-year periods must include a dated copy of
5        written notice provided to tenants informing them of
6        the date of the termination regardless of whether or
7        not the owner is eligible for or seeking a renewal.
8            (D) If the property is sold or transferred, the
9        purchaser or transferee must comply with all
10        requirements of this Section in order to continue
11        receiving the reduction in assessed value.
12            (E) The owner may apply for the benefit if the
13        newly-constructed residential real property or
14        improvements to existing residential real property
15        were put in service on or after January 1, 2015.
16        However, the initial 10-year eligibility period shall
17        be reduced by the number of years between the placed in
18        service date and the date the owner first receives this
19        benefit.
20            (F) The owner may apply for the benefit within 2
21        years after the newly-constructed residential real
22        property or improvements to existing residential real
23        property are put in service. However, the initial 10
24        year eligibility period shall be reduced for the number
25        of years between the placed in service date and the
26        date the owner first receives this benefit.

 

 

HB5865- 8 -LRB100 21586 HLH 38631 b

1            (G) Owners of a multifamily building receiving a
2        benefit through the Cook County Class 9 program on
3        December 31, 2018 shall be deemed automatically
4        eligible for the benefit defined in this Section in
5        terms of meeting the criteria for new construction or
6        substantial rehabilitation for a specific multifamily
7        building regardless of when the newly-constructed
8        residential real property or improvements to existing
9        residential real property were put in service. If a
10        Cook County Class 9 owner had Class 9 status revoked on
11        or after January 1, 2017 but can provide documents
12        sufficient to prove that the revocation was in error or
13        any deficiencies leading to the revocation have been
14        cured, the chief county assessment officer may deem the
15        owner to be eligible. However, owners may not receive
16        the both the benefits defined in this Section and the
17        Cook County Class 9 program in any single taxable year.
18        In addition, the number of years during which an owner
19        has participated in the Class 9 program shall count
20        against the number of remaining years eligible for the
21        benefit as defined in this Section.
22            (H) At the completion of the assessment reduction
23        period described in this Section, the entire parcel
24        will be assessed as otherwise provided in State law.
25    (d) For the purposes of this Section,
26    "Affordable units" means units that have rents that do not

 

 

HB5865- 9 -LRB100 21586 HLH 38631 b

1exceed the maximum rents as defined in this Section.
2    "Household income" includes the annual income for all the
3people who occupy a housing unit that is anticipated to be
4received from a source outside of the family during the
512-month period following admission or the annual
6recertification, including related family members and all the
7unrelated people who share the housing unit. Household income
8includes the sum total of the following income sources: wages,
9salaries and tips before any payroll deductions; net business
10income; interest and dividends; payments in lieu of earnings,
11such as unemployment and disability compensation, worker's
12compensation and severance pay; Social Security income,
13including lump sum payments; payments from insurance policies,
14annuities, pensions, disability benefits and other types of
15periodic payments, alimony, child support, and other regular
16monetary contributions; and public assistance, except for
17assistance from the Supplemental Nutrition Assistance Program
18(SNAP). "Household income" does not include: earnings of
19children under age 18; temporary income such as cash gifts;
20reimbursement for medical expenses; lump sums from
21inheritance, insurance payments, settlements for personal or
22property losses; student financial assistance paid directly to
23the student or to an educational institution; foster child care
24payments; receipts from government-funded training programs;
25assistance from the Supplemental Nutrition Assistance Program
26(SNAP).

 

 

HB5865- 10 -LRB100 21586 HLH 38631 b

1    "Maximum income limits" means the maximum regular income
2limits for 60% of area median income for the geographic area in
3which the multifamily building is located for multifamily
4programs as determined by the United States Department of
5Housing and Urban Development and published annually by the
6Illinois Housing Development Authority.
7    "Maximum rent" means the maximum regular rent for 60% of
8the area median income for the geographic area in which the
9multifamily building is located for multifamily programs as
10determined by the United States Department and published
11annually by the Illinois Housing Development Authority. To be
12eligible for the benefit defined in this Section, maximum rents
13are to be reduced by the owner based on the Illinois Housing
14Development Authority's rules regarding tenant payment of
15utilities; or if the owner is leasing an affordable unit to a
16household with an income at or below the maximum income limit
17who is participating in qualifying income-based rental subsidy
18program, "maximum rent" means the maximum rents allowable under
19the guidelines of the qualifying income-based rental subsidy
20program.
21    "Qualifying income-based rental subsidy program" means a
22Housing Choice Voucher issued by a housing authority under
23Section 8 of the United States Housing Act of 1937, a tenant
24voucher converted to a project-based voucher by a housing
25authority or any other program administered or funded by a
26housing authority, the Illinois Housing Development Authority,

 

 

HB5865- 11 -LRB100 21586 HLH 38631 b

1or another State agency, or a unit of local government where
2participation is limited to households with incomes at or below
3the maximum income limits as defined in this Section and the
4tenants' portion of the rent payment is based on a percentage
5of their income or a flat amount that does not exceed the
6maximum rent as defined in this Section.
7    "Qualifying rehabilitation" means, at a minimum,
8compliance with local building codes and the replacement or
9renovation of at least 2 primary building systems. Although the
10cost of each primary building system may vary, to be approved
11for the benefit under paragraph (1) of subsection (b) of this
12Section, the combined expenditure for making the building
13compliant with local codes and replacing primary building
14systems must be at least $8 per square foot for work completed
15between January 1, 2019 and December 31, 2019 and in subsequent
16years, $8 adjusted by the Consumer Price Index for All Urban
17Consumers, as published annually by the U.S. Department of
18Labor. To be approved for the benefit under (b)(2) of this
19Section, the combined expenditure for making the building
20compliant with local codes and replacing primary building
21systems must be at least $12.50 per square foot for work
22completed between January 1, 2019 and December 31, 2019 and in
23subsequent years, $12.50 adjusted by the Consumer Price Index
24for All Urban Consumers, as published annually by the U.S.
25Department of Labor. "Primary building systems", together with
26their related rehabilitations, specifically approved for this

 

 

HB5865- 12 -LRB100 21586 HLH 38631 b

1program 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

 

 

HB5865- 13 -LRB100 21586 HLH 38631 b

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.

 

 

HB5865- 14 -LRB100 21586 HLH 38631 b

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

 

 

HB5865- 15 -LRB100 21586 HLH 38631 b

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

 

 

HB5865- 16 -LRB100 21586 HLH 38631 b

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

 

 

HB5865- 17 -LRB100 21586 HLH 38631 b

1        landscaping to promote on-site water retention.
2        (11) Any applicant who has purchased the property in an
3    arm's length transaction not more than 90 days before
4    applying for this benefit may use the cost of
5    rehabilitation or repairs required by documented code
6    violations, up to a maximum of $2 per square foot, to meet
7    the qualifying rehabilitation requirements.
 
8    Section 99. Effective date. This Act takes effect upon
9becoming law.