Rep. Emanuel Chris Welch

Filed: 5/15/2020

 

 


 

 


 
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1
AMENDMENT TO HOUSE BILL 5071

2    AMENDMENT NO. ______. Amend House Bill 5071 by replacing
3everything after the enacting clause with the following:
 
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 substantial rehabilitation.
9    (a) The chief county assessment officer shall, upon passage
10of an ordinance by a majority vote of the county board,
11establish a tax incentive program for eligible
12newly-constructed residential real property or qualifying
13substantial rehabilitation to all eligible existing
14residential real property in accordance with subsection (b).
15The program shall apply during the construction period and for
1630 taxable years after the newly-constructed residential real

 

 

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1property or improvements to existing residential real property
2are put in service. Property is eligible for the program if and
3only if all of the following factors have been met:
4        (1) at the conclusion of the new construction or
5    qualifying substantial rehabilitation, the property will
6    consist of a newly-constructed multifamily building
7    containing 6 or more rental dwelling units or an existing
8    multifamily building that has undergone qualifying
9    substantial rehabilitation containing 6 or more rental
10    dwelling units;
11        (2) except as defined in subparagraphs (D), (E), and
12    (F) of paragraph (4) of subsection (c) of this Section,
13    prior to the newly-constructed residential real property
14    or improvements to existing residential real property
15    being put in service, the owner of the residential real
16    property commits that, for a period of 30 years after the
17    newly-constructed residential real property or
18    improvements to existing residential real property are put
19    in service, at least 20% of the multifamily building's
20    units will have rents as defined in this Section that are
21    at or below maximum rents and are occupied by households
22    with household incomes at or below maximum income limits;
23    and
24        (3) the property meets the application requirements
25    defined in subsection (c).
26    (b) The incentives shall be calculated as follows:

 

 

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1        (1) during the construction period, the property is
2    entitled to a reduction in its equalized assessed value in
3    an amount equal to the difference between the equalized
4    assessed value in the year for which the incentive is
5    sought and the equalized assessed value for the property in
6    the base year;
7        (2) for the first through tenth taxable years after the
8    property or improvements are placed in service, the
9    property is entitled to a reduction in its equalized
10    assessed value in an amount equal to 50% of the difference
11    between the equalized assessed value in the year for which
12    the incentive is sought and the equalized assessed value
13    for the property in the base year;
14        (3) for the eleventh through twentieth taxable years
15    after the property or improvements are placed in service,
16    the property is entitled to a reduction in its equalized
17    assessed value in an amount equal to 40% of the difference
18    between the equalized assessed value in the year for which
19    the incentive is sought and the equalized assessed value
20    for the property in the base year; and
21        (4) for the twenty-first through thirtieth taxable
22    years after the property or improvements are placed in
23    service, the property is entitled to a reduction in its
24    equalized assessed value in an amount equal to 30% of the
25    difference between the equalized assessed value in the year
26    for which the incentive is sought and the equalized

 

 

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

 

 

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

 

 

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1        including, but not limited to, any information
2        necessary to ensure compliance with applicable local
3        ordinances and to ensure that the owner is complying
4        with the provisions of subparagraph (E) of paragraph
5        (4) of this subsection.
6        (2) The chief county assessment officer shall notify
7    the owner as to whether the property meets the requirements
8    of this Section. If the property does not meet the
9    requirements of this Section, the chief county assessment
10    officer shall provide written notice of any deficiencies to
11    the owner, who shall then have 30 days from the date of
12    notification to provide supplemental information showing
13    compliance with this Section. If the owner does not
14    exercise this right to cure the deficiency, or if the
15    information submitted, in the sole judgment of the chief
16    county assessment officer, is insufficient to meet the
17    requirements of this Section, the chief county assessment
18    officer shall provide a written explanation of the reasons
19    for denial.
20        (3) The chief county assessment officer may charge a
21    reasonable application fee to offset the administrative
22    expenses associated with the program.
23        (4) The benefit conferred by this Section is limited as
24    follows:
25            (A) The owner is eligible to apply for the benefit
26        conferred by this Section from June 1, 2020 through

 

 

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1        December 31, 2029. If approved, the reduction will be
2        effective for the current taxable year, which will be
3        reflected in the tax bill issued in the following
4        taxable year.
5            (B) In the year prior to the final year of
6        eligibility for the reduction in assessed value,
7        written notice must be provided to tenants informing
8        them of the date of the termination.
9            (C) If the property is sold or transferred, the
10        purchaser or transferee must comply with all
11        requirements of this Section in order to continue
12        receiving the reduction in assessed value.
13            (D) The owner may apply for the benefit if the
14        newly-constructed residential real property or
15        improvements to existing residential real property
16        were put in service on or after June 6, 2015. However,
17        the 30-year eligibility period shall be reduced by the
18        number of years between the placed in service date and
19        the date the owner first receives this benefit.
20            (E) 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 30-year
24        eligibility period shall be reduced for the number of
25        years between the placed in service date and the date
26        the owner first receives this benefit.

 

 

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1            (F) Owners of a multifamily building receiving a
2        benefit through the Cook County Class 9 program on May
3        31, 2020 shall be deemed automatically eligible for the
4        benefit defined in this Section in terms of meeting the
5        criteria for new construction or substantial
6        rehabilitation for a specific multifamily building
7        regardless of when the newly-constructed residential
8        real property or improvements to existing residential
9        real property were put in service. If a Cook County
10        Class 9 owner had Class 9 status revoked on or after
11        June 1, 2017 but can provide documents sufficient to
12        prove that the revocation was in error or any
13        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            (G) At the completion of the assessment reduction
23        period described in this Section, the entire parcel
24        shall 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

 

 

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1exceed the maximum rents as defined in this Section.
2    "Base year" means the taxable year prior to the first year
3of the construction period.
4    "Construction period" means a period of not more than 3
5consecutive tax years during which the dwelling units are being
6newly-constructed or the qualifying substantial rehabilitation
7is taking place.
8    "Household income" includes the annual income for all the
9people who occupy a housing unit that is anticipated to be
10received from a source outside of the family during the
1112-month period following admission or the annual
12recertification, including related family members and all the
13unrelated people who share the housing unit. Household income
14includes the sum total of the following income sources: wages,
15salaries, and tips before any payroll deductions; net business
16income; interest and dividends; payments in lieu of earnings,
17such as unemployment and disability compensation, worker's
18compensation and severance pay; Social Security income,
19including lump sum payments; payments from insurance policies,
20annuities, pensions, disability benefits and other types of
21periodic payments; alimony, child support, and other regular
22monetary contributions; and public assistance, except for
23assistance from the Supplemental Nutrition Assistance Program
24(SNAP). "Household income" does not include: earnings of
25children under age 18; temporary income such as cash gifts;
26reimbursement for medical expenses; lump sums from

 

 

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1inheritance, insurance payments, settlements for personal or
2property losses; student financial assistance paid directly to
3the student or to an educational institution; foster child care
4payments; receipts from government-funded training programs;
5assistance from the Supplemental Nutrition Assistance Program
6(SNAP).
7    "Maximum income limits" means the maximum regular income
8limits for 60% of the area median income for the geographic
9area in which the multifamily building is located for
10multifamily programs, as determined by the United States
11Department of Housing and Urban Development and published
12annually by the Illinois Housing Development Authority.
13    "Maximum rent" means the maximum regular rent for 60% of
14the area median income for the geographic area in which the
15multifamily building is located for multifamily programs, as
16determined by the United States Department of Housing and Urban
17Development and published annually by the Illinois Housing
18Development Authority. To be eligible for the benefit defined
19in this Section, maximum rents are to be reduced by the owner
20based on the Illinois Housing Development Authority's rules
21regarding tenant payment of utilities; or, if the owner is
22leasing an affordable unit to a household with an income at or
23below the maximum income limit who is participating in
24qualifying income-based rental subsidy program, "maximum rent"
25means the maximum rents allowable under the guidelines of the
26qualifying income-based rental subsidy program.

 

 

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1    "Qualifying income-based rental subsidy program" means a
2Housing Choice Voucher issued by a housing authority under
3Section 8 of the United States Housing Act of 1937, a tenant
4voucher converted to a project-based voucher by a housing
5authority or any other program administered or funded by a
6housing authority, the Illinois Housing Development Authority,
7or another State agency, or a unit of local government where
8participation is limited to households with incomes at or below
9the maximum income limits as defined in this Section and the
10tenants' portion of the rent payment is based on a percentage
11of their income or a flat amount that does not exceed the
12maximum rent as defined in this Section.
13    "Qualifying substantial rehabilitation" means, at a
14minimum, compliance with local building codes and the
15replacement or renovation of at least 2 primary building
16systems. Although the cost of each primary building system may
17vary, to be approved for the benefit under this Section, the
18combined expenditure for making the building compliant with
19local codes and replacing primary building systems must be at
20least $8 per square foot for work completed between June 1,
212020 and December 31, 2020 and, in subsequent years, $8
22adjusted by the Consumer Price Index for All Urban Consumers,
23as published annually by the U.S. Department of Labor. "Primary
24building systems", together with their related
25rehabilitations, specifically approved for this program are:
26        (1) Electrical. All electrical work must comply with

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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