Tag: Class 7c

Available Real Estate Tax Incentives for Cook County Property Owners and Developers

Real estate taxes are one of the largest operating expenses for income producing properties; especially for commercial and industrial properties located in Cook County. In an effort to reduce the property tax burden and to inspire development, the Cook County Board of Commissioners created tax incentive programs available to prospective buyers of vacant property and available to current owners who plan to construct new improvements on their property. These incentive programs can offer significant real estate tax reductions, with some property tax bills being reduced by up to 60%. Current owners or developers of property located in Cook County should become familiar with these incentive opportunities.

The tax incentives created by the Board of Commissioners are the Class 6b and Class 8 Tax Incentives, which are available for industrial properties, and the Class 7a, Class 7b and the new Class 7c Tax Incentives, which are available for commercial properties. These tax incentives last for ten years, escept for the Class 7c Tax Incentive which lasts only for 5 years. The Tax Incentives can be obtainable by fulfilling the eligibility requirements and filing a Tax Incentive application and corresponding tax appeal with the Cook County Assessor’s Office. You can visit the Cook County Assessor’s Office website to find the mandatory eligibility requirements for each incentive and the necessary forms that need to be submitted with the Assessor’s Office: http://www.cookcountyassessor.com/PdfForms/Incentive-Forms.aspx.

Each of the available incentives have their own set of eligibility requirements, For example, the Class 7a and 7b Tax Incentives are only available for commercial properties located in areas determined to be “in need of commercial development,” and the Cook County Assessor’s Office requires a tax incentive application to be filed with their office prior to any vacant property being occupied or any new construction commencing. These requirements are mandatory and every property owner or prospective buyer should become familiar with the tax incentive requirements and consult with legal counsel before entering into a purchase or construction contract. Additionally, the Cook County Assessor’s Office requires all incentive applications to include a passed resolution from the local municipality In which the property is located that supports and consents to the Tax Incentive being granted for the property. Owners and buyers seeking the Tax Incentive must make a formal request to the local municipality for the supporting resolution as part of the process for obtaining the tax incentive. The local municipality will most likely have its own requirements for passing a resolution supporting the Tax Incentive, and such requirements could me more or less extensive than what is required by the Assessor’s Office.

As indicated above, property owners and developers who intend to seek the above-referenced Tax Incentives should plan and coordinate with their counsel, along with the representatives from the local municipality, in the initial stages of the real estate project or venture. If you have more questions regarding available property tax incentives or to discuss future real estate projects, please contact:

Anthony M. Ochs at:

aochs@lgattorneys.com or (312) 368-0100

New Property Tax Incentive Classification to Stimulate Real Estate Development in Cook County

Cook County recently amended its real property assessment classification ordinance to add a new property tax incentive classification to stimulate real estate development in the County.  The new classification, known as “Class 7c – Commercial Urban Relief Eligibility (CURE)”, provides eligible commercial property owners with a five year reduction in property tax levels for: (i) all newly constructed buildings or other structures, (ii) the utilization of vacant structures which have been abandoned for at least 12 months, and (iii) all buildings and other structures which are substantially rehabilitated to the extent the rehabilitation adds to the value of the property.  The Class 7c classification also extends the assessment relief to the property value attributable to the underlying land.

Projects which qualify for the Class 7c incentive will receive a reduced assessment level of 10% of fair market value for the first three years, 15% for the fourth year and 20% for the fifth year. Without this incentive, commercial property would normally be assessed at 25% of its market value. This has the effect of reducing the assessment by 60% for each of the first three years, 40% for the next year and 20% for the fifth year.  For a newly constructed building with a $5,000,000 fair market value in the City of Chicago, the savings based on 2013 tax rates, would be approximately $136,000 for each of the first three years and approximately $546,000 over the five year duration of the incentive.

To be eligible for Class 7c, the property must be “real estate used primarily for commercial purposes”, which is defined as “any real estate used primarily for buying and selling of goods and services, or for otherwise providing goods and services, including any real estate used for hotel and motel purposes.” Qualifying property must meet four eligibility factors:

    • The property’s assessed valuation for three of the past six years has declined or remained stagnant due to the depressed condition of the property;
    • The proposed project development or redevelopment is viable, likely to proceed on a reasonably timely basis and result in an economic enhancement of the property if granted a Class 7c designation:
    • The Class 7c designation materially assists in the development of the property and the development would not have gone forward without the Class 7c designation; and
    • The designation is reasonably expected to result in an increase in property tax revenue and the creation of employment opportunities at the property.

An application for Class 7c designation must be submitted prior to the commencement of construction, rehabilitation or reoccupation.  The application must include a resolution or ordinance from the municipality in which the property is located supporting the project and stating that the municipality has confirmed the above-referenced eligibility factors and that the area in which the property is located is in need of commercial development.

For further information regarding the Class 7c incentive program, and real estate development and related issues, please contact:

Jeffrey M. Galkin:  jgalkin@lgattorneys.com or 312-368-0100

or

Morris R Saunders:  msaunders@lgattorneys.com or 312-368-0100

testimonials

"We've worked with Levin Ginsburg since the 1980s...we have grown with them and have a very high level of comfort and confidence with this firm." Jay Nichols, President,
Badger Murphy
"Astute, responsive and practical. Those are three reasons why we work with Levin Ginsburg." Bryan L. Oyster, V.P. and General Manager,
Bentley Forbes