Tag: Cook County

Industrial Growth Zones Created

The City of Chicago and Cook County recently announced the creation of an “Industrial Growth Zone” initiative in order to encourage industrial development in seven designated Chicagoland neighborhoods.  These neighborhoods are principally located in existing industrial areas on the south and west sides of the City.  The program is intended to incentivize industrial development in these neighborhoods by removing barriers to further development and by providing services to support property owners and industrial developers in their development efforts.  Specifically, the services to be provided are aimed at two primary impediments to development: evaluation and remediation of environmental conditions and maneuvering complex governmental regulations.

Much of the land located within the Industrial Growth Zone program has been previously developed and used for industrial purposes.  Accordingly, to redevelop these properties, a developer will first need to conduct a Phase I environmental site assessment and, depending on the identification of recognized environmental conditions, to perform some level of environmental remediation.  This can constitute a significant barrier to development as the cost to conduct the required testing and the possible costs associated with remediating hazardous environmental conditions may be substantial both in terms of costs and delays in commencing construction.  The Industrial Growth Zone initiative will provide qualified developers up to $130,000 of financial assistance for environmental evaluation and remediation efforts.  Specifically, developers may be eligible for $5,000 to update an existing Phase I environmental report and up to $25,000 to conduct a Phase II report.  Additional funds in the amount of $100,000 may be available to remediate environmental conditions.

Additionally, the initiative will establish a “concierge” program.  The concierge will serve as a single point of contact for providing assistance to developers in conducting site evaluation and working their way through voluminous and complex layers of governmental regulations and requirements.  The concierge will assist in making available a broad range of site data and documentation required in connection with the development of properties.  This data includes, among other things, zoning maps, aerial photos, surveys, ownership and real estate tax history, analysis of utility availability, flood plain classification, and providing information regarding the presence of wetlands and endangered species.  Having access to this information at the early stages of the development process will save a developer time and effort in conducting its due diligence, evaluating the suitability of a property for development, and commencing the process of obtaining required governmental approvals.

For further information regarding Industrial Growth Zones, real estate development and related issues, please contact:

Jeffrey M. Galkin at:

jgalkin@lgattorneys.com or 312-368-0100.

Cook County Raises Minimum Wage

On October 26, 2016, the Cook County Board passed an ordinance to gradually increase the minimum wage to $13.00 per hour by 2020. The Cook County Board’s action follows the lead of the City of Chicago which in 2014 passed an ordinance to gradually increase the minimum wage in Chicago to $13.00 per hour by 2019.

The first increase is effective July 1, 2017, raising the minimum wage from $8.25 to $10.00 per hour. The minimum wage will increase again on July 1, 2018, to $11.00 per hour; on July 1, 2019, to $12.00 per hour; and on July 1, 2020, to $13 per hour. The ordinance applies to any business or individual that employs at least one employee who performs at least two hours of work in any two-week period while physically present within the geographical boundaries of Cook County, with limited exceptions.

The ordinance also requires Cook County employers to provide notice to their employees regarding their rights under the ordinance, including: (i) conspicuously posting a notice at each facility within Cook County; and (ii) providing a written notice to employees with their first paycheck issued after July 1, 2017.

Employers are subject to significant penalties for non-compliance with the ordinance, including, but not limited to, fines in the amount of $500 to $1,000 per each day of non-compliance. The ordinance also establishes a private cause of action for employees who may recover damages against an employer in an amount equal to three times the amount of any underpayment, in addition to the employee’s attorneys’ fees and costs. An employer’s failure to comply with the ordinance may also violate other laws including the Illinois Wage Payment and Collection Act, Illinois Minimum Wage Law, and Federal Fair Labor Standards Act, which also provide for an employee’s recovery of damages, interest and attorneys’ fees.

If you have any questions regarding the minimum wage applicable to your business or your obligations under the new Cook County Ordinance, please contact:

Kristen E. O’Neill at:

koneill@lgattorneys.com or 312-368-0100.

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 Cook County Wage Theft Ordinance Applicable to Cook County Employers as of May 1, 2015

On May 1, 2015, employers in Cook County will be subject to the new Cook County Wage Theft Ordinance that imposes harsh penalties on employers who violate federal or state wage laws. The purpose of the Ordinance is to protect employees from wage theft and prohibits companies and individuals found to have violated wage-payment laws from obtaining Cook County procurement contracts, business licenses, or property tax incentives for a period of five years.

An employer will face penalties under the Ordinance if it has admitted guilt or liability, or has been adjudicated guilty or liable in any judicial or administrative proceeding, of committing a repeated or willful violation of the Illinois Wage Payment and Collection Act, the Illinois Minimum Wage Act, the Illinois Worker Adjustment and Retraining Notification Act, the Illinois Employee Classification Act, the federal Fair Labor Standards Act, or any comparable state statute or regulation that governs the payment of wages.

The Ordinance applies not only to business entities, but to any “person”, including a “substantial owner” or an employer. A substantial owner is defined as any person who “owns or holds a 25 percent or more percentage of interest in any business entity seeking a county privilege, including those shareholders, general or limited partners, beneficiaries and principals; except where a business entity is an individual or sole proprietorship, substantial owner means that individual or sole proprietor.”

Penalties under the Ordinance include:

  1. Ineligibility for County Contracts:  The employer will be ineligible to enter into a contract with Cook County for a period of five years from the admission of guilt, date of conviction, entry of a plea, or finding in a judicial or administrative proceeding of a violation of a wage-payment law.
  2. Ineligibility for Property Tax Incentives: The employer will be ineligible to receive any property tax incentives for a period of five years from the admission of guilt, date of conviction, entry of a plea, or finding in a judicial or administrative proceeding of a violation of a wage-payment law.
  3. Ineligibility for a Cook County Business License: The employer will be ineligible to receive a Cook County business license for a period of five years from the admission of guilt, date of conviction, entry of a plea, or finding in a judicial or administrative proceeding of a violation of a wage-payment law.

Employers who are subject to the above listed penalties may request an exception to the applicable period of ineligibility by submitting a written request to the County. Such exceptions may be granted by the County if the County finds that the exception is in the best interest of the County.

Employers in Cook County should review their wage payment policies to ensure that they are in compliance with all applicable federal and state wage-payment laws.

If you have any questions or concerns regarding the Cook County Wage Theft Ordinance or your business’s wage payment policies, please contact:

Kristen E. O’Neill at:

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

Addressing Real Estate Tax Issues Involved in Recently Constructed Property

With increasing real estate development activity, many owners and lenders of recently developed properties are experiencing problems ensuring the correct payment of real estate tax bills during the first year or two after the completion of construction.  In many cases, owners are discovering a couple of years after they have purchased newly constructed property that adequate arrangements were not made to address the complexities of allocating responsibility for pre-construction and initial post-construction tax bills.  This can become quite problematic when undivided tax bills cover parcels owned by multiple owners.

The problem is the result of an incongruity in the time line for the creation of tax parcels for a new project and Illinois practice of paying tax bills in arrears (i.e., tax bills paid in 2015 are for the 2014 tax year).  In the case of newly developed property, this could mean that the tax bills payable in the calendar year after construction is completed could still relate to the property as it existed before construction.

To further complicate matters, if the redeveloped property results in a new ownership structure which does not match the pre-development ownership structure, the old tax bills will not correspond with the new ownership structure.  For example, if a parcel of land which constitutes a single tax parcel (that generates a single tax bill) is redeveloped with two buildings that are sold to separate owners, then the new owners will face a single, undivided tax bill covering both buildings.  Until the County Assessor creates separate tax parcels covering each of the newly constructed buildings, the owners would need to cooperate to cause the combined tax bill to be paid each year.  This situation would lead to all manner of problems because it would not be immediately clear what portion of the tax bill would be attributable to each of the properties.  Furthermore, if one of the owners refused to pay his proportionate share, the other owner might be faced with paying the entire bill to avoiding having the undivided tax bill become delinquent.

Unfortunately, the time line for creating new tax parcels does not correspond with the with the payment dates for real estate tax bills.  For example, an application for a tax division (i.e., the procedure for creating new tax parcels) in Cook County, Illinois is filed a year in advance, meaning a division filed in 2015 will result in new tax parcels in 2016 which will not be payable until 2017.  If the division (other than condominium properties) isn’t filed before the October 31st filing deadline, a division filed in November or December 2015 will result in new tax parcels in 2017 and initial tax bills payable in 2018.

In light of the foregoing, a prudent purchaser of newly developed real estate will need to make certain that adequate provisions have been made to assure the owner that (i) a new division will take place, (ii) that sufficient funds have been collected or will be available from the seller post-closing to pay the seller’s share of the undivided tax bill for the year of closing and any prior years, and (iii) sufficient steps have been taken or are available to protect the purchaser with respect to the payment of undivided tax bills in the periods occurring prior to the issuance of separate, divided tax bills.  Without taking adequate steps to protect themselves, many property owners may be faced with significant real estate tax problems years after the initial construction of their properties.  Thankfully, with some planning, these issues can be avoided.

For further information regarding the real estate tax issues involved in recently constructed property, the procedures which may be employed to address these issues and real estate development and related issues in general, please contact:

Jeffrey M. Galkin at:

jgalkin@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

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