|The affordable housing landscape has changed dramatically with the passage of 35 ILCS 200/15-178 and a subsequent amendment through Senate Bill 3895. In recent years, jurisdictions have begun requiring that residential developments include on-site affordable housing units. To offset the cost of on-site affordable housing, Springfield has created two new avenues by which affordable housing developers can realize significant tax benefits.
The first program, requiring at least 15% affordable units for 10 years, allows a 25% to 35% decrease in the assessed value over the term of the program. Any residential development that was put into service on or after January 1, 2015, and meets the above requirements (among others) is eligible for the 25% to 35% reduction in assessed value. The second program requires that developments be located in low-affordability areas and/or be designated as low affordability communities. It also requires developments to contain at least 20% affordable housing for at least 30 years, and grants even more substantial assessment reductions. The second program limits taxation to that of pre-development for years 1 through 3 of the incentive, with a graduated escalation for years 4 through 30. While counties with less than 3,000,000 inhabitants can opt out of the program, opting out is not a possibility for those counties with greater than 3,000,000 inhabitants.
In the coming years, an increase in affordable housing development is expected in the Chicago Loop and the program is set to sunset in 2027 unless extended. It remains to be seen how 35 ILCS 200/15-178 will be interpreted in other counties, as Cook County is the first to substantially implement the incentive program by granting reductions. While the statute requires certification of time frames, it does not contain a payback provision as is covered in the Open Space statute, should the property be redeveloped to not include affordable housing.
Mary Kate Fitzgerald is a Partner at the Fitzgerald Law Group, P.C. and a founding member of the Women’s Property Tax Association.
Published by the Illinois Property Assessment Institute, March 2023