Cook County Offers New Property Tax Incentive to Promote Commercial Development

 
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Authored By: Minah C. Hall & Dorothy M. Radicevich
 
Class 7c Incentive Summary
The Class 7c incentive—the Commercial Urban Relief Eligibility (“CURE”)—is a new five-year commercial property tax incentive intended to encourage rehabilitation and redevelopment of vacant or abandoned commercial properties in the City of Chicago and suburban Cook County. The Cook County Board of Commissioners approved the incentive for projects that would not otherwise be economically feasible without assistance. The Class 7c incentive fills the large gap left by the Class 7a and 7b programs. This new program incentivizes redevelopment of properties before blight occurs, while still ensuring that the property is in actual need of assistance. 
 
The Class 7c incentive offers commercial property owner’s reduced property tax assessment levels of 10% for the first three years of the incentive, 15% in the fourth year, and 20% in the final year of the credit. Without property tax incentives, commercial property is assessed at 25% of its market value. Projects eligible for Class 7c incentives include new construction, reoccupied abandoned property, and substantial rehabilitation of existing structures. The incentive for new construction to the entirety of the land and structure assessments, while the incentive for substantial rehab projects applies only to the assessment value added above a base-year value. 
 
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Eligibility Requirements
In order to qualify for the Class 7c Incentive, the property must meet the following four requirements:
  • Real Estate Tax Analysis. The property has had declining or stagnant assessed values for three of the previous six years. 
  • Viability and Timeliness. The project must be viable and likely to go forward on a reasonably timely basis, resulting in economic enhancement of the property. For reoccupancy projects, applicant will need to prove the development was vacant for 12 months or more and marketed for at least 6 months.
  • Assistance and Necessity. The incentive must materially assist the project to an extent that the project would not go forward without the incentive (“But for…”).
  • Increased Tax Revenue and Employment. The applicant shows the development, with the incentive will result in higher real property tax revenue for the county, as well as increased employment opportunities.
Applicants must also secure support from the local jurisdiction, or Cook County, if the project is located in unincorporated Cook County.
 
Unique Factors
Unlike previously established Cook County real property incentives Classes 7a and 7b, the Class 7c incentive does not require the project to be in an area designated as in need of redevelopment or economic assistance. Additionally, there is no required minimum investment to qualify for this new incentive. Furthermore, the review process for the Class 7c is streamlined.
 
The Application Process & Our Expertise
Cook County has published guidelines and procedures for the application project. Applications and supporting documentation, including a resolution from the local municipality, must be filed with the Cook County Bureau of Economic Development prior to the commencement of construction or rehabilitation activities. Upon submission of the application to the Cook County Assessor’s office and the Economic Development Advisory Council (EDAC), the EDAC will have 30 days to review and make their finding if the designation criteria have been satisfied. Upon the Assessor’s approval, the designation will be granted. In the event that the EDAC does not return its findings within 30 days, the Assessor’s office will make the designation determination on its own. 
 
True Partners Consulting’s Property Tax and Credit & Incentives Team is comprised of a national group of professionals with diverse backgrounds, headquartered in Chicago. Our team regularly works with both the Cook County Assessor’s Office and the Bureau of Economic Development and can assist developers in navigating the various requirements for meeting, and maintaining, a designation as a Class 7c property. 

 

Greg Majors
Director of Business Development South/Southwest
813.434.4021
Greg.Majors@TPCtax.com

Kristin Mauer
Director of Business Development Northwest
408.625.5069
Kristin.Mauer@TPCtax.com
 

John Shipley
Director of Business Development Northeast
646.356.7214
John.Shipley@TPCtax.com


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©2015 True Partners Consulting LLC. All rights reserved. Printed in the USA. True Partners Consulting is a registered trademark in the U.S. and several international jurisdictions. We are required by regulation to inform you that any tax advice contained in this communication (or in any attachment) is not intended or written to be used, and cannot be used by any taxpayer, for the purpose of avoiding U.S. federal, state, or local tax penalties or promoting, marketing, or recommending to another party any transaction or matter addressed in this communication (or any attachment). The information contained herein is for informational purposes only and is based on our understanding of the current tax laws and published tax authorities in effect as of the date of publishing, all of which  are subject to change. You should consult with your professional tax advisor to discuss the potential application of this subject matter to your particular facts and circumstances.
 

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