Property Assessment Investigation brought forward during current State session from Bill Ward, HBAI Executive Vice President & Director of Governmental Affairs HR527, a resolution for the House Revenue Committee to investigate property assessments in Illinois. This, I believe, is in response to the weeklong series of articles published by the Chicago Tribune which details the inequities and poor management of the Cook County Assessor’s office. That being said, point #6 of the resolution: “analyze preferential assessments including farm evaluation, open space, and developer relief;.” “Developer Relief” is the official title of what we in this association refer to as “The Vacant Lot Act.” The Vacant Lot Act allows developers to keep the assessment of a completed lot at the prior assessment until such time that the property is transferred to the next owner. We have safeguarded the Vacant Lot Act and the Model Home Act since the recession of the 1980s. We as an association must now swarm like bees to secure this benefit for years to come by meeting with the sponsor and with others on the House Revenue Committee over the coming months to emphasize its importance of this benefit to our industry. All of the legislators involved with this committee are above I-80 and HBAI will be calling on the assistance of HBAGC, Northern, SSHBA, and Rockford to make our visits count over the next few weeks. “What is the “developer’s” exemption? Section 10-30 of the Illinois Property Tax Code1 gives a preferential property assessment for acreage that is in transition from vacant land to a residential, commercial, or industrial use. The purpose of the preferential assessment is to encourage real estate development by providing a tax incentive that protects a developer from paying increased taxes until a return on the investment can be made. As a result, the preferential assessment is often called the “developer’s exemption” or “developer’s rate”. The preferential assessment is available in all counties except Cook County. For anyone not familiar with the “Developer Exemption” the information above was published by the Illinois Department of Revenue. It is an extremely important exemption for builders and developers. As stated by the IDR, “ The purpose of the preferential assessment is to encourage real estate development by providing a tax incentive that protects a developer from paying increased taxes until a return on the investment can be made.” Since there are no residents until the vacant lots are occupied by a home there is little or no cost to the taxing bodies when the developer makes the investment to improve the subdivision with infrastructure, i.e. no burden to schools, fire departments, park districts or other governmental bodies. Each lot is reassessed at market when a home is build an occupied and will start to utilize public services. The cost of an increased assessment for what is a vacant lot producing no income can increase the carry cost of a subdivision by 3% to 4% per year. With the very weak market for homes in the current market it can take up to 4 years for a public builder and more than 10 years four smaller custom builders to sell the lots subdivision. This impact can be dramatic on any proforma for new lot development. This increase in taxes which are not needed for vacant lots which utilize no public services is an unnecessary tax burden that will raise the cost of housing to the consumer, make new homes less affordable, slow sales even further and in the end in many instances cause new development of quality lots to be economically unfeasible. ALL HOME START HERE IBS 2018 10
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