Southland boosters are pushing a bill that would create a new economic development tool to make the region more competitive for business investment.
Officials testified in Springfield last week about how the Southland Reactivation Act would lower property tax rates for everyone by bringing idle, exempt parcels back onto tax rolls.
“If we get the tax rates down I think more businesses will take a look at our communities in the south suburbs,” said Kristi DeLaurentiis, executive director of the South Suburban Mayors and Managers Association.
House Bill 1842 would create incentives for potential developers of vacant or blighted commercial and industrial properties. Municipalities and others own at least 1,800 “dead” properties that contribute nothing to the tax base.
If approved, the program would lower assessments for up to 12 years if private investors breathed life back into exempt properties. You could say it’s like half a loaf is better than none.
The legislation has a good chance of being approved because there would be no cost to the state, DeLaurentiis said.
“That’s the beauty of it,” she said. “Because they’re tax exempt now they’re not contributing. If we’re successful and bring new properties online they will start contributing.”
The proposed incentives would only be available for properties in south suburban Bloom, Bremen, Calumet, Rich, Thornton and Worth townships, according to the bill.
High tax rates are a scourge that chase potential investors away from towns in south Cook. A company looking to open a new store might look on a map and think Park Forest is an excellent location, until they discover the town’s tax rate is an absurd 35%.
Ridiculously high rates suck most of the potential profitability out of just about any potential project. As a result, many businesses instead invest in neighboring Will County, across the border in Indiana or elsewhere.
High tax rates are primarily due to a relative lack of commercial and industrial properties dating back to the decline of the region’s steel industry that began more than 50 years ago.
Fewer businesses mean homeowners get socked with a greater share of the property tax burden. High tax rates make homes less attractive to potential buyers, which affects market values and assessments.
The state’s overreliance on property taxes to fund education also puts the region at a disadvantage compared to other areas with lower tax rates. The bottom line is that without incentives to address high tax rates, businesses will invest elsewhere and the vicious cycle of high taxes will persist.
“Properties in the south suburbs are not looked at as an investment opportunity by most,” DeLaurentiis said. “We want to reactivate investor interest and bring this region back so that it is seen as a long-term viable investment and a place to be.”
Other incentive programs in the past have tried to achieve the same result. Cook County, for example, offers a Class 8 incentive that lowers taxes for commercial and industrial properties that experience new construction or substantial expansion.
The Southland Reactivation Act addresses properties that tax-exempt municipalities and other taxing bodies have acquired because nobody else wanted them. Previous owners may have walked away from underwater mortgages or surrendered properties at scavenger sales due to years of unpaid taxes.
Properties acquired by the South Suburban Land Bank Development Authority and Cook County Land Bank Authority would be eligible for the incentives, according to the bill.
Land banks have the unique ability to wipe away debt owed to governments from unpaid property taxes. Land banks may use that tool as part of the proposed program, but they could also help the Southland’s dozens of small municipalities in other ways, DeLaurentiis said.
“It’s hard for a community that doesn’t have a village administrator or economic development expert to help recruit, navigate and secure an investor into their community,” she said.
“With support of land banks, that job could fall to them with help of municipalities,” DeLaurentiis said. “Land banks could petition for a Southland Reactivation site on their own, but it has to be supported by the municipality.”
Members of the House Revenue and Finance Committee indicated support for the proposal after local officials testified, she said.
“What we’re proposing makes eminent sense because it’s helping spur reinvestment at no cost,” DeLaurentiis said.
Cook County Assessor Fritz Kaegi overhauled the way his office determines values of commercial properties. Tax rates in many south suburbs dropped sharply after recent reassessments but remained significantly higher than other parts of the county.
Kaegi said he supports House Bill 1842, which is paired with Senate Bill 2178.
“This bill is a tool that will further revitalize the Southland as an industrial hub of the Midwest,” he said. “I stand with South Suburban Mayors and Managers because of a shared goal: Lower property taxes for homeowners and a better process for new business development.”
State Rep. Anthony DeLuca, D-Chicago Heights, introduced the legislation. House sponsors include state Reps. Debbie Meyers-Martin of Olympia Fields, William Davis of Homewood and Nicholas K. Smith of Chicago.
Senate sponsors are state Sens. Elgie Sims Jr. and Bill Cunningham of Chicago, Napoleon Harris III of Harvey and Patrick Joyce of Essex.
Boosters hope if lawmakers approve the program this year, the incentives would immediately attract new investment and get idle parcels back onto tax rolls. Then, success stories could be highlighted to build investment momentum.
“We proposed this as a pilot,” DeLaurentiis said. “We could serve as an example for the rest of the state. Other divested areas could use this tool, too.”
There doesn’t appear to be a downside, such as unintended consequences that resulted from a well-intended measure a few years ago to expand eligibility for tax breaks for senior citizens. So many people took advantage of the incentive that other homeowners felt a greater share of the tax burden. That’s not the case with this bill.
“With tax exempt properties, you’re not taking anything away from anyone, you’re adding to the base,” DeLaurentiis said.
Ted Slowik is a columnist for the Daily Southtown.