Governor JB Pritzker signed a landmark housing bill that pushes homeowners to create more affordable housing.
Bob Palmer, policy director for advocacy group Housing Action, said developers and proponents of affordable housing have worked together for a long time to come up with key provisions of House Bill 2621.
The legislation was passed by both houses of the Illinois Legislature in May with unanimous and bipartisan support.
“The idea is to support rental property owners who want to invest in their properties and keep rents affordable,” Palmer said.. “By lowering property taxes, you allow people to charge affordable rents. “
The incentives appealed to developer Related Midwest, the builder of a new 300-unit building that will soon open near Fulton Market. Related President Curt Bailey told the Chicago Tribune the new tax formula will allow the company to reserve 60 units in the 43-story skyscraper for low to moderate income families.
According to the definition of the law, an affordable apartment is an apartment that a family earning 60% of the median income in the region can afford. In Chicago, a family of four with a combined income of $ 54,500 per year meets this qualification. The family’s gross monthly income is $ 4,542.
Under the provisions of the bill, affordable rent for the family must not exceed 30% of their monthly income, or $ 1,300 per month.
Housing Action says Illinois needs an additional 108,000 affordable housing units to accommodate all families in need. The need for social housing in Illinois is even greater, with approximately 270,000 units needed. The lack of affordable housing in Illinois means that many low to moderate income families are forced to pay up to 50 percent or more of their monthly income for rent.
Palmer said most of the owners who will take advantage of the new tax incentives will not be large developers, but rather owners of existing buildings of seven or more units.
“When it comes to basic operating expenses, property taxes are an important component for a building owner,” Palmer said.
Landlords who charge their tenants more affordable rents can’t cover their O&M expenses and pay their property taxes, according to Palmer.
“It just doesn’t work,” he said.
Illinois’ new housing bill will reduce property tax assessments for homeowners who charge affordable rents.
“When they need to fund major upgrades, such as roof or HVAC replacement, or modifications to make a unit accessible to people with disabilities, the reductions assessed will make the search for funding much less difficult,” said Palmer said.