State bill could cut into local property tax base

By ERIC LINDEN

Property tax money to Oak Park governments and others in Illinois
municipalities could be lost if Gov. Ryan approves in the coming weeks
of a freeze in property values after rehabilitation of historic
properties.

The Illinois Municipal League, a not-for-profit group that lobbies on
behalf of municipalities in the state, opposes House Bill 3428 because,
according to the league, it will be a losing proposition for cities,
especially those like Oak Park with a significant number of historic
properties.

"The bill would result in lost revenue to municipalities," the Municipal
League said in a recent Legislative Bulletin.

Under the bill, which is co-sponsored in the Illinois House by Reps.
Robert A. Biggins (R-Elmhurst), Barbara Flynn Currie (D-Chicago) and
Thomas Holbrook (D-Bellville) and co-sponsored in the Senate by State
Sen. Steven J. Rauschenberger (R-Elgin), owner-occupants of historic
homes who spend at least 25 percent of the value of their property on
historic rehabilitation of the property would receive an eight-year
freeze in their property tax assessments.

Theoretically, a major renovation to a home would raise the property's
assessment and, thus, the tax base of a city. But under the proposed tax
freeze plan, the tax base would not rise as much. Given the two historic
districts in Oak Park and the large number of other historic homes in
the village, the impact on future tax-base growth could be serious.

Now and without the new law, owners of such historic properties are
eligible for property tax breaks if they have major renovations
performed, and they somewhat lower the growth of property values in Oak
Park--but not River Forest or Forest Park, who do not participate in the
tax-break program. It is unclear now to what extent, but the assessment
freeze for doing historic rehabilitation on public properties would cost
local taxing bodies even more revenue that the tax breaks.

Under the bill, the property values on qualifying homes would be frozen
for eight years, after which the climb to the property's true assessment
value would be phased over another eight years. Thus, it would be 16
years before local taxing bodies could collect taxes on the full value
of the properties with the assessment freeze.

The assessment-freeze measure was first read in the House on Jan. 20 and
passed there on Feb. 23. The Senate began considering the bill on Feb.
25 and passed the historic assessment freeze on March 31. Gov. Ryan
approved the measure on June 13. But now the plan is subject to the fall
veto session that is scheduled to be held by the General Assembly on
Nov. 14, 15 and 16 and Nov. 28, 29 and 30. Legislators could overturn
the previous passage, or the freeze will take effect.

Properties eligible for the assessment freeze would include "historic
buildings." Those are defined as residential buildings listed on the
National Register of Historic Places, or as locally designated
architectural landmarks or as properties in a nationally recognized
historic district. Oak Park has several properties on the National
Register, several local landmarks and two historic districts, meaning
that hundreds of properties in the village would be eligible for the
assessment freeze.

River Forest and Forest Park have no historic districts, no local
landmarks and no nationally designated historic homes, meaning
governments in those two municipalities would not lose as much money as
Oak Park could. Still, under the process outlined in the state bill,
some other properties also could qualify for an assessment freeze.

The state action, however, retains local control over revenue lost to
historic rehabilitation. River Forest and Forest Park choose not to
participate in the current tax-break program and also could opt out of
the assessment freeze program.

In Oak Park, village boards currently and in the past have favored the
tax breaks as a way of encouraging long-term increase of property values
in the village and may even favor the assessment freeze. But public
school districts, protective of their property tax bases because they
have hardly any other source of revenue outside of property taxes, have
opposed the tax-break program. School districts almost certainly would
not be happy with the state tax assessment freeze were it to survive a
veto override this year and were it to be enacted by a village board.