Chicago Mayor Plans Property Tax Hike for Apartment Owners, Residents
CHICAGO - Mayor Rahm Emanuel's record property tax increase is already expected to fall short of municipal obligations, namely city police and fire pension funds, beginning another round of tax increases shortly after approving next year’s budget. The plan is expected to propose an even larger than expected projected increases for apartment owners and residents.
The property tax increase, already being touted as the largest in the city’s history, is expected to boost collections annually by $543 million over the next four years. Despite increasing individual tax bills by 12 percent, it is still expected to fall hundreds of millions short of what the city is required to fund under state law.
For the rental housing industry, the property tax increase amounts to a nearly $400 annual rent hike for residents, according to the Chicagoland Apartment Association (CAA) – that is if property owners can pass on the cost to their residents. The association’s forecast of the cost on renters of the proposed tax hike is 60 percent more than the initial increase proposed by the Emanuel administration, which was $240 per year. City officials downplay the impact, particularly on low-income residents that live in public housing or receive vouchers where rent increases are restricted.
"Owners are going to have to make some tough decisions," said Michael Mini, CAA Executive Vice President, speaking to Crain’s Chicago Business. "My costs are going up, I either pass those costs through in the form of higher rents or I have to make adjustments to other parts of my budget, like my capital improvement plan and maintenance.
“It's naïve to think those increases are not passed on eventually, or in some form,” he added.
The tax hike could have additional unintended consequences. Higher taxes, combined with additional costs on new projects imposed by the affordable housing ordinance that was passed last year, will slow down the construction pipeline while the number of renters grows, developers say.
Source: Crain’s Chicago Business, Chicago Tribune, Chicagoland Apartment Association