Most Illinois property owners probably don’t know, but their property tax bills may now effectively contain an invisible line item for funding affordable housing. Statewide authorization for that is now going into effect at least in Cook County.
To address Illinois’ affordable housing problem, Illinois enacted a new law in 2021 called Affordable Illinois that includes property tax cuts of up to 35% for apartment owners that commit to maintain certain levels of affordable units in their property. The tax cut is achieved through a reduced assessment.
It’s just now being implemented in Cook County, which apparently is the first county, and it’s already being trumpeted as a success, as in this recent Chicago Tribune column and here in The Real Deal. Details on the program are here.
What’s often not mentioned or understood is that property tax breaks for some mean higher property taxes for others. The “levy” is what ultimately matters — the total amount property taxes that any government decides to collect. If one group gets a lower rate or assessment, that reduction has to be offset by increased taxes on everybody else in order to meet the total levy.
That’s how it works with Affordable Illinois. The levy is not decreased.
So, to get more affordable housing, other housing will be made less affordable. The increased property tax burden to cover the program actually will be borne by all property owners — commercial as well as residential, including single-family homes. Still, at least to some extent, Affordable Illinois will have the effect of make housing not in the program less affordable.
We warned about that perverse result when the legislation was being considered in 2019. However, the new law sailed through the General Assembly, getting a bipartisan, unanimous vote from both houses.
The new law was inspired, in part, by Chicago’s failure to get its Affordable Requirements Ordinance to work. Its convoluted approach, that we’ve long criticized, has never produced much new affordable housing. Despite expansion and toughening of that ordinance under Mayor Lori Lightfoot, results remain minimal, as recently reported by the Illinois Answers Project.
If taxpayers want to pay for more affordable housing (which is questionable), the simplest and most efficient means seems to be vouchers, which is a far simpler, market-based concept. However, the federal program for housing vouchers needs improvements, too, because it includes no work requirements for the able-bodied, permits long-term dependency and has a long wait list to enroll. America today has over ten million job openings and it’s essential to get people back to work. And the vouchers surely ought not be funded through property taxes, as Affordable Illinois does, because Illinois property taxes are already the highest in the nation.
Instead, Illinois has chosen to conceal the cost in property tax increases and to create a whole new level of bureaucracy for assessors and administrators to enforce. The cost of that, in addition to the direct cost of the program, will be in your property tax bill if you are in a county like Cook that implements the program.