CHICAGO; Dec. 11, 2018: Mayoral candidate Paul Vallas today reiterated his pledge to boost affordable housing and communities throughout Chicago by overhauling City building and zoning codes to facilitate the creation of tens of thousands of new affordable and accessible housing units. He also pledged to protect communities from gentrification and individual taxpayers from dramatic increases in property taxes by shielding existing homeowners, renters and businesses from unaffordable property tax and fee increases.

“Very little has be done to create new affordable housing in Chicago,” Vallas said. “Even more damaging has been its failure to help homeowners and renters find ways to afford to stay in their long-time communities that are undergoing rapid appreciation.”

Vallas Plan For Accelerating Construction of New Housing

Vallas said his strategy would be simple: spur affordable housing by accelerating the construction of new housing citywide. This will be done while capping property tax increases for existing residents in gentrifying areas. Vallas said that solving Chicago’s affordable living problems will begin on day one of his administration.

“Despite the hard work of numerous affordable housing groups and advocates, Emanuel has failed to produce a workable comprehensive strategy to address the affordable housing needs in Chicago, which must include managing affordability in rapidly appreciating neighborhoods,” Vallas said.

A centerpiece of the Vallas plan is to provide new affordable housing is to make it easier for landlords to convert unfinished or unproductive spaces to apartments. According to analysis of Cook County property records, Chicago is home to as many as 130,000 apartment buildings, ranging from two-flats to multi-unit buildings of 24 apartments or more. The overriding majority of those properties have unfinished garden-level space which are ideally suited for conversion that could provide upwards of 175,000 new housing units throughout the city.

Further, the City has more than 700 linear miles of vacant ground-level retail space. Many analysts believe that this space will never be occupied by retailers due to the shift to internet retailing. The City needs to lead efforts to explore how amendments to the zoning ordinance could facilitate converting these spaces to residential use.

“Chicago has been ignoring a vast untapped potential for a major expansion of housing options all over the city. This is a major housing opportunity whose infrastructure is already largely in place and could benefit both prospective tenants as well as current property owners who are struggling to pay the skyrocketing property taxes, water and sewer fees, and other expenses that have mushroomed under Mayor Emanuel.”

“Nothing demonstrates Chicago’s ‘tale of two cities’ more than housing,” Vallas said. “There has been an explosion of luxury housing development downtown, while even middle-class families struggle to find affordable housing in neighborhoods across Chicago.”  Vallas proposed that the initial stage of the garden unit apartment program be limited to the City’s transit-oriented development (TOD) zones around mass transit stations. “Traditionally, parking availability has been the greatest concern for aldermen and residents when discussions of increasing housing density is proposed. By initially limiting these units to existing TOD zones, we can carefully assess the impact this program is having on communities and adjust, as needed, as we expand.”Vallas noted that the benefits of the City’s current TOD policy generally accrue to major developers, typically developments of 25 units or more. By comparison, the Vallas proposal would help spread the financial benefits of TOD to a large number of smaller property owners.

Affordable housing is not only a problem for poorer communities but is becoming a major problem for middle and upper-middle income communities as well,’ Vallas said. “Regardless of the number government initiatives to expand affordable housing in Chicago, the City’s long- term needs cannot be accomplished without removing the obstacles and barriers currently restricting new construction.

Vallas also noted the opportunities to provide expanded affordable and specialty housing by establishing a City Housing Trust (CHT) that would secure unoccupied and abandoned buildings, making them available to community based organizations, local developers and faith based organizations. This would be conditional on the buildings be used to provide affordable housing, special housing for veterans, the homeless, veterans, displaced youth and young adults, victims of domestic violence. The CHT could also provide financing for rehab and award temporary property tax abatements during the rehab and for an extended period depending on the buildings residential use. The City would retain an equity share in the property.

Vallas Plan for Capping Individual Property Taxes

The highlight of Vallas’ proposal to protect existing homeowners, renters and businesses from the adverse effects of sudden large increases in property taxes would be to cap and defer property taxes on existing homeowners and landlords to prevent them from being priced out of their homes just because their neighborhoods are rapidly appreciating.

Chicago Property Owners and Small Businesses are about to get hammered by what will amount to be the biggest property tax increases in our 185-year history.  This will result in tremendous pain for all Chicago property owners as well as the overall Chicago economy. These increases are draconian, and what’s worse is the lack of transparency.

Property owners have received their property tax reassessment invoices from the office of Assessor Joe Berrios.  Many people are shocked to find that the assessed valuation of their properties have gone up between 20 to 50%, and some as high as 70% from just 3 years ago.

In February taxpayers are going to get another shock when they receive their final tax invoices showing their actual property tax numbers with even greater increases in the actual amounts they owe.

While everyone will suffer, our homeowners, the middle class and small businesses will get hurt in an extreme way.

Regardless of what Assessor Berrios says our homes are worth, the reality is that home prices are stagnant or declining, leaving more than 116,000 Chicago homeowners owing more on their mortgages than their home is worth… more underwater mortgages than NY, LA AND Boston COMBINED.

The first step in addressing the skyrocketing real estate taxes is that Chicagoan’s deserve an honest explanation.  That simply hasn’t happened. Chicagoan’s deserve transparency into how these numbers are being calculated and when this will all end.  People cannot plan for massive uncertainty.

Vallas Plan for Addressing the Skyrocketing taxes:

  1. I propose a cap of 5% or the rate of inflation, whichever is less, on property taxes on owner occupied residences, apartments and businesses.
    1. Rate of inflation is commonly 2-3%, meaning this is in effect a 2-3% cap a majority of the time.
    2. This would protect Chicago homeowners and renters in rapidly gentrifying areas.
    3. Enactment of a cap would not have the adverse impact of shifting the tax burden to other non-residential property owners, as increasing the homeowner’s exemption has often done.
    4. This is because the cap does not reduce the taxable base but merely limits the tax increase to an affordable level.
  2. The City should allow seniors to freeze their property taxes until the property is sold.
    1. A major problem in gentrifying neighborhoods is that low-and moderate-income seniors are choosing to sell because they cannot afford rising property taxes in gentrifying neighborhoods and cannot afford the upkeep on their homes.
    2. An existing State of Illinois Senior Citizen Property Tax Deferral Program, available for low-income seniors, could be expanded and vigorously marketed in gentrifying neighborhoods.
    3. The program could also be extended to seniors at higher income levels who own and live in multiple family homes in at-risk areas, who keep their rents affordable.
  3. Prioritize keeping families in their homes and simplifying the process for accessing and renewing available tax relief programs.
    1. Priority should be given to keeping residents in their homes by amending tax delinquency and providing support to avoid forecloses. One way would be for homeowners and landlords to exchange equity share in lieu of taxes or to allow to secure the property at tax sale and allow the residents to remain.
    2. There is also an already existing array of programs designed to reduce the impact of property taxes through exemptions, credits, grants or deferrals. The process for accessing these programs is both cumbersome and confusing and the programs currently must be renewed annually. This imposes a hardship on the elderly especially. I will simplify access and make renewal automatic.
  4. The Vallas administration will partner with nonprofit organizations and volunteer groups to provide support and infrastructure for homeowner appeals.
    1. Unlike the infrastructure of income tax clinics that help many low-income families prepare their tax return and claim the EITC, there is no similar infrastructure to help low-income families appeal their property tax assessments.
    2. The assessor’s office does outreach, but fact remains that low-income homeowner’s appeal less frequently than upper income taxpayers.
  5. The City will be more aggressive in opposing property tax appeals by large commercial property owners and will also challenge under-assessments of large commercial properties.
    1. As Crain’s, the Chicago business magazine pointed out, many downtown commercial properties are shockingly under-assessed.
    2. The real estate tax system is a prime example of an industry of politically connected lobbyists and attorneys who have set up shop making hundreds of millions of dollars in fees to appeal their client’s property taxes, shortchanging schools and shifting the burden to homeowners.
    3. Accurately assessing commercial properties would help shift the tax base away from homeowners.