HomeMy WebLinkAbout09.30.19
SPECIAL CITY COUNCIL MEETING
CITY OF EVANSTON, ILLINOIS
LORRAINE H. MORTON CIVIC CENTER
JOAN BARR-SMITH ALDERMANIC LIBRARY
Monday, September 30, 2019
6:00 p.m.
ORDER OF BUSINESS
(I) Roll Call – Begin with Alderman Rue Simmons
(II) Public Comment
Members of the public are welcome to speak at City Council meetings. As part of the Council
agenda, a period for public comments shall be offered at the commencement of each regular
Council meeting. Public comments will be noted in the City Council Minutes and become part of
the official record. Those wishing to speak should sign their name and the agenda item or non-
agenda topic to be addressed on a designated participation sheet. If there are five or fewer
speakers, fifteen minutes shall be provided for Public Comment. If there are more than five
speakers, a period of forty-five minutes shall be provided for all comment, and no individual shall
speak longer than three minutes. The Mayor will allocate time among the speakers to ensure that
Public Comment does not exceed forty-five minutes. The business of the City Council shall
commence forty-five minutes after the beginning of Public Comment. Aldermen do not respond
during Public Comment. Public Comment is intended to foster dialogue in a respectful and civil
manner. Public comments are requested to be made with these guidelines in mind.
(III) Special Order of Business
SPECIAL ORDER OF BUSINESS
(SP1) Resolution 94-R-19, Endorsing the Application of 619 H, LLC to the Cook
County Assessor for Class 7a Status Designation for Commercial
Development of the Vacant Property Located at 611-21 Howard Street
The Economic Development Committee recommends City Council adoption of
Resolution 94-R-19, “Endorsing the Application of 619 H, LLC) to the Cook
County Assessor for Class 7a Status Designation for Commercial Development of
the Vacant Property Located at 611-21 Howard Street, Evanston, Illinois.”
For Action
(IV) Executive Session
1 of 37
City Council Agenda September 30, 2019 Page 2 of 2
(V) Adjournment
Information is available about Evanston City Council meetings at: www.cityofevanston.org/citycouncil.
Questions can be directed to the City Manager’s Office at 847-866-2936. The City is committed to
ensuring accessibility for all citizens. If an accommodation is needed to participate in this meeting, please
contact the City Manager’s Office 48 hours in adv ance so that arrangements can be made for the
accommodation if possible.
2 of 37
For City Council Meeting of September 30, 2019 Item SP1
Resolution 94-R-19, Endorsing Class 7a Status for 611-21 Howard Street
For Action
To: Honorable Mayor and Members of the City Council
From: Johanna Leonard, Community Development Director
Paul Zalmezak, Economic Development Manager
Subject: Resolution 94-R-19, Endorsing the Application of 619 H, LLC to the Cook
County Assessor for Class 7a Status Designation for Commercial
Development of the Vacant Property Located at 611-21 Howard Street
Date: September 24, 2019
Recommended Action:
The Economic Development Committee recommends City Council adoption of
Resolution 94-R-19, “Endorsing the Application of 619 H, LLC) to the Cook County
Assessor for Class 7a Status Designation for Commercial Development of the Vacant
Property Located at 611-21 Howard Street, Evanston, Illinois.”
Livability Benefits
Economy & Jobs: Retain and expand local businesses, expand job opportunities
Summary:
619 H, LLC is the real estate entity established by Dr. Mohamed Eldibany to acquire the
long vacant building located at 611-21 Howard Street, formerly partially occupied by
Sherwin Williams. The 17,500 +/- parcel includes a nearly 10,000 square foot building
and a parking lot. Dr. Eldibany is in negotiations with the ownership of Peckish Pig to
lease the space, upon substantial rehabilitation, for an event space that can host public
and private events such as concerts, graduations, and weddings. Peckish predicts a
total of 130 events annually.
Dr. Eldibany intends to invest nearly $1 million for the renovation including updating
plumbing, electrical, and insulation, replacing the roof and floor, renovating the
bathrooms and kitchen, installing new audio and visual equipment, and replacing all of
the windows. Exterior improvements planned include tuck pointing, installing privacy
fencing on the perimeter of the parking lot as well as repairing and repaving the parking
lot, and landscaping.
Memorandum
3 of 37
The renovation of 611-21 Howard Street is expected to generate the following economic
impacts:
Approximately 50 temporary construction jobs
Up to 12 permanent employees to staff the new event space
Home rule liquor/sales tax totaling $55,000 (estimated $1.5 million in sales)
During incentive period, approximately $30,000 annually in property taxes
($5,000 in City property taxes)
Post-incentive period, approximately $40,000 annually in property taxes ($6,800
in City property tax)
An activity generator for Howard Street business district with an estimated 130
events per year
Renovated property contributing to ongoing revitalization of Howard Street
The analysis below highlights the difference between taxes paid on the property with the
Class 7a assessment and if the property does not receive the Class 7a assessment.
The complete analysis provided by the applicant, and reviewed by staff, is attached. To
illustrate the range of outcomes, staff requested estimates of tax revenue based on
three scenarios:
1. Event space without 7a
2. Event space with 7a
3. The building remains vacant
Total Est. 619 H, LLC Tax Revenue Impact Over 12 Years (2019-2030)
Scenario
Total Property Tax
Generated
City of Evanston
Total Share of Tax
Revenues
1. Occupied without 7a [1] $ 1,177,632 $ 200,198
2. Occupied with 7a $ 529,935 $ 90,089
3. Vacant without 7a $ 181,649 $ 30,880
[1] Not a feasible option for 619 H, LLC. Without 7a, 619 H, LLC will not acquire space.
The property at 611-21 Howard Street is assessed at 25% of its fair market value. Using
fair market value numbers, based on the 2019 First Pass Assessed Value of the
Building of $218,108, the property will generate an estimated $181,649 in total tax
revenue for all taxing bodies over the proposed 12-year life of the incentive ($15,137 a
per year) if it were to remain vacant (Scenario 3 in the table above). The City of
Evanston would receive approximately $30,000. Scenario 3 is unlikely as it assumes the
building will remain vacant for the entire 12-year period of the requested 7a incentive.
Scenario 3 provides the extreme lower end of the range of tax revenue generation for
illustrative purposes.
Using the same assumptions, the property would generate approximately $1.2 million if
occupied without 7a and over $200,000 for the City of Evanston. However, Scenario 1
is not really an alternative as 619 H, LLC has indicated they will not close the acquisition
of the property without the incentive. But it provides an illustrative example of the
potential high range of tax revenue generate.
4 of 37
By contrast, based on an estimated market value of $1.4 million the property would
generate an estimated $529,000 in total tax revenue over the proposed 12-year life of
the incentive ($98,000 per year), as summarized in Scenario 2. This is an increase in
potential tax revenue of approximately $350,000 over the life of the incentive compared
to taxes collected if vacant. The total tax revenue collected by the City over 12 years
would be approximately $91,000 ($7,500 annually). Scenario 2 provides a realistic mid-
range estimate if 619 H, LLC were to occupy with the 7a.
In summary, the Class 7a provides an opportunity to help a local business grow their
event business and to convert a vacant property into a vibrant, tax paying business. If
Resolution 94-R-19 is adopted, the next step in the application process will be for the
applicant to re-submit the full application to the Cook County Assessor. The Assessor
will forward this application to the Economic Development Advisory Committee of Cook
County (EDAC) which will within 30 days review the application and present its findings
to the Assessor. The Assessor will then make a final determination within 30 days of
receiving the report from the EDAC.
Cook County Commissioner Larry Suffredin is supportive of the application after having
visited the property and has receiving a briefing on the proposed renovation and reuse.
Background:
The Cook County Class 7a requires the City Council adopt a resolution endorsing the
application and to designate the area as blighted. In 2004, the City Council adopted TIF
ordinances effectively designating a conservation TIF, which qualifies this property
under the Class 7a guidelines.
The Class 7a incentive of the Cook County Real Property Assessment Classification
Ordinance ("Ordinance") is intended to encourage, in areas determined to be "in need
of commercial development", commercial projects with total development costs,
exclusive of land, that do not exceed $2 million, which would not be economically
feasible without the incentive. The Cook County Class 7a bulletin, providing a detailed
summary, is attached.
The Cook County Assessor requires the City Council to adopt a resolution consenting to
the Class 7a tax incentive based on occupation of abandoned property, substantial
rehabilitation, for projects under $2 million. In addition, the Assessor requires a
resolution designating the area as blighted. Attached are TIF ordinances 1-O-04, 2-O-
04, and 3-O-04 identifying the area as a conservation area / blighted.
Legislative History:
On September 25, 2019, the Economic Development Committee unanimously approved
recommending adoption of the resolution.
5 of 37
Attachments:
Resolution 94-R-19
7a Tax Revenue Analysis
Cook County Class 7a Eligibility Bulletin
619 H, LLC Application
6 of 37
9/18/2019
94-R-19
A RESOLUTION
Endorsing 619 H, LLC’s Application to the Cook County Assessor
for 7a Status Designation for Renovation and Redevelopment of a
Vacant Building at 611-21 Howard Street, Evanston, Illinois
WHEREAS, the City of Evanston, Cook County, Illinois, (the “City”)
is a home rule unit of government under the Illinois Constitution of 1970; and
WHEREAS, there exists within the borders of the City a recognized
need for economic development, business expansion and employment; and
WHEREAS, there exists a need to aid in financing the cost of
economic development projects in order to encourage an increase in commerce
and industry within the City, thereby reducing unemployment and providing for
the increased welfare and prosperity of the residents; and
WHEREAS, the City Council desires to promote the redevelopment
of vacant buildings and retain local business to allow them to expand within its
borders; and
WHEREAS, the Cook County Assessor operates under an
ordinance, known as the Cook County Real Property Classification Ordinance,
which the Cook County Board of Commissioners enacted in order to encourage
industrial and commercial development in Cook County; and
WHEREAS, 619 H, LLC (the “Applicant”) has applied for or is
applying for Class 7a property status pursuant to said ordinance, for certain real
estate, located at 611-21 Howard Street in the City, with the Property Index
Numbers 11-30-210-016-0000, 11-30-210-017-0000, 11-30-210-018-0000, 11-
7 of 37
94-R-19
~2~
30-210-019-0000, 11-30-210-020-0000 (the “Subject Property”), and has
documented that such incentive provided for in said ordinance is necessary for
renovation of an existing building to occur on the Subject Property; and
WHEREAS, the City of Evanston, has reviewed the factors that
resulted in the area to be defined as a conservation area under 65 ILCS 5/11-
74.4-1 through 11-74.4-11 and adopted the Howard & Ridge Tax Increment
Financing District Redevelopment Plan and Project No. 5; and
WHEREAS, applicant seeks affirmative support from the City of Evanston
for its application to the Cook County Assessor and the City Council finds it is in
the best interests of the City to support their efforts to receive this 7a designation,
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL
OF THE CITY OF EVANSTON, COOK COUNTY, ILLINOIS:
SECTION 1: That the City Council hereby grants the request of the
Applicant to have the Subject Property declared eligible for Class 7a status
pursuant to the Cook County Real Property Classification Ordinance because the
City Council recognizes that the incentive benefits provided for in said ordinance
are necessary for new construction to occur on the Subject Property.
SECTION 2: The City Council hereby supports and consents to the
Cook County Assessor granting the Subject Property 7a status pursuant to the
Cook County Real Property Classification Ordinance.
SECTION 3: The City Manager is hereby authorized and directed
to sign any documents necessary to implement this resolution.
8 of 37
94-R-19
~3~
SECTION 3: That this Resolution 94-R-19 shall be in full force and
effect from and after its passage and approval in the manner provided by law.
_______________________________
Stephen H. Hagerty, Mayor
Attest:
_______________________________
Devon Reid, City Clerk
Adopted: __________________, 2019
Approved as to form:
_______________________________
Michelle L. Masoncup, Corporation
Counsel
9 of 37
September 17, 2019
VIA E-MAIL
Wally Bobkiewicz
City Manager
2100 Ridge Avenue
Evanston, IL 60201
RE: Class 7a Tax Incentive
619 H LLC
611-621 Howard Street
Evanston, IL 60202
PIN: 11-30-210-016/-017/-018/-019/-020
Dear Wally:
619 H LLC (the “Applicant”) is seeking to purchase the above referenced property, and is
requesting:
1) A Resolution from the City of Evanston supporting and consenting to a Class 7a Tax
Incentive based on Occupation of Abandoned Property, Substantial Rehabilitation
with a purchase for value; and
2) A Resolution designating the area as blighted pursuant to Section 74-65(a) in
compliance with the ordinance:
“The area is or has been within the last 10 years designated by federal, state or local
agency as conservation, blighted or renewal area or an area encompassing a
rehabilitation or redevelopment plan or project adopted under the Illinois Urban Renewal
Consolidation Act of 1961, as amended, or the Commercial Renewal Redevelopment
Areas Act of 1967, as amended, or that the area be located in a federal Empowerment
Zone or Enterprise Community, as proposed and approved by the Cook County Board of
Commissioners on June 22, 1994, or the Commercial District Development Commission
Ordinance of the City of Chicago or the designations(s) of like effect adopted under any
similar statute or ordinance.” [74-65(a)(1)]
The subject property currently consists of an approximately 17,424 square foot lot.
Applicant plans to substantially rehabilitate the 9,929 square foot building that currently site on
the site. The Applicant intends to turn the vacant building into a premiere event space that can
host public and private events such as concerts, graduations, and weddings.
10 of 37
Should the City of Evanston approve of the Applicant’s Class 7a Tax Incentive request
the Applicant will be in a position to justify investing approximately $937,000 rehabilitating the
currently vacant site. The building must undergo extensive modernization in order to host all of
the potential events. These improvements include completely updating plumbing, electrical, and
insulation, replacing the roof and floor, renovating the bathrooms and kitchen, installing new
audio and visual equipment, and replacing all of the windows. The Applicant will also
substantially invest in exterior improvements such as tuck pointing, installing privacy fencing on
the perimeter of the parking lot as well as repairing and repaving the parking lot, and
landscaping. The Applicant expects the development to create approximately 35-55 construction
jobs.
In addition to the approximately 35-55 construction jobs, the Applicant expects the event
space to create approximately 10-12 new permanent jobs. The Applicant will consider qualified
City of Evanston residents for any job openings.
Based on a cost approach to value, the subject property is estimated to have a market
value of $1,414,000 after completion of the development and commencement of operations.
Therefore, over the course of the 12-year Tax Incentive the subject property is anticipated to
produce approximately $529,935 in real estate taxes, or $39,254 annually. Currently, 2/3 of the
property has been vacant for approximately since 2001, per Sherwin Williams, and the building
has remained fully vacant since 2017 when Sherwin Williams left. Because Evanston is in a
reassessment year, the 2018 Final Assessed value was used to project the subject property’s taxes
over the next 12 years since it more accurately reflects the building’s value at full vacancy. If the
subject property were to remain fully vacant it would only generate approximately $181,649 over
the next 12 years, or $15,137 per year. Therefore, if the City of Evanston approves of the
Applicant’s Class 7a tax incentive, the subject property will generate approximately $348,286
over the life of the incentive.
Considering the intended use of the property as an event space, the City of Evanston will
also retain a significant amount of sales tax including liquor tax and entertainment tax. The
property is projected to host at least 130 different events a year. The site can hold up to 1,000
people which would generate significant foot traffic to this area and revitalize the part of Howard
Street that had long been economically depressed. Local restaurants will also be called upon to
cater these events, thus generating revenue for businesses all across the City of Evanston. The
Applicant expects approximately 1/3 of the events to be catered by local businesses.
Conservative sales projections show approximately $1,500,000 in revenues from bar sales, food
and concession sales, as well as catering sales.
In addition to creating significant property tax and other tax revenues for the City of
Evanston, should the Class 7a tax incentive be approved, the Applicant’s projected 10-12 onsite
employees and hundreds of annual guests will stimulate the City of Evanston’s economy by
supporting local businesses.
If the Applicant does not receive a Class 7a Tax Incentive, the Applicant has determined
that the development is not economically feasible due to the Cook County property tax burden
11 of 37
and the extensive renovations that would be required to modernize the building. Therefore, the
Applicant will be required to consider making the investment in county, state, or community that
offers it a Class 7a Tax Incentive, which would leave the subject property as a vacant building on
an area on Howard Street that is in need of revitalization.
The Applicant is requesting a Class 7a tax incentive based on occupation of abandoned
property, substantial rehabilitation with a purchase for value, and is eager to work with the City
of Evanston in order to bring more jobs, tax revenues and commerce to this long vacant building.
Please review this letter and the attached materials and, if possible, place the Applicant on the
agenda for the next City Council meeting to approve the Class 7a Incentive for this property.
Should you have any other questions or need any additional information or documentation,
please do not hesitate to contact me at (312) 580-1595.
Regards,
Christopher M Zarek
Encls.
12 of 37
13 of 37
14 of 37
15 of 37
16 of 37
17 of 37
18 of 37
19 of 37
20 of 37
Tax Year
2018 Tax
Rate
2018
Multiplier
Estimated
Effective Tax
Rate*
Estimated Taxes at
2019 Market Value
$675,000 +
$739,000 in
Improvements, Full
Occupancy, and no
7a
Assessment
Level Without
Class 7a
Estimated
Assessed Value
Without a Class
7a
Estimated Tax
Without a Class 7a
Estimated Taxes at
2019 Market Value
$675,000 + $739,000
in Improvements, Full
Occupancy, and 7a
Assessment
Level with a
Class 7a
Estimated
Assessed Value
With a Class 7a
Estimated Tax
With a Class 7a
Estimated Taxes at 2019
Cook County Market
Value, Full Vacancy, and
no 7a
Year of
Proposed
New
Incentive
Assessment
Level With NO
Class 7a
Estimated
Assessed Value
Without a Class
7a
Estimated
Taxes With a
Class 7a
2019 9.537%2.9109 27.761%$1,414,000 25%$353,500 $98,136 $1,414,000 10%$141,400 $39,254 $218,108 1st 25%$54,527 $15,137
2020 9.537%2.9109 27.761%$1,414,000 25%$353,500 $98,136 $1,414,000 10%$141,400 $39,254 $218,108 2nd 25%$54,527 $15,137
2021 9.537%2.9109 27.761%$1,414,000 25%$353,500 $98,136 $1,414,000 10%$141,400 $39,254 $218,108 3rd 25%$54,527 $15,137
2022 9.537%2.9109 27.761%$1,414,000 25%$353,500 $98,136 $1,414,000 10%$141,400 $39,254 $218,108 4th 25%$54,527 $15,137
2023 9.537%2.9109 27.761%$1,414,000 25%$353,500 $98,136 $1,414,000 10%$141,400 $39,254 $218,108 5th 25%$54,527 $15,137
2024 9.537%2.9109 27.761%$1,414,000 25%$353,500 $98,136 $1,414,000 10%$141,400 $39,254 $218,108 6th 25%$54,527 $15,137
2025 9.537%2.9109 27.761%$1,414,000 25%$353,500 $98,136 $1,414,000 10%$141,400 $39,254 $218,108 7th 25%$54,527 $15,137
2026 9.537%2.9109 27.761%$1,414,000 25%$353,500 $98,136 $1,414,000 10%$141,400 $39,254 $218,108 8th 25%$54,527 $15,137
2027 9.537%2.9109 27.761%$1,414,000 25%$353,500 $98,136 $1,414,000 10%$141,400 $39,254 $218,108 9th 25%$54,527 $15,137
2028 9.537%2.9109 27.761%$1,414,000 25%$353,500 $98,136 $1,414,000 10%$141,400 $39,254 $218,108 10th 25%$54,527 $15,137
2029 9.537%2.9109 27.761%$1,414,000 25%$353,500 $98,136 $1,414,000 15%$212,100 $58,882 $218,108 11th 25%$54,527 $15,137
2030 9.537%2.9109 27.761%$1,414,000 25%$353,500 $98,136 $1,414,000 20%$282,800 $78,509 $218,108 12th 25%$54,527 $15,137
$1,177,632 $529,935 $181,649
$200,198 $90,089 $30,880
611-621 Howard Street
12 Year Tax Estimates
Estimated Taxes at 2018 Cook County Market Value, Full Vacancy,
and no 7a
Total Estimated Taxes (2019 to 2030)
Estimated Taxes at 2019 Market Value $675,000 +
$739,000 in Improvements, Full Occupancy, and no 7a
Estimated Taxes at 2019 Market Value $675,000 +
$739,000 in Improvements, Full Occupancy, and 7a
Total Estimated Taxes (2019 to 2030)Total Estimated Taxes (2019 to 2030)
Notes:
The above estimates are speculative, and should be treated as such.
* The 2019 Effective Tax Rate (the 2018 tax rate x the 2018 multiplier) was used. It does not take into account any increases or decreases in the Effective Tax Rate between 2019 and 2030.
Estimated Taxes Based on:
Estimated Taxes at 2019 Market Value $675,000 + $739,000 in Improvements, Full Occupancy, and no 7a
Compared to
Estimated Taxes at 2019 Market Value $675,000 + $739,000 in Improvements, Full Occupancy, and 7a
Compared to
Estimated Taxes at 2018 Cook County Market Value, Full Vacancy, and no 7a
(PIN: 11-30-210-016/-017/-018/-019/-020)
Evanston, Illinois 60202
Property Tax Revenue Generated from the Property's Class 6b Tax Incentive: $348,286
9/17/2019 Page 1 of 121 of 37
COOK COUNTY ASSESSOR
F RITZ K AEGI
COOK COUNTY ASSESSOR’S OFFICE
118 NORTH CLARK STREET, CHICAGO, IL 60602
PHONE: 312.443.7550 FAX: 312.603.6584
WWW.COOKCOUNTYASSESSOR.COM
CLASS 7A
ELIGIBILITY BULLETIN
The Class 7a Incentive and Its Benefits
The Class 7a incentive of the Cook County Real Property Assessment Classification Ordinance
("Ordinance") is intended to encourage, in areas determined to be "in need of commercial
development", commercial projects with total development costs, exclusive of land, that do not exceed
$2 million, which would not be economically feasible without the incentive. The twelve-year incentive
applies to all newly constructed buildings or other structures, including the land upon which they are
situated; the reutilization of vacant structures abandoned for at least twenty-four (24) months, (unless
otherwise stipulated for a shorter period of time by the municipality in which the real estate is located,
with approval from the County Board, or stipulated by the County Board, if locat ed in an
unincorporated area) including the land upon which they are situated; or all buildings and other
structures which are substantially rehabilitated to the extent such rehabilitation has added to their value,
including qualified land related to the rehabilitation.
Projects that qualify for the Class 7a incentive will receive a reduced assessment level of ten percent
(10%) of fair market value for the first ten years, fifteen percent (15%) for the eleventh year and twenty
percent (20%) for the twelfth year. Without this incentive, commercial property would normally be
assessed at twenty-five percent (25%) of its market value.
The Class 7a incentive is available to "Any real estate used primarily for commercial purposes", which
is defined in the Ordinance as:
"Any real estate used primarily for buying and selling of goods and services, or for otherwise
providing goods and services, including any real estate used for hotel and motel purposes." [74-62]
Where projects qualify for the incentive as new construction or reoccupied abandoned property, the
incentive will apply to them in their entirety, including the land upon which they are located. For
projects involving substantial rehabilitation of existing structures, the incentive applies to the added
value which is attributable to the rehabilitation and to the land, if vertical or horizontal square footage
has been added, in such proportion as the square footage added by the rehabilitation bears to the to tal
square footage of the improvements on the parcel. (Please note that the additional value attributable
to the rehabilitation for assessment purposes is likely to be lower than the actual amount spent on
the rehabilitation.) The reduced assessment continues for twelve years from the date that the new
construction or substantial rehabilitation is completed and initially assessed or, in the case of
abandoned property, from the date of substantial reoccupation.
22 of 37
Page 2 of 6
Updated 1/18/2019
Under the Ordinance, "abandoned property" qualifies if it consists of:
"Buildings and other structures that, after having been vacant and unused for at least 24
continuous months, and purchased for value by a purchaser in whom the seller has no direct
financial interest." An exception to this definition shall be, “if the municipality or the Board of
Commissioners, as the case may be, finds that special circumstances justify finding that the
property is ‘abandoned’ for the purposes of Class 7a.”
The finding of abandonment, along with the specification of the special circumstances, shall be
included in the resolution or ordinance supporting and consenting to the incentive application.
Notwithstanding the foregoing, special circumstances may not be determined to justify finding that a
property is deemed “abandoned” where:
A. There has been a purchase for value and the buildings and other structures have not been vacant
and unused prior to such purchase; or
B. There has been no purchase for value and the buildings and other structures have been vacant
and unused for less than 24 continuous months.
If the ordinance or resolution containing a finding of “special circumstances” is that of a municipality,
the approval of the County Board of Commissioners is required to validate such a finding that the
property is deemed “abandoned” for purposes of the incentive, and a resolution to that effect shall be
included with the eligibility application.
Abandonment for twenty-four consecutive months may be evidenced by utility bills, Internal Revenue
Service statements, certified business statements, and records of building code violations. Purchase for
value may be evidenced by a sale contract, recorded deed, assignment of beneficial interest and real
estate transfer declaration. Proof of re-occupancy may be evidenced by sworn statements from persons
with knowledge, occupancy permits and utility statements.
The incentive may be renewed, as described on page 6.
Eligibility Requirements
The essential part of a Class 7a Application is documentation satisfying the five eligibility
requirements of Section 74-65(a) of the Ordinance. All five factors must be present if the project is to
qualify. The absence of any one factor, notwithstanding the substantial presence of the other four
factors, will defeat the Application. Documentation requirements are, however, flexible enough
to accommodate the specific conditions and size of the projects. Because Class 7a is targeted
for smaller projects in areas in need of substantial revitalization, the Assessor, in compliance with the
direction of the Ordinance to liberally construe the requirements of factors (1) through (5), will
generally require less extensive documentation than required for larger projects.
23 of 37
Page 3 of 6
Updated 1/18/2019
The five (5) eligibility factors of Section 74-65(a) of the Ordinance are as follows:
1. Designation of Area:
"The area is currently designated by Federal, State or local agency as a conservation, blighted
or renewal area or an area encompassing a rehabilitation or redevelopment p lan or project
adopted under the Illinois Urban Renewal Consolidation Act of 1961, as amended, or the
Commercial Renewal Re-development Areas Act of 1967, as amended, or that the area is located
in a Federal Empowerment Zone or Enterprise Community, as proposed and approved by the
County Board on June 22, 1994, or the Chicago City Council on May 18, 1994, or the
Commercial District Development Commission Ordinance of the City of Chicago or designation
of like effect adopted under an y similar statute or Ordinance;" [74-65(a)(1)]
A certified copy of the action designating the area must accompany the Application.
Copies of any area studies done by the designating governmental entity should be included, to
support the overall requirements of this section of the Ordinance.
2. Real Estate Tax Analysis:
" Real estate taxes within the area, during the last six years, have declined, remained stagnant
or potential real estate taxes are not being fully realized due to the depressed condition of the
area, and/or subject site, or property values as determined by the assessed value (AV) or
equalized assessed value (EAV) for the redevelopment area or specific subject site have
declined over the last six years, or property values as determined by the AV or EAV are
increasing at a rate that is less than the balance of the municipality's AV or EAV for the last
six years; or property values as determined by the AV or EAV for the redevelopment area/site
are increasing at a rate that is less than Consumer Price Index (CPI) for All Urban Consumers
as published by the US Department of Labor for last six years; " [74-65(a) (2)]
Demonstration that depressed conditions are the cause of declining, stagnating or unrealized tax
revenue should include data on such factors as adverse market conditions; structural and functional
obsolescence; the extent and duration of vacancies; the absence or near absence of new business
formations; and, a pattern of tax sales, delinquencies or forfeitures in the area. If real estate taxes
have not stagnated or declined, the applicant may establish that tax collections have not been fully
realized because of depressed conditions in the project area. In all cases, data supplied should be
on a parcel-by-parcel basis and include an analysis of assessments, taxes billed and taxes collected
for a period of at least six years. A showing should be made that going forward with the project
will improve the economic condition of the area and result in increased real estate tax collections.
If the area designation in factor (1) above is of a size that is either inadequate or too large to be a
useful representation for analysis of real estate taxes, the applicant should contact the Assessor for
guidance in creating a more representational boundary area for this factor.
3. Viability and Timeliness:
"There is a reasonable expectation that the development, re-development or rehabilitation of
the commercial development project is viable and likely to go forward on a reasonably timely
basis if granted Class 7a designation and will therefore result in the economic enhancement of
the area." [74-65(a)(3)]
24 of 37
Page 4 of 6
Updated 1/18/2019
Progress on the proposed development well beyond an abstract or general plan is expected of the
applicant by the time of submission of the Application to the Assessor. Therefore, submitted
evidence of economic viability and timely completion of the project should be relevant and specific
in addressing the following points:
A. Development Plan: A specific development plan must be submitted including, but not
limited to: architectural exhibits and building plans; site plans demonstrating the relationship
of the proposed development to its private and public surroundings including open spaces,
service areas, driveways, parking areas, walks and adjacent streets, sidewalks and buildings;
a description of structures to be demolished and of buildings to be rehabilitated or
reoccupied; a description of the facilities and amenities to be provided by the applicant with
cost estimates; a description and the cost of public works planned for the area in conjunction
with the development, such as infrastructure improvements; a description of all incentives
or subsidies which will be offered to the developer by public agencies with an analysis of
the benefits to the developer and costs to the public; a copy of any predevelopment
agreements or contracts affecting the project; and, disclosure of any environmental reports
or studies relating to the development and its direct surroundings.
B. Economic Feasibility: The Application must include pro forma financial statements that
clearly demonstrate that the proposed development is economically viable and able to
sustain itself beyond the incentive period. The pro forma statements should compare results,
including return on investment, with and without the incentive, to help satisfy the
requirement of this section of the Ordinance as well as the "assistance and necessity"
requirement of Section 4(A)(4). The statements must not be different from those submitted
to financial institutions in support of private, financial backing and should include a detailed
analysis of project costs. Copies of any private or public feasibility studies of the project
area may be submitted. A description of any lawful, participation agreement between the
developer and any taxing districts for the sharing of future profits should also be included.
C. Financing: The applicant should identify the amounts, sources and basic terms of proposed
debt and equity financing for all aspects of the development, including both private and
public sources of all funds.
D. Owners, Developers, Prime Tenants and other Interested Parties: The business experience
and financial strength of the participants is important to the project's viability. The applicant
should therefore provide sufficiently detailed financial information about the developers,
owners, prime tenants, and any other interested parties, including names and addresses.
Information about owners must include all general and limited partners and beneficiaries of
a land trust. Any material legal or tax liabilities that might affect the project’s viability must
be disclosed.
E. Development Schedule: The applicant must provide a development schedule that at least
includes the date of the construction start, the projected time to completion and the projected
date for occupancy.
25 of 37
Page 5 of 6
Updated 1/18/2019
4. Assistance and Necessity
"Certification of the commercial development project for Class 7a designation will materially
assist development, re-development or rehabilitation of the area and the commercial
development project would not go forward without the full incentive offered under Class 7a."
[74-65(a) (4)]
Section 74-65(a)(4) requires the applicant to establish a link between the incentive and the viability
and feasibility of the development by demonstrating that the project would not go forward without
the incentive. The materials submitted for Section 74-65(a)(4), especially the pro forma financial
statements comparing results with and without the incentive, may be referred to in support of the
requirement for this section. In addition, evidence of the failure of formal public bidding or a
showing that the unaided operation of the marketplace has produced no developer interest in the
area for a period of years will help support satisfaction of this section's requirements. Examples of
other evidence which may help satisfy the 74-65(a)(4) requirements are: physical isolation or
substandard location of the project area; special environmental problems adding to development
costs; municipal requirements for landmark preservation or costly amenities in connection with the
project; and, expert testimony that unassisted development of the area will not occur. In addition,
the existence of a participation agreement between the developer and any taxing districts should
be described in the Application.
5. Increased Tax Revenue and Employment:
"Certification of the commercial development project for Class 7a designation is reasonably
expected to ultimately result in an increase in real property tax revenue and employment
opportunities within the area." [74-65(a)(5)]
The applicant must supply a statistical analysis projecting the added real estate tax revenue and
employment which will result from the development, with and without the incentive. A tax revenue
projection for the area, without the development, should also be provided for comparison. Since
real estate taxes are a function of market value and the effective tax rate, market value projections
should be based on the cost, income and market approaches to value. All figures should cover the
same twelve-year period. Employment figures should be categorized to show projections for new
full and part-time employment and for temporary construction employment. Finally, if the
development involves relocation within the same taxing jurisdiction, the developer should supply
a statement comparing the costs and benefits of relocation for the community as a whole.
Application Procedures
An Eligibility Application, accompanied by supporting documentation, must be submitted to the
Assessor's Office prior to the commencement of construction, rehabilitation or reoccupation. At the
time of filing the application, a filing fee of $500.00 must be paid. The Application must include a
resolution or ordinance from the municipality where the real estate is located or from the Cook County
Board of Commissioners if the real estate is located in an unincorporated area. The resolution or
ordinance must expressly state that the five eligibility factors that must be present to demonstrate that
the area is “in need of commercial development” are satisfied and that the municipality consents to
and supports the Application.
26 of 37
Page 6 of 6
Updated 1/18/2019
In all cases of abandonment based on special circumstances, the finding of the municipality or the
County Board, along with the specification of circumstances which led to said finding of
“abandonment”, shall be included in a resolution or ordinance passed by the municipality in which
the real estate is located (or the County Board if located in an unincorporated area) and must be filed
at the time of the Eligibility Application. The ordinance or resolution pertaining to abandonment based
on special circumstances must be validated by the County Board and a resolution from the County
Board stating its approval of the special circumstances must also be filed at the time of the Eligibility
Application.
The Assessor will make a final determination as to whether factors (1) through (5) exist within 60 days
after receipt of the application and necessary supporting documentation. Certification of the project
will lapse within one year if new construction, rehabilitation or reoccupation has not commenced.
Once new construction, rehabilitation, or reoccupation has been completed, the applicant must file an
"Incentives Appeal Form" requesting that the property be reclassified to Class 7a. At the time of filing
the appeal, an appeal fee of $100.00 must be paid.
During the term of the Class 7a incentive classification, the Assessor will mail to Class 7a recipients,
at the time of their triennial reassessments, affidavit forms. Recipients must attest to the use of the
property and the number of workers employed at the Class 7a site. The affidavit must be signed,
notarized, and returned to the Assessor within three weeks. Failure to file the triennial affidavits within
that time will result in the loss of the incentive.
Class 7a classification may be renewed during the last year in which a property is entitled to a 10%
assessment level or when the incentive is still applied at the 15% or 20% assessment level. A renewal
application must be filed, along with a certified copy of a resolution or ordinance adopted by the
municipality in which the real estate is located (or by the County Board, if the property i s located in
an unincorporated area of Cook County). The resolution or ordinance must expressly state that the
municipality or County, as the case may be, supports and consents to the renewal of the Class 7a
incentive and that it has determined that use of the property is necessary and beneficial to the local
economy. The owners must notify the Assessor’s Office of their intent to request this renewal prior to
their requesting a resolution or ordinance from the municipality or County Board. The number of
renewal period requests is not limited.
Questions about the Class 7a incentive program may be directed to the Incentives Department
of the Cook County Assessor's Office, 118 N. Clark, 3rd Floor, Chicago, IL 60602, (312) 603-
7529.
27 of 37
28 of 37
29 of 37
30 of 37
31 of 37
32 of 37
33 of 37
34 of 37
35 of 37
36 of 37
37 of 37