Emanuel to offer $150 property tax rebate to offset record hike

Roughly 155,000 households would be eligible for a $150 property tax rebate — with senior citizens getting $100 more — to offset the blow from the largest property tax increase in Chicago history.

Before raising property taxes by $588 million for police and fire pensions and school construction, Mayor Rahm Emanuel vowed to double the homeowners’ exemption so homes worth less than $250,000 would be held harmless. The plan went nowhere in Springfield.

The “hold harmless” pledge will hardly apply to the after-the-fact, $21 million property tax rebate unveiled Thursday to inoculate the mayor and aldermen from at least some of the political fallout.

It will be offered to 155,000 of Chicago’s 425,000 households at a cost of $21 million — assuming all eligible households apply. The average rebate will be $150.

It will be offered to homeowners with a household adjusted gross income of no more than $75,000. Actual rebates will range from $25 to $200, based on the property tax bill and the household income.

Senior citizens will get an additional “supplement” of $100, but only if they do not receive the Cook County Senior Freeze or the Home Improvement Exemption.

Emanuel was on a lobbying trip to Washington D.C. when details of the rebate program were released.

An emailed statement quoted the mayor as saying, “What is most important to me and members of City Council is that homeowners’ are not shouldering the increase property tax burden alone. So we are moving forward with a property tax rebate proposal that will provide working- and middle-class families and seniors to some property tax relief.”

To qualify, the property must be the homeowner’s “principal place of residence” as of Jan. 1, 2014. Homeowners must also: receive the homeowners exemption from Cook County; be current on their property tax bills; not owe any debt to the city; and be affected by the $588 million property tax increase for police and fire pensions and school construction approved by the City Council last fall.

Civic Federation President Laurence Msall has questioned whether a city that needs “additional tax revenue” to save its largest employee pension fund and an additional $250 property tax increase for teacher pensions can afford to bankroll a property tax rebate of an size.

On Thursday, the mayor’s office refused to say how the $21 million rebate would be financed.

“We are having ongoing discussions with the aldermen on possible funding sources for the rebate proposal. Keep in mind, this is a rebate option, and we plan to continue to have conversations with aldermen about the final structure of the rebate,” Molly Poppe, a spokeswoman for the city’s Office of Budget and Management wrote in an email to the Chicago Sun-Times.

Three competing proposals are still pending in the City Council. All are similar to the widely ignored 2010 plan offered by then-Mayor Richard M. Daley. Daley set aside $35 million for rebate checks; in the end, only $2.1 million was distributed because most homeowners didn’t bother to apply.

The rebate plan championed by Ald. Proco Joe Moreno (1st) would be an “opt-in” plan that would apply to owner-occupied households whose annual incomes do not exceed $100,000.

It would create a “rebate rate” by subtracting household income from $100,000, then multiplying by the difference in tax rates from year to year and assessed value.

The plan proposed by rookie Ald. Carlos Ramirez-Rosa (35th) and embraced by the City Council’s Progressive Caucus would apply to those with incomes under four times the poverty level, estimated at $47,000 for an individual, $64,000 for a couple and $97,000 for a family of four. Based on the tax increase and the property’s assessed value, the plan would likely produce a $400 rebate on a $475 increase, sponsors said.

The third plan was tailor-made by Lincoln Park Ald. Michele Smith (43rd) to prevent “longtime” residents from losing their homes. It would be available to homeowners who have an annual income of less than $100,000 or are older than 60 and have lived in their homes for more than 18 years.

If any of those criteria is met, the homeowner would qualify for a “rebate rate” calculated much like Moreno’s. If the new assessed value is more than 30 percent greater than the previous year’s assessment, Smith would offer a rebate.

The Emanuel administration rejected the rental rebate, but took elements from all three plans to simplify administration, reduce processing costs and boost participation.

The two-month program will be administered by “third-party” agencies, preferably “community-based services that have a citywide outreach.” Rebate checks will be distributed “before the end of 2016.”

“While a rental rebate may provide relief to tenants, [it] will be difficult and costly to administer and enforce,” said a memo on the program distributed by the mayor’s office.

“It is unclear how the city will ensure that the `no rent increase requirements’ are complied with or how the city will address rents that increased prior to the application for a rebate,” the memo said. “Further work is needed to structure a rental rebate that addresses these concerns.”

Ramirez-Rosa commended the mayor for crafting a “fusion” rebate that blends the pending proposals while protecting seniors and granting the largest refunds to the neediest families.

But he said, “The city’s property tax rebate program needs to provide substantial relief to working homeowners and renters. I will continue to work with the Mayor’s office and my colleagues to craft a proposal that will benefit renters.”

Moreno and Smith had no immediate comment on the mayor’s plan.

Last months, Emanuel made no apologies for his inability to follow through on his promise to hold the owners of homes worth less than $250,000 “harmless” from the record increase.

Instead, he pinned the blame squarely on two things: the city’s decision to grossly under-fund police and fire pensions and the marathon state budget stalemate.

“For years, the city was inattentive and there was no action when it came to pensions for our police and fire. Rather than adressing the issue, the city, by ignoring it allowed it become a big challenge. I’m [roud that we, as a city, finally stepped up and addressed our pensions and funded them,” the mayor said.

“I would like to have seen the homeowner exemption extended, but we were going to have a back-up plan in case Springfield disappointed everybody. They not only disappointed everybody by vetoing it. But, we overrode the governor. They disappointed us by not passing the homeowner’s exemption because I said we were gonna do it, but do it in a way that was fair…to all homeowners.”