In 2000, the Cook County Board passed an ordinance designed to “ease the increasing burden” of property taxes on certain modest residences.
The law was well-intentioned, but it included a gaping loophole.
As Tim Novak reported in Sunday’s Sun-Times, the ordinance did little to ease tax burdens for regular folks. Instead, it inadvertently gave unwarranted tax breaks to thriving businesses, many of them in the Wrigleyville area.
Who pays for those tax breaks? Every other property owner in Cook County must make up the difference.
To give a compassionate tax break to small mom-and-pop businesses in buildings where, say, the family lived upstairs, the county board decided those buildings would be assessed at the county’s cheaper residential rate instead of the more expensive commercial rate.
Eventually, though, bigger business owners began exploiting the new rule by adding residential units to their buildings, thus qualifying for the lower rate. That’s legal, provided the building has less than 20,000 square feet above ground and six or fewer residential units.
Consider this example. Two years ago, the building housing the popular Wrigleyville bar Casey Moran’s was reclassified from commercial property to residential property because its owner installed a small apartment above the bar. That cut property taxes by 60 percent, saving the owner more than $110,000 so far.
Or consider the Ricketts family, owner of the Chicago Cubs, which has saved hundreds of thousands of dollars on apartment buildings known as Wrigley Rooftops that are classified as residential, though the rooftop businesses pull in far more money than the residences.
On Monday, Cook County Commissioner Peter Silvestri said the county has begun looking at ways to plug the loophole without hurting the people for whom the ordinance was intended.
One option would be to issue split assessments so that only part of a building would be classified as residential. Or businesses that generate more than some defined amount of income could be taxed at the full commercial rate.
Another option would be to reconsider Cook County’s unique system of assessing residential property at a lower percentage of market value than commercial property. But residential property taxes would explode, making that solution a political non-starter.
A lot of mom-and-pop businesses really need the tax break. But the Ricketts family, much as we love the Cubs?
Not so much.
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