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Preckwinkle pursues back taxes from parking lot operators

Parking lot near United Center

Cook County is conducting audits and may try to collect back taxes from parking lot operators. | Sun-Times file photo

Cook County Board President Toni Preckwinkle is taking another look at the county’s parking lot and garage tax, auditing private parking companies to potentially collect millions in back taxes.

The county has already brought in about $700,000 related to disallowed residential parking exemptions discovered through the auditing process, Nick Shields, a spokesman for Preckwinkle, said in a statement.

Those exemptions apply if an agreement to be able to park in a given lot is written into someone’s lease, or if they otherwise have that parking agreement in writing. In those cases, the parking lot operator does not pay the tax.

Shields couldn’t say how much the county would likely bring in through the auditing process. More than 20 parking lot operators are being looked at, and residential parking is one of the issues being reviewed. The process started in the winter and early spring of 2018.

“Since that time additional audits have started and this issue is being looked at in each,” Shields said in a statement. “We have made no changes in the wording of the ordinance related to this issue or any exemptions recently. Since taking office President Preckwinkle has simply professionalized the County’s operations and this is another example.”

Michael Mini, executive vice president of the Chicagoland Apartment Association, said the association is still trying to figure out the “practical impact” of the county’s audit. The law was never really enforced the way they’re doing it now, he says.

The association owns and manages over 200,000 units in the city and suburbs, most of them in Cook County, which are owned by 190 companies with a little over 1,000 actual apartment properties, Mini said.

Mini says through their audits, the county indicated that the terms of the parking agreement and lease agreement have to be consistent, which goes against some common practices, like allowing an apartment owner to have a direct agreement with a garage operator.

The residential exemption was passed in city and county parking tax laws because of congestion on the city’s streets. The county’s pursuit of back taxes caught some in the parking business off guard.

“They are in the process of auditing several companies, so it’s typical that you enter into some type of settlement agreement,” Mini said. “We don’t really have an indication of the impact this might have. The county’s budget didn’t talk about any significant increase in a tax.”

Revisiting the tax and related exemptions means the county is enforcing the law and doesn’t mean a new tax on the county’s taxpayers, Shields said, but a spokeswoman for mayoral candidate Gery Chico painted a different picture, one of “a new parking tax that gets passed on to consumers, just like her ill-conceived soda tax.”

“President Preckwinkle has been clear that she can’t be trusted when it comes to nickel and diming residents — whether it’s a pop tax, a penny tax or now a secret parking tax,” Kelley Quinn, Chico’s spokeswoman, said. “This secret parking tax directly contradicts her claims that she has not raised taxes. President Preckwinkle has a problem when it comes to transparency and protecting the hardworking people she serves. We need a mayor who won’t jam through secret taxes or goes back on her word, time and again.”

Preckwinkle’s administration has done this before.

In 2016, the county attempted to collect hundreds of thousands of dollars in back taxes from small music venues in the city, claiming they should not have been exempt from the county’s amusement tax — Preckwinkle’s administration wanted to collect $200,000 alone in amusement taxes going back at least six years from Beauty Bar on Chicago Avenue, the Chicago Reader reported then.

While it is too early to say what impact the audit may have on the association there are fears that residents may see the impact directly. Lawyers are working on altering leases to try to protect against the problem in the future.

“It’s frustrating that members are caught in this situation after remitting the tax for years,” Mini said. “Though they indicate it’s not a change, the practical impact is that it looks like a tax increase.”