The defeat of the "Bring Chicago Home" referendum reminds us that we must still find ways to preserve affordable housing. Now we fear that due to the Assessor's office reclassifying mixed-use buildings in our neighborhood corridors, many naturally occurring affordable apartments that exist in these building will be notably less affordable.
As background, there are two rates of assessment that determine taxable value:
- Classification code 5-17 Commercial: stand alone structures, with the assessment rate at 25% of the fair market value.
- Classification code 3-18 Residential/multi-family: assessment rate is 10% of fair market value.
For years, mixed-use buildings, apartments over commercial, has been at an assessment rate of 10% of fair market value.
Yet, the current Assessor's Office has made a policy decision that there is an imbalance between the 25% rate charged to the stand-alone 5-17s, and the 3-18s. The Assessor's Office is saying that because 3-18s have residential and commercial, that the commercial gets away with a 10% classification. The Assessor's Office argues that a stand alone commercial property ought not pay 2.5 times more than the other.
Thus, for certain types of mixed-use buildings where there exists 7 or more apartments with a commercial space below meeting or exceeding 35% or more of the gross building area, the Assessor's Office is imposing a new way of classifying 3-18s, which allows the Office to assess the commercial at 25%; with the apartments remaining at 10%.
This might not sound like a big deal, but it is … dramatically impacting local small businesses along many commercial corridors. The Assessor's Office started reclassifying mixed-use properties in last year's reassessment of the south and west suburban properties. Yet, building owners are growing increasingly concerned now that the Office has introduced this reclassification in Chicago, starting in Rogers Park Township.
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