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The Housing Opportunity Tax Incentive Act:
A State Tax Incentive for Section 8/Housing Choice Vouchers

 

This act was passed by the Illinois General Assembly in 2003 as HB 2246. It took effect on January 1, 2004. The Interfaith Housing Center of the Northern Suburbs encourages all landlords to take advantage of this incentive to rent to Housing Choice Voucher holders.

The Need
It is well documented that the Chicago metropolitan region has a shortage of affordable housing in areas of high job-growth including the northern suburbs.

Since entry-level jobs pay in the eight to ten dollar per hour range, employees are often unable to afford market-rate rental housing, as rents are well over $1,000 per month. This is particularly true if they are the primary income earner in the family and do not have family or relatives nearby to help out. Long commutes are practically impossible for single parent wage-earners with young children even if childcare is available.

The solution must involve creating affordable housing opportunities near work. The Housing Choice Voucher Program provides one solution. The voucher, commonly called a Section 8 voucher, pays the landlord the difference between what the tenant can afford and the market rate rent for the apartment. The problem is that many landlords have no trouble finding market-rate tenants in these areas and so have little incentive to become involved with a program that will involve some amount of red tape.

Solution: A Landlord Incentive
In order to increase use of the voucher program in opportunity areas, the state created an economic incentive to encourage landlords to participate in the program. A tax abatement is structured so that it results in a reduction of the equalized assessed value of the property rather than a reduction in the tax levy. The benefit to the property owner will be a real reduction in property taxes for any rental property that provides a unit to a Housing Choice Voucher tenant provided:

  • The unit qualifies under the Housing Choice Voucher program,
  • The unit is in a township that has sufficient tax base to qualify for the program and is located in a county with more than 200,000 inhabitants,
  • The property is located in a low-poverty census tract (under 10% poverty rate),
  • A qualified tenant occupies the unit as of January 1st of the tax year,
  • There will be a maximum of 2 or 20% of the units that can qualify for the incentive for any single property, and a municipality may be exempt if more than 2.5% of its housing stock is occupied by voucher tenants.
  • The incentive will provide the landlord with an annual per unit tax savings of up to 19% (approximately $500.00 to $900.00/unit), the equivalent of one month’s rent.

Administration and Verification
This proposal will have safeguards against abuse by landlords and will also have safeguards limiting the amount of tax savings in areas with lower real estate values. The primary administrative burden will be upon the Housing Authorities that administer the voucher program (in the Cook County suburbs, it is the Cook County Housing Authority; in Lake County, the Lake County Housing Authority). The Housing Authorities will be responsible for certifying the eligibility of the landlord for the program based upon information supplied by the county clerk. Compliance auditing for the program should be fairly simple.

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