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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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