SB2350ham002 94TH GENERAL ASSEMBLY

Revenue Committee

Filed: 4/26/2006

09400SB2350ham002 LRB094 17384 BDD 58588 a

AMENDMENT TO SENATE BILL 2350

AMENDMENT NO. ______. Amend Senate Bill 2350, AS AMENDED, by replacing everything after the enacting clause with the following:

"Section 5. The Property Tax Code is amended by changing Sections 12-55, 15-176, and 20-5 as follows:

(35 ILCS 200/12-55)

Sec. 12-55. Notice requirement if assessment is increased; counties of 3,000,000 or more.

(a) In counties with 3,000,000 or more inhabitants, a revision by the county assessor, except where such revision is made on complaint of the owner, shall not increase an assessment without notice to the person to whom the most recent tax bill was mailed and an opportunity to be heard before the assessment is verified. When a notice is mailed by the county assessor to the address of a mortgagee, the mortgagee, within 7 business days after the mortgagee receives the notice, shall forward a copy of the notice to each mortgagor of the property referred to in the notice at the last known address of each mortgagor as shown on the records of the mortgagee. There shall be no liability for the failure of the mortgagee to forward the notice to each mortgagor. The assessor may provide for the filing of complaints and make revisions at times other than those dates published under Section 14-35. When the county assessor has completed the revision and correction and entered the changes and revision in the assessment books, an affidavit shall be attached to the assessment books in the form required by law, signed by the county assessor.

(b) In counties with 3,000,000 or more inhabitants, for parcels, other than parcels in the class that includes the majority of the single-family residential parcels under a county ordinance adopted in accordance with Section 4 of Article IX of the Illinois Constitution, located in the assessment district for which the current assessment year is a general assessment year, within 30 days after sending the required notices under this Section, the county assessor shall file with the board of appeals (until the first Monday in December 1998, and the board of review beginning the first Monday in December 1998 and thereafter) a list of the parcels for which the notices under this Section were sent, showing the following information for each such parcel: the parcel index number, the township in which the parcel is located, the class for the current year, the previous year's final total assessed value, the total assessed value proposed by the county assessor, and the name of the person to whom the notice required under this Section was sent. The list shall be available for public inspection at the office of the board during the regular office hours of the board. The list shall be retained by the board for at least 10 years after the date it is initially filed by the county assessor.

(c) The provisions of subsection (b) of this Section shall be applicable beginning with the assessment for the 1997 tax year.

(d) On and after the effective date of this amendatory Act of the 94th General Assembly and so long as any portion of the county is subject to the provisions of Section 15-176 instead of Section 15-175, the notice required under this Section must include the following statement:

Beginning in 2003, the Cook County Board imposed a 7% cap on annual increases in property tax assessments for certain owner-occupied residences. This assessment cap takes the form of an expanded homestead exemption. It is designed to reduce the burden of large property tax increases caused by rapid appreciation in home prices.

The assessment cap shifts the property tax burden. Some homeowners pay less, but all other taxpayers pay more. This is because a reduction in the assessed value of some properties causes the tax rate to increase for all properties in order for the taxing district to collect the same total amount in taxes.

The taxpayers who pay more include owners of rental housing, commercial property, industrial property, and vacant land. The higher rate also causes some senior citizen homeowners to pay more because, though technically eligible for the 7% assessment cap, they already qualify for the more advantageous "senior freeze" on assessments. Similarly, homeowners whose property value appreciates less than 7% annually will also pay more in taxes than if the assessment cap were not in effect.

In general, the assessment cap shifts the tax burden from fast-growing to slow-growing residential areas and from homeowners to businesses. The magnitude of the shift will depend on how rapidly home prices appreciate over time.

Property tax bills for homestead property will indicate whether the property taxes are more, less, or the same as a result of the county's election to implement an assessment cap.

(Source: P.A. 90-4, eff. 3-7-97; 91-751, eff. 6-2-00.)

(35 ILCS 200/15-176)

Sec. 15-176. Alternative general homestead exemption.

(a) For the assessment years as determined under subsection (j), in any county that has elected, by an ordinance in accordance with subsection (k), to be subject to the provisions of this Section in lieu of the provisions of Section 15-175, homestead property is entitled to an annual homestead exemption equal to a reduction in the property's equalized assessed value calculated as provided in this Section.

(b) As used in this Section:

(1) "Assessor" means the supervisor of assessments or the chief county assessment officer of each county.

(2) "Adjusted homestead value" means the lesser of the following values:

(A) The property's base homestead value increased by 7% for each tax year after the base year through and including the current tax year, or, if the property is sold or ownership is otherwise transferred, the property's base homestead value increased by 7% for each tax year after the year of the sale or transfer through and including the current tax year. The increase by 7% each year is an increase by 7% over the prior year.

(B) The property's equalized assessed value for the current tax year minus (i) $4,500 in Cook County or $3,500 in all other counties in tax year 2003 or (ii) $5,000 in all counties in tax year 2004 and thereafter.

(3) "Base homestead value".

(A) Except as provided in subdivision (b)(3)(B), "base homestead value" means the equalized assessed value of the property for the base year prior to exemptions, minus (i) $4,500 in Cook County or $3,500 in all other counties in tax year 2003 or (ii) $5,000 in all counties in tax year 2004 and thereafter, provided that it was assessed for that year as residential property qualified for any of the homestead exemptions under Sections 15-170 through 15-175 of this Code, then in force, and further provided that the property's assessment was not based on a reduced assessed value resulting from a temporary irregularity in the property for that year. Except as provided in subdivision (b)(3)(B), if the property did not have a residential equalized assessed value for the base year, then "base homestead value" means the base homestead value established by the assessor under subsection (c).

(B) If the property is sold or ownership is otherwise transferred, other than sales or transfers between spouses or between a parent and a child, "base homestead value" means the equalized assessed value of the property at the time of the sale or transfer prior to exemptions, minus (i) $4,500 in Cook County or $3,500 in all other counties in tax year 2003 or (ii) $5,000 in all counties in tax year 2004 and thereafter, provided that it was assessed as residential property qualified for any of the homestead exemptions under Sections 15-170 through 15-175 of this Code, then in force, and further provided that the property's assessment was not based on a reduced assessed value resulting from a temporary irregularity in the property.

(3.5) "Base year" means (i) tax year 2002 in Cook County or (ii) tax year 2004 or 2005 2002 or 2003 in all other counties in accordance with the designation made by the county as provided in subsection (k).

(4) "Current tax year" means the tax year for which the exemption under this Section is being applied.

(5) "Equalized assessed value" means the property's assessed value as equalized by the Department.

(6) "Homestead" or "homestead property" means:

(A) Residential property that as of January 1 of the tax year is occupied by its owner or owners as his, her, or their principal dwelling place, or that is a leasehold interest on which a single family residence is situated, that is occupied as a residence by a person who has a legal or equitable interest therein evidenced by a written instrument, as an owner or as a lessee, and on which the person is liable for the payment of property taxes. Residential units in an apartment building owned and operated as a cooperative, or as a life care facility, which are occupied by persons who hold a legal or equitable interest in the cooperative apartment building or life care facility as owners or lessees, and who are liable by contract for the payment of property taxes, shall be included within this definition of homestead property.

(B) A homestead includes the dwelling place, appurtenant structures, and so much of the surrounding land constituting the parcel on which the dwelling place is situated as is used for residential purposes. If the assessor has established a specific legal description for a portion of property constituting the homestead, then the homestead shall be limited to the property within that description.

(7) "Life care facility" means a facility as defined in Section 2 of the Life Care Facilities Act.

(c) If the property did not have a residential equalized assessed value for the base year as provided in subdivision (b)(3)(A) of this Section, then the assessor shall first determine an initial value for the property by comparison with assessed values for the base year of other properties having physical and economic characteristics similar to those of the subject property, so that the initial value is uniform in relation to assessed values of those other properties for the base year. The product of the initial value multiplied by the equalized factor for the base year for homestead properties in that county, less (i) $4,500 in Cook County or $3,500 in all other counties in tax year 2003 or (ii) $5,000 in all counties in tax year 2004 and thereafter, is the base homestead value.

For any tax year for which the assessor determines or adjusts an initial value and hence a base homestead value under this subsection (c), the initial value shall be subject to review by the same procedures applicable to assessed values established under this Code for that tax year.

(d) The base homestead value shall remain constant, except that the assessor may revise it under the following circumstances:

(1) If the equalized assessed value of a homestead property for the current tax year is less than the previous base homestead value for that property, then the current equalized assessed value (provided it is not based on a reduced assessed value resulting from a temporary irregularity in the property) shall become the base homestead value in subsequent tax years.

(2) For any year in which new buildings, structures, or other improvements are constructed on the homestead property that would increase its assessed value, the assessor shall adjust the base homestead value as provided in subsection (c) of this Section with due regard to the value added by the new improvements.

(3) If the property is sold or ownership is otherwise transferred, the base homestead value of the property shall be adjusted as provided in subdivision (b)(3)(B). This item (3) does not apply to sales or transfers between spouses or between a parent and a child.

(e) The amount of the exemption under this Section is the equalized assessed value of the homestead property for the current tax year, minus the adjusted homestead value, with the following exceptions:

(1) The exemption under this Section shall not exceed $20,000 for any taxable year.

(2) In the case of homestead property that also qualifies for the exemption under Section 15-172, the property is entitled to the exemption under this Section, limited to the amount of (i) $4,500 in Cook County or $3,500 in all other counties in tax year 2003 or (ii) $5,000 in all counties in tax year 2004 and thereafter.

(e-5) For each assessment year in which the alternative general homestead exemption under this Section applies to any portion of the county, the county clerk must determine whether the taxes for that year on each homestead property are more, less, or the same as a result of the county having elected to be subject to the provisions of this Section rather than the general homestead exemption under Section 15-175. The assessor must provide the county clerk with any assistance that the clerk requires. The determination of whether the taxes for that year are more, less, or the same must be made without regard to any other factor. In making the determination, the actual taxes on the property for that year shall be compared to what the taxes would have been for that year had the county not elected to be subject to the provisions of this Section. In calculating what the taxes would have been for that year had the county not elected to be subject to the provisions of this Section, the county clerk shall use the equalized assessed value of the homestead property and the combined tax rate of all taxing districts, both computed based on the assumption that the general homestead exemption under Section 15-175 was in effect throughout the county when this Section applied to any portion of the county.

The county clerk must provide the results of these calculations for each homestead property to the official in the county who is responsible for preparing and mailing the property tax bills so that the official can include on or with the bills the notifications required under subsection (b) of Section 20-5. For the purpose of this subsection, "homestead property" has the definition set forth under Section 15-175.

(f) In the case of an apartment building owned and operated as a cooperative, or as a life care facility, that contains residential units that qualify as homestead property under this Section, the maximum cumulative exemption amount attributed to the entire building or facility shall not exceed the sum of the exemptions calculated for each qualified residential unit. The cooperative association, management firm, or other person or entity that manages or controls the cooperative apartment building or life care facility shall credit the exemption attributable to each residential unit only to the apportioned tax liability of the owner or other person responsible for payment of taxes as to that unit. Any person who willfully refuses to so credit the exemption is guilty of a Class B misdemeanor.

(g) When married persons maintain separate residences, the exemption provided under this Section shall be claimed by only one such person and for only one residence.

(h) In the event of a sale or other transfer in ownership of the homestead property, the exemption under this Section shall remain in effect for the remainder of the tax year in which the sale or transfer occurs, but (other than for sales or transfers between spouses or between a parent and a child) shall be calculated using the new base homestead value as provided in subdivision (b)(3)(B). The assessor may require the new owner of the property to apply for the exemption in the following year.

(i) The assessor may determine whether property qualifies as a homestead under this Section by application, visual inspection, questionnaire, or other reasonable methods. Each year, at the time the assessment books are certified to the county clerk by the board of review, the assessor shall furnish to the county clerk a list of the properties qualified for the homestead exemption under this Section. The list shall note the base homestead value of each property to be used in the calculation of the exemption for the current tax year.

(j) In counties with 3,000,000 or more inhabitants, the provisions of this Section apply as follows:

(1) If the general assessment year for the property is 2003, this Section applies for assessment years 2003, 2004, and 2005. Thereafter, the provisions of Section 15-175 apply.

(2) If the general assessment year for the property is 2004, this Section applies for assessment years 2004, 2005, and 2006. Thereafter, the provisions of Section 15-175 apply.

(3) If the general assessment year for the property is 2005, this Section applies for assessment years 2005, 2006, and 2007. Thereafter, the provisions of Section 15-175 apply.

(4) If the general assessment year for the property is 2006 and only if the county elects, by ordinance, to extend the application of this Section under subsection (k-5), then this Section continues to apply for assessment years 2006, 2007, and 2008. Thereafter, the provisions of Section 15-175 apply.

(5) If the general assessment year for the property is 2007 and only if the county elects, by ordinance, to extend the application of this Section under subsection (k-5), then this Section continues to apply for assessment years 2007, 2008, and 2009. Thereafter, the provisions of Section 15-175 apply.

(6) If the general assessment year for the property is 2008 and only if the county elects, by ordinance, to extend the application of this Section under subsection (k-5), then this Section continues to apply for assessment years 2008, 2009, and 2010. Thereafter, the provisions of Section 15-175 apply.

In counties with less than 3,000,000 inhabitants, this Section applies for assessment years (i) 2005, 2006, and 2007 if tax year 2004 2003, 2004, and 2005 if 2002 is the designated base year or (ii) 2006, 2007, and 2008 if tax year 2005 2004, 2005, and 2006 if 2003 is the designated base year. Thereafter, the provisions of Section 15-175 apply.

(k) To be subject to the provisions of this Section in lieu of Section 15-175, a county must adopt an ordinance to subject itself to the provisions of this Section within (i) 6 months after the effective date of this amendatory Act of the 93rd General Assembly for Cook County, except as provided in subsection (k-5), or (ii) within 6 months after the effective date of this amendatory Act of the 94th General Assembly for all other counties. In a county other than Cook County, the ordinance must designate either tax year 2004 2002 or tax year 2005 2003 as the base year.

(k-5) Cook County may elect, by ordinance, to extend the application of this Section for the assessment years set forth under items (4), (5), and (6) of subsection (j). The ordinance must be adopted within 6 months after the effective date of this amendatory Act of the 94th General Assembly.

(l) Notwithstanding Sections 6 and 8 of the State Mandates Act, no reimbursement by the State is required for the implementation of any mandate created by this Section.

(Source: P.A. 93-715, eff. 7-12-04.)

(35 ILCS 200/20-5)

Sec. 20-5. Mailing tax bill to owner.

(a) Every township collector, and every county collector in cases where there is no township collector, upon receiving the tax book or books, shall prepare tax bills showing each installment of property taxes assessed, which shall be filled out in accordance with Section 20-40. A copy of the bill shall be mailed by the collector, at least 30 days prior to the date upon which unpaid taxes become delinquent, to the owner of the property taxed or to the person in whose name the property is taxed.

(b) In each county in which the county clerk is required to make the determinations under subsection (e-5) of Section 15-176, the tax bill for each homestead property must include, on the bill, a notification to the taxpayer as to whether the taxes on the property are more, less, or the same as a result of the county's election to be subject to the alternative general homestead exemption under Section 15-176 rather than the general homestead exemption under Section 15-175. The notification must be based on the determinations made under subsection (e-5) of Section 15-176. The notification must be clearly visible and must be in the following form:

"The taxes on this property are (more/less/the same) as a result of the county's election to be subject to the alternative general homestead exemption under Section 15-176 of the Property Tax Code, sometimes known as the "7% solution" or "assessment cap"."

For the purpose of this subsection, "homestead property" has the definition set forth under Section 15-175.

(c) On and after the effective date of this amendatory Act of the 94th General Assembly and so long as any portion of the county is subject to the provisions of Section 15-176 instead of Section 15-175, the following statement must be included with each tax bill in Cook County:

Beginning in 2003, the Cook County Board imposed a 7% cap on annual increases in property tax assessments for certain owner-occupied residences. This assessment cap takes the form of an expanded homestead exemption. It is designed to reduce the burden of large property tax increases caused by rapid appreciation in home prices.

The assessment cap shifts the property tax burden. Some homeowners pay less, but all other taxpayers pay more. This is because a reduction in the assessed value of some properties causes the tax rate to increase for all properties in order for the taxing district to collect the same total amount in taxes.

The taxpayers who pay more include owners of rental housing, commercial property, industrial property, and vacant land. The higher rate also causes some senior citizen homeowners to pay more because, though technically eligible for the 7% assessment cap, they already qualify for the more advantageous "senior freeze" on assessments. Similarly, homeowners whose property value appreciates less than 7% annually will also pay more in taxes than if the assessment cap were not in effect.

In general, the assessment cap shifts the tax burden from fast-growing to slow-growing residential areas and from homeowners to businesses. The magnitude of the shift will depend on how rapidly home prices appreciate over time.

Property tax bills for homestead property will indicate whether the property taxes are more, less, or the same as a result of the county's election to implement an assessment cap.

(Source: P.A. 86-957; 87-818; 88-455.)

Section 90. The State Mandates Act is amended by adding Section 8.30 as follows:

(30 ILCS 805/8.30 new)

Sec. 8.30. Exempt mandate. Notwithstanding Sections 6 and 8 of this Act, no reimbursement by the State is required for the implementation of any mandate created by this amendatory Act of the 94th General Assembly.

Section 99. Effective date. This Act takes effect upon becoming law.".