SOUTH SHORE — Chicago small business advocates are throwing their support behind a state bill that aims to punish absentee landlords who take advantage of tax breaks for long-vacant properties.
The proposed Vacancy Fraud Act would allow municipalities, school districts, parks and other taxing bodies to file complaints with their county government if a property owner who receives vacancy tax relief isn’t actively trying to lease, sell or renovate the property.
“We want to pass legislation that will remove the incentives for people to keep their storefronts vacant in a way that is damaging for their neighbors and damaging to the community,” said bill sponsor Rep. Daniel Didech, who represents portions of the suburbs.
The Woodlawn Chamber of Commerce and the Small Business Advocacy Council will hold a virtual town hall on the bill’s impact on Woodlawn at 6 p.m. Wednesday. To register, click here.
The bill outlines 10 factors for county review boards to consider when they receive a vacancy fraud complaint, including whether the owner has publicly advertised the property, hired a realtor or been responsive to potential renters or buyers.
If the board rules an owner has committed vacancy fraud, the owner could be forced to pay back three times the amount of tax breaks received. They could also be barred from receiving any vacancy tax relief for that property until it’s sold or rented.
“We are looking for ways for [owners] to demonstrate they are actively looking” to sell, rent or improve their properties, said Tonya Trice, South Shore Chamber executive director. “This has to be done with more than just a ‘For Rent’ sign in the window. We need some legitimate proof that they are working to improve these projects in our communities.”
In Logan Square, “it’s hard to tell” which owners are taking advantage of tax relief and which owners actually need it, said Nilda Esparza, executive director of the Logan Square Chamber of Commerce.
The bill could motivate “the bad players” into communicating with potential tenants and buyers — as well as neighborhood residents and chambers of commerce — about their plans for vacant shops, Esparza said.
“I’m hoping that we can create stronger relationships with these property owners where they keep us in tune,” Esparza said.
The bill was introduced last month by Didech and cosponsored by Rep. Carol Ammons, who represents the heart of Champaign-Urbana. Its backers in the House are “hopeful we can get the legislation [passed out of committee] in time for next week, because next week is our deadline week,” Didech said.
Some members of the House small business committee argued at a hearing in late January that rising property taxes already deter vacancy fraud, according to the Daily Line. They also questioned whether the bill would open up county review boards to lawsuits from property owners.
The criticism and questioning “will help generate a better piece of legislation at the end of the day,” said Elliot Richardson, president of the Small Business Advocacy Council.
The council is spearheading the legislative push, Didech said.
“There will be additional language forthcoming” that responds to concerns raised “to avoid some unintended consequences,” Didech said.
Backers of the bill “have actively been working with local realtors” to gauge their input and potentially amend the bill, Esparza said.
“Working with the realtor community is key,” Esparza said, though only chambers of commerce have officially signed on.
Inspired by former state Rep. Robert Martwick’s 2017 proposal to punish “vacancy fraud” — which stalled amid political disputes ahead of Gov. JB Pritzker’s election — Trice has advocated for curtailing vacancy tax relief since at least 2018.
After hearing about Martwick’s proposal, “we identified some of the properties that are taking advantage of the vacancy relief tax credit,” Trice said. “Other landlords admitted they received the tax credit and would prefer to keep the space vacant than deal with the headache of a tenant.”
Trice and the Small Business Advocacy Council also supported a county ordinance proposal last year, which would cap the frequency a property can receive a vacancy tax break at three times every 10 years.
They aren’t giving up on the county proposal, though pushing for the bill “is the best way to move forward at this time,” Richardson said.
“We did not want to punish all the local developers that had legitimate projects that could benefit from a vacancy relief tax credit,” Trice said.
“Some degree of vacancy is going to be a part of any healthy business district,” and the coronavirus pandemic has caused “a huge increase in vacancies,” said Scott Smith, spokesperson for Cook County Assessor Fritz Kaegi’s office.
Given those and other factors, tax relief isn’t the only driver of empty storefronts, but “what you don’t want is to continue to disincentivize development of properties year after year after year,” Smith said.
“We share the same goals that [the bill’s supporters] do — reducing the harm that this vacancy can cause,” he said.
The bill’s passage would not be a total fix for blighted communities like South Shore, where storefront vacancy rates hover around 50-60 percent on all three main commercial strips, Trice said.
Zoning changes that allow more flexibility in renovations, public-private programs like the Chicago Recovery Program and community-led efforts like the Bennett Place redevelopment in South Shore are all important approaches to filling vacant shops, she said.
“The residents that live in the community should have a say in how the corridors are revitalized, and should have an opportunity to invest in properties along those corridors,” Trice said. “You have to have a vested interest — and it’s not just about the bottom line, it’s about the quality of life. Residents that live here understand it better than anyone.”
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