January 8, 2007

Although there have been no press releases announcing the changes, the Cook County Board recently approved modifications to the 6b Tax Incentive Ordinance. The changes went into effect in late 2006 and were codified in the Cook County Ordinance website by the beginning of 2007.

Prior to the amendments, the 6b ordinance required that an owner of property used primarily for industrial purposes who was seeking the incentive based on reoccupancy of "abandoned" property, satisfy two main requirements:

  1. A purchase for value; and

  2. Reoccupancy of property vacant for more than 24 continuous months.

If both of these requirements were met and an ordinance from the municipality issued, the Cook County Assessor's Office could change the property classification to 6b upon application by the owner. The change in classification would reduce the assessment of the property from 36% to 16% of market value, and thus, effectuate a significant reduction of the real estate taxes.

The 24-month vacancy requirement could be relaxed in the event of "special circumstances." Although special circumstances were never defined in the ordinance, a municipality could find special circumstances to justify a determination that the property was deemed "abandoned" even though it was vacant less than 24 months. The Cook County Board would also be required to ratify such finding and recommend that an exception to the 24-month vacancy requirement be approved.

The modifications to the 6b Ordinance now allow special circumstances for either, but not both, of the two requirements. For example, if the property has been subject to vacancy for more than 24 months, the municipality and the Cook County Board could determine, based on special circumstances, that the property is deemed abandoned. Accordingly, an owner may apply for a 6b incentive even though the owner is not reselling the property. This situation might apply to owners who wish to lease the property and are looking for a way to attract prospective tenants. The incentive would not be granted until reoccupancy occurs. This would be a substantial change as the ordinance had previously required the sale of the property to a non-affiliated party.

One other important recent change is that the 6b application must be filed with the Assessor's Office prior to reoccupancy of the property. Accordingly, it is now very important to file the application immediately after closing and before reoccupancy or before any substantial work is performed to the property by the new owner.

This article contains material of general interest and should not be construed as legal advice or a legal opinion on any specific facts or circumstances. Under applicable rules of professional conduct, this content may be regarded as attorney advertising.