Chamber hopes residences can be left out of taxing area, cites state supreme court ruling


The Jefferson Park Chamber of Commerce is submitting its application to create a taxing body that would help beautify and market the commercial area but plans to explore ways that would leave the 501 residential properties which would be taxed out of the proposed Special Service Area.

Omitting the residential properties would leave about 220 commercial and mixed-use properties to fund the service area. In addition, the chamber would then have to reduce its proposed $220,000 budget for the service area in 2016 or increase the tax levy to make up for the loss revenue, estimated at about $60,000, from not taxing the residential properties.

“We’re going to continue to try to figure this out,” chamber president Lionel Rabb said at the chamber’s June 11 meeting. “We don’t want the residential in the SSA. We have to figure out a compromise.”

Rabb cited a 1992 ruling in which Illinois Supreme Court wrote that the City of Chicago could exclude residential properties from a service area, a development tool that typically is used to fund improvements for business districts. In the ruling, the court stated that the state’s definition of “contiguity” appears to allow “for the ‘swiss nature’ of the special service area that results from the exclusion of residential property.”

The ruling stemmed from a lawsuit in which a commercial property owner claimed that the planned special service area where he owned property was unconstitutional. Despite the ruling, city policy states that boundaries for a service area must be contiguous and that all properties in the affected area be included.

“I’m with you guys. I’d rather have the residences out,” Alderman John Arena (45th) told the chamber. For now, the chamber’s application, which was due to the city by June 12, calls for the residential properties to be taxed.

Once the chamber receives “a final determination from the legal minds” on the issue, some changes to the application will be possible, Arena said. “It is a process,” he told the chamber. “Nothing is set in stone.”

Arena said that he supports the service area’s creation because both commercial and residential property owners would benefit from the improvements that the tax would fund. He said that the Six Corners SSA has been used to market that business districts to prospective developers and to pay for advertising that benefits local merchants.

Resident Ron Ernst said after the meeting that the city has been misinterpreting how state law defines contiguous boundaries for service areas and that there are other municipalities in the state which have excluded residential properties. He said that city and chamber officials have told residents that “their hands are tied because of the city policy” but the court ruling makes it clear that “their hands are not tied.”

Under the proposed budget, condominium owners would pay between about $40 and $170 a year for the service area tax, whose spending would be determined by a local commission of property owners appointed by Mayor Rahm Emanuel. The service area also would include about five single-family homes, whose tax would be around $300.

The average commercial property owner would pay about $1,100 a year. The boundaries would run primarily along Milwaukee Avenue between the Kennedy Expressway and Montrose Avenue and along Lawrence Avenue between Austin Avenue and the expressway.

At the chamber meeting, resident Paula Stecker submitted a petition against the service area with signatures from the owners of 15 of the 18 condominiums in her building in the 5800 block of West Lawrence Avenue. She said that the tax is not fair to those residents who are living on a fixed income, noting that some owners in her building would pay about $150 a year.

The Jefferson Park Neighborhood Association has called for residential owners to be able to opt out of the service area since it would be designed primarily to help businesses.

The chamber’s application includes a support petition with the signatures of 147 property owners who would pay the tax, and 37 percent of those signatures are from residential owners. The city requires SSA applications to collect signatures from 20 percent of the affected properties.

Some of the signatures came from management companies which are leasing out condominiums in the area, and representatives of those companies told the chamber that services areas already operate in neighborhoods where they manage other properties, said chamber executive director Amie Zander. There are 53 service areas in the city, including in the Sauganash and Belmont-Central business districts.

Some chamber members aid that residents should pay the SSA tax given that they would benefit from an improved business district and that their share of the tax would be significantly lower than what the businesses would be paying.

If the City Council approves the SSA application, property owners can go to court and asked to be disconnected from the service area, but they must show that they do not benefit from how services and programs which are funded by the tax.