Businesses Pursue 6b Property Tax Relief

Businesses Pursue 6b Property Tax Relief

With Cook County property tax assessments skyrocketing, businesses are looking for ways to mitigate increases. In February, two property owners in Sky Harbor asked the Village Board to support their applications to receive the 6b tax classification from Cook County. The Trustees’ reactions reflected the challenge of how to balance the encouragement of new investment through tax incentives against fairness to existing businesses.

A Cook County initiative, Class 6b classification offers a real estate tax incentive for the development of new industrial facilities, rehabilitation of existing industrial structures, and industrial reutilization of abandoned buildings. Qualifying applicants receive a reduced assessment over the course of a 12-year term: covered properties are assessed at 10% of market value for the first 10 years, 15% in the 11th year and 20% in the 12th year. In year 13, the rate increases to the full 25%.

As part of the application process, owners are expected to seek the endorsement of the affected local government. In evaluating 6b applications, Northbrook’s Trustees consider the economic and fiscal impacts of the business on the community, the condition of the existing building and private vs. public funding, the quality of jobs created, and environmental features.

The recent applications presented to the Board are both atypical, though for different reasons. The first application, filed by electronics recycler Belmont Trading Co., Inc. for a property at 555 Huehl Road, would move the company’s headquarters and operations from Buffalo Grove to Northbrook along with 132 full time employees with potential for more growth. However, the property has only been vacant since January 2019. For properties that have been vacant for less than two years, the County will only approve 6b treatment if there is a finding of special circumstances. The company argued that the building requires $700K- $900K in renovations, an investment they would only be able to undertake with the benefit of a 6b incentive.

The second application involves a warehouse space at 3401 Commercial Avenue, owned by Northbrook-based Hilco Redevelopment Partners. The space has been vacant since 2015, and Hilco has invested around $1M in updates. Hilco is seeking Village approval of the 6b classification to cover a potential, unspecified tenant. As the company’s attorney explained to the Board, “What we’re looking for is a resolution from the Village in order to give an inducement to the tenants that when they come in there’s a quicker turnaround.”
The Trustees were unwilling to give their endorsement to an unknown tenant, but did make informal statements in support of 6b treatment given a tenant who would comply with other expectations under the County and Village Guidelines.

In both reviews, Trustees noted that this year’s property reassessments are placing pressure on all commercial owners. While there was general enthusiasm for bringing Belmont Trading to Northbrook and for finding a tenant to fill the long-vacant Commercial Avenue space, some concerns were raised about widening the availability of 6b incentives. Trustee Kathryn Ciesla stated with regard to the Belmont Trading proposal, “I don’t think it’s fair to our current businesses who are paying those tax rates to say let’s just give you a break.” President Frum and other Trustees discussed setting clear parameters to justify 6b treatment. Otherwise, in the words of Trustee Hebl, “everybody would apply for a 6b when they have a vacant property.”

Following the preliminary reviews, the companies have the opportunity to file formal 6b applications that will be commented upon by affected school districts, other local taxing bodies, and the Industrial & Commercial Development Commission before returning to the Trustees for consideration. Final approval of the application would be decided by Cook County.