Will Governor Veto Potential Tax Hike?

A new Illinois law giving tax relief to the operator of military housing in Highland Park with a potential impact on property taxes in Deerfield and Highland Park is under review for a possible veto by Gov. Patrick Quinn.

Quinn must decide by Saturday whether to sign or veto legislation which easily passed both houses of the Illinois General Assembly and potentially reduces the taxes paid by Midwest Family Housing.

A joint venture between Forest City and the United States Navy, the Midwest Family Housing operates military residences in Highland Park, Glenview and the Great Lakes Naval Training Center. A portion of the taxes paid by the organization go to Deerfield and Highland Park High Schools as well as North Shore School District 112.

State Rep. Scott Drury (D-Highwood), whose district includes not only Highland Park and Deerfield but the naval base as well, became concerned last week and called on his constituents to ask Quinn for the veto. He has had some success.

“Because there is some concern as to how this will affect taxes, this is under review,” Quinn spokesperson David Blanchette said. “He has not made a decision on whether to sign or veto it.”

Revenue in the three taxing bodies could be reduced approximately $650,000 through the end of 2015 and $3.5 million after that, according to Drury. He is afraid the difference will have to be paid of the taxpayers of those communities.

“This is a bad situation,” Drury said. “I’m making people aware of what’s going on. I’ve reached out to people in the community.” As a result of his effort, Highland Park Mayor Nancy Rotering as well as representatives of District 112 and Township High School District 113 have asked Quinn to veto the legislation.

State Sen. Terry Link (D-Waukegan), who negotiated the original tax agreement with Midwest Family Housing in 2006, disagrees with Drury’s assessment of the situation. There will be a reduction through the end of 2015 and a renegotiation for 2016 and beyond.

“We were on the verge of losing all of it (the tax income),” Link said. “We came up with a 62 percent cap with a three-year sunset. At the end of two years we’ll see if they’re doing better or worse.”

Link is referring to the way Midwest Family Housing pays property taxes. The entity pays a portion of its income after expenses. For tax purposes, those expenses can be no more than 42 percent of income regardless of the actual costs, according to Midwest’s Senior Program Executive John Hoyt.

“Our actual expenses were between sixty and seventy percent (of expenses),” Hoyt said. “We want to pay our fair share. We can’t afford our debt (under the current arrangement).” Hoyt echoed Link’s statement there will be a reevaluation before 2016 begins. “The assessor will look at our expenses (then).”

As Drury understands the new legislation, the tax revenue will cease after 2015. “The way I read the bill in 2016 it (Midwest Family Housing) will stop paying taxes altogether. I confirmed this with the Illinois Department of Revenue.”

Unlike other operators of residential rental housing, Midwest is responsible for maintaining roads, utilities and other infrastructure, according to Hoyt and state Sen. Julie Morrison (D-Deerfield). “They manage the property,” she said. “They’re like a public works department.”

Morrison voted for the new law and Drury opposed it.

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