How It Works
The demolition tax assesses a residential structure demolition fee of $10,000 per building or $3,000 per unit, whichever is greater. Revenue raised from this tax will be distributed evenly between the affordable housing demolition tax fund and inclusionary housing trust fund for the creation, preservation, maintenance, and improvement of affordable housing within the city. At least 50 percent of the revenue will be used exclusively to assist households whose incomes are at or below 80 percent of area median income ($59,600 annually for a family of four in 2006). The following are exempt from the tax: • If applicants enter into an agreement with the city to provide affordable housing. • If the Evanston Community Development Director determines the replacement structure will be affordable. • If the demolition is ordered by the city.
Owner-occupants who demolish their homes in order to construct replacement houses for their own use have two options regarding payment of the tax. An owner may apply to defer the tax if he/she has been the occupant for three consecutive years. In this case, a lien for the tax amount will be recorded against the property. If the owner sells the replacement house prior to the expiration of three years from issuance of the certificate of occupancy, the deferred tax, plus interest, is due. If the person remains an occupant of the replacement house for three years, the lien is released and no tax is due. Alternatively, an owner may pay the tax at the time the demolition permit is issued and later apply for a monetary stability incentive equal to the amount of the tax if the person remained the owner and occupant of the replacement house for three consecutive years after issuance of the certificate of occupancy.
Public Involvement
The Affordable Housing Demolition Tax ordinance received some public opposition and generated debate among council members because it initially required owner-occupants who might continue to occupy the property to pay the tax up front. People were also concerned about equal protection if owner-occupants were allowed to defer payment but sold the replacement housing without meeting the three-year requirement.
Business and Professional People for the Public Interest (BPI) provided pro bono assistance to help resolve this and other issues. BPI drafted an initial sample ordinance, participated in public meetings to communicate the intent of the ordinance to the public, gave continuous feedback to city staff on revisions, and offered alternatives for the collection of this fee. Ultimately, the City of Evanston adopted a BPI recommendation, which is known as the “stability incentive.” This gives homeowners eligible for reimbursement of the tax the option of paying the tax up front or taking a lien on the property.
Contact
Donna Spicuzza, Housing Planner, City of Evanston
Phone
847/866-2928
dspicuzza@cityofevanston.org
Web site
www.cityofevanston.org
As of October 2006