Effort underway to extend tax break to rebuilding businesses
GIFFORD — State officials are being urged to extend a property tax exemption to commercial property as well as residential property affected by natural disasters.
A Natural Disaster Homestead Exemption law was approved last year by the Legislature in response to damaging tornadoes in southern Illinois.
Champaign County Supervisor of Assessments Stan Jenkins said the law helps homeowners who want to rebuild on land affected by natural disasters.
"Let's say you lost your home completely and you're going to rebuild," he said. "Let's say the assessment on your home was $20,000 on the building and that it was a 40- or 50-year-old home and you come in and you build a new home. With the new home the assessment could be $50,000. So that $30,000 difference, the homeowner would get a $30,000 exemption so that they're not having to pay tax on that brand-new building.
"There are some limitations on it. But that exemption stays on the property as long as those people own the home."
The biggest catch, Jenkins said, is that the square footage of the new home has to be within 110 percent of the square footage of the old home.
But the new law doesn't apply to commercial property, such as the Rademacher Building Center and lumber yard in Gifford. If the business rebuilds in Gifford, its tax bill would be much higher.
"I just happened to stop in and talk to them about this because they're afraid this could put them out of business," Jenkins said of the business that was heavily damaged by the Nov. 17 tornado that raked Gifford. "When you take that kind of a hit and you've got an additional monthly expense of $1,200 or $1,300, that's tough. You're talking about some big buildings there."
In a letter to various state officials, including Gov. Pat Quinn and House Speaker Michael Madigan, Champaign County Board Chairman Alan Kurtz urged the state to extend the natural disaster credit to commercial property, including Rademacher's.
"They had five structures on their property. Their last tax bill for all five buildings was $8,104. Three of those buildings are going to have to be rebuilt," Kurtz wrote. "The new tax bill on just those three buildings that were destroyed will be over $23,000. Their total tax bill will triple. For a small business in a small town, this may well cause this business to close its doors."
State Rep. Chad Hays, R-Catlin, whose district includes Gifford, said he's drafting language to apply the disaster exemption to commercial property too.
"The issue is that there are business owners such as Mr. Rademacher who seek to rebuild in the community but through no fault of their own may end up with structures that are valued at a much higher level because of new construction," Hays said. "It can have a very dramatic impact on their property tax bill and I don't think that's anything the local community wants to have happen."
Hays said legislation would be filed "in the very near future to handle this.
"It's one of those issues that until something of this nature happens you don't even contemplate that unintended consequence happening."