Lawmakers seek to end tax loophole that encourages vacant buildings

State lawmakers are seeking to close a tax loophole that might be an incentive for property owners to keep commercial buildings vacant.

Currently, owners can apply for lower property tax rate if the space is not leased. That is enough for building owners to just leave the building empty.

State Rep. Robert Martwick, D-Chicago, said the tax break does not give owners an incentive to develop the properties.

"It leaves vacant storefronts and blight in areas that could otherwise be thriving business districts," Martwick said.

The state House Revenue and Finance Committee heard testimony Wednesday morning about a proposal to penalize owners who collect the tax break, but fail to actively try to rent their property. Several government and business leaders on the city's Northwest Side are in support.

"We're just handing money over to someone who's not earned it," said Philip Schwartz, of the Portage Park Neighborhood Association.

"They see it as a benefit of the tax system," said Ald. John Arena (45th Ward), of the property owners.

Julio Rivera grew up in the Jefferson Park neighborhood and has seen some of the same storefronts surrounding the area remain vacant.

"It's bad for everybody. It's bad for business. It's bad for the community. There's a lot of businesses not generating income," said Rivera.

According to the Six Corners Neighborhood Association, there are 200 leasable properties in the neighborhood and many have been vacant for a decade or more. However, many of the owners are receiving a property tax break because the buildings remain empty.

Supporters of the bill in Springfield, of course, are hoping to close this benefit. It would penalize property owners who defraud the system by taking the tax break but failing to try to rent out their property.

The full Legislature is expected to vote on the measure by end of year or early next year.