Overview
Dating back to the 1980s, studies of affordable housing costs, locally sponsored by the Chicago Rehab Network and variously by national non-profit and academic intermediaries, have examined the extraordinary costs of managing affordable housing, especially with housing developed using multiple sources and Low-Income Housing Tax Credits (LIHTC).
Recognition of the social and economic “double bottom line” (referenced in national studies) informed underwriting and funding of projects in better ways in the decades that followed. Although these studies could compare, contrast and draw lessons from costs that were documented in audits of properties, they could not show expense items liked donated labor, in-kind contributions, external grant funding or various ways that sponsored affordable housing is more labor or cost intensive than property management for private, market-rate housing.
A number of social costs for creating and sustaining affordable housing may be included in the operating expenses reported, consistent with GAAP accounting standards, others like labor-intensive leasing and compliance costs paid from fixed management fees, balance sheet expenditures, in-kind contributions and outside donor support — may not be fully represented in property income and expense statements.
In addition, there can be “unfunded” social costs for expenses and expenditures that may be vital to the social or economic sustainability of affordable housing, but outlays are not made because of tight project or housing sponsor cash flows. As the concept goes with “social cost accounting”, even affordable housing showing significant net incomes may be financially stressed when considering externally supported or unfunded social costs — where the mission of the owner or partner(s) is the continuation of affordable housing and services to residents — for both housing stability of tenants and economic viability of affordable housing projects.
In discussion with assessment and appeals officials in the last two years, there has been a willingness to review supplemental social cost data with evidence submitted with appeals, specifically with the Cook County Board of Review, the second agency where appeals for tax relief can be made. This agency is governed by three elected officials, currently represented by Commissioners Larry Rogers, George A. Cardenas and Samantha Steele. Voice of the People has piloted this process on three buildings where significant tax relief was awarded. It is now sharing what it has learned with others.
The Assessor’s Office in Cook County has also recognized the need to understand and consider all economic circumstances for affordable housing owners – with the formation of an affordable housing division devoted to their support and a Real Property Income & Expense (RPIE) system where owners can contribute detailed data on affordable housing projects to inform more accurate and fair valuations. The dialogue has also begun with their team about the additional consideration of social costs.
About the Public Policy
Cook County Assessment and Appeal Officials have recognized the need for affordable housing, have supported incentive legislation providing new options for tax relief like the Special Assessment Program, and have recognized the validity of considering “rent-restrictions” that come with subsidized housing as evidence supporting lower valuations on appeals. Groups like Housing Action Illinois and Illinois Housing Council have raised awareness of this, and lender consortia, including the Community Investment Corporation’s “Preservation Compact Program, were instrumental in making legislation possible.
Despite this progress, debt burdens and property taxes remain an economic threat to the viability of affordable housing everywhere and, in higher cost communities particularly. Recognizing the challenges, assessment and appeal officials are open to dialogue on how to adjust values in a way that is logical and justifiable within the parameters of the tax classification system, need for uniformity and standard arguments for relief.
In property valuations and tax appeals, income statement expense assumptions are used by agencies to evaluate what may be considered reasonable. Unless separately argued, these expenses or expenditures do not typically include in-kind or externally funded costs, including social services or extraordinary compliance costs, that we consider essential to socially and economically sustaining affordable housing, nor balance sheet expenditures — like investments, improvements, draws on reserves or essential expenditures not made because of limits of cash flow.
Networking, Training & Technical Assistance
Voice of the People in Uptown, with organizational and city-wide allies, have started a public dialogue on how social cost information can better inform property tax valuations and appeals, by engaging with affordable housing organizations, legal counsel, consultants and public officials.
In 2023 and 2024, Voice hosted summer Social Cost Appeals Training Sessions with legislative co-sponsors, presenters from the Cook County Board of Review and tax appeal professionals. Affordable housing owners, lenders, legislative and assessing officials were in attendance. Participants received detailed presentations, sample docs and guiding materials on the tax appeal process and using social cost evidence to inform appellants support and work with property tax professionals. (This is not intended as legal advice.)
To access online presentation materials, tips and guidance on Social Cost Appeals with the Cook County Board of Review, participation in a workshop, webinar, Chicago delegate agency training or individual consultation is recommended first. To schedule a presentation or technical assistance consultation, contact Voice Owner Services Specialist, Marshall Goldsmith at Marshall@UptownVoice.org, or log your interests with a very brief Owners Survey