THESIS ABSTRACT 2005
The Public and Private Economic Benefits of the Cook County Class Landmark Property Tax Incentive
Real estate developers are often unwilling to consider rehabilitating a historic building. Some of the perceived drawbacks include lack of design freedom to incorporate uses; the requirement of large, non-returnable expenditures on rehabbing a building both structurally and cosmetically; and the fear of not being able to sell an older space to a potential tenant or buyer. In the face of all of these drawbacks, it is easy to see why a developer would prefer to begin with a clean slate through which to realize their vision. Many governing bodies have addressed this issue in an effort to both help developers and improve their own economic status. As a result many incentives have been developed that can make rehabilitation of a historic building much more attractive and profitable for a developer. These incentives include federal income tax credits, façade easements and rebates, property tax incentives, and the use of TIF funds for historic preservation.
When a building of historic or architectural value is preserved or reused by a developer, the public is also greatly benefited. An economically vital business created on a historic property means large returns for a developer, but also increases the tax base used for public infrastructure and improvements. These improvements can include everything from the improvement of roads, to better education and the provision of social services. In May of 1997, Cook County, Illinois, adopted its own incentive, called the Class Landmark, or Class L, property tax incentive to help encourage the development of landmarked buildings within its jurisdiction.
Since the adoption of the Class L ordinance in 1997, there have been several successful developments that have been granted the incentive. This thesis will examine four case studies in particular and their benefits to both the public and private sectors. The case studies include the Hard Rock Hotel, the Allerton Hotel, the Wheeler-Kohn House, and the Carleton Hotel in Oak Park. In order to determine the benefits of the Class L tax incentive, this thesis will examine several aspects of each project in-depth. First, there will be a brief investigation into the historical background of each property, given as a testament to its landmark value to the community. The thesis will also focus on the development proposal, including the market analysis and site selection method of the developer as evidence of the economic potential of the historic property. Restoration plans for each project, including budgets, will also be studied. Finally, there will be an analysis of how the Class L tax incentive was used in each case. This analysis will include how, or if, the money saved was used in the physical restoration, how the money saved affected profit margins for the developer, and how the projects will affect (projected) the tax base of the county both during and after the incentive period.
Laura Royer received a BS in Design from the University of Nebraska College of Architecture in 2002. Before entering SAIC, she worked as an interior designer in an architectural design firm in Omaha, Nebraska. Currently, Laura is an intern at Archistoric Workshop, LLC, where she catalogs and researches the company’s collection of original, historic light fixture designs.
Thesis Advisor: Jim Peters, Instructor, Historic Preservation; Director, Preservation Planning, Landmarks Preservation Council of Illinois
Charlie Pipal, Instructor, Historic Preservation