Property Tax Abatements (PTA)

The City of Chicago offers staggered reductions in real estate taxes to for-profit businesses and nonprofit organizations.

Value Range: $16,000 - $25 million
Date Range: 2010-2021
Total Number of Projects:
Additional Resources: City of Chicago PTAs - Cook County Assessor PTAs - Apply for PTAs

What is a Property Tax Abatement?

Property Tax Abatements are incentives offered to for-profit businesses and nonprofit organizations that contribute to preserving and adding jobs for the community. Property Tax Abatements are not one-time grants or disbursements. Tax abatements are administered by the local government and translate into multi-year tax reductions from the standard Cook County rate. With this incentive, the local government seeks to incentivize multiple types of development in targeted locations.

How does it work?

The Chicago Department of Planning and Development and Cook County Assessor’s Office lists eight classes for projects eligible for Property Tax Abatements. These classes include:

• industrial development (6b)
• commercial projects in areas determined to be “in need of commercial development” (7a, 7b, and 7c)
• industrial and commercial development in areas experiencing severe economic stagnation (8)
• affordable multi-family rental housing (9)
• remediation of contaminated property including abandoned or vacant land (C)
• commercial, industrial, multi-family residential, or non-profit development for landmark designated properties (L)

The Cook County Assessor’s Office is responsible for determining if applicants for the tax reduction are eligible under one of the classes’ programs.

Where and how can it be used?

Programs in the Industrial classes offer 12-year tax abatement for new construction, rehabilitation, and re-occupancy of abandoned industrial property, industrial projects in areas experiencing economic depression, properties in areas with substantial environmental contamination, and properties designated as city landmarks or within landmark districts.

Programs in the commercial classes offer 5-year or 12-year abatements for new construction, rehabilitation, or re-occupancy of abandoned commercial properties. Depending on the specific commercial class, projects either do not have location requirements or must be located in designated redevelopment areas or empowerment or federal enterprise zones. The abatement also applies for projects in areas experiencing severe economic depression, locations with significant environmental contamination, and properties designated as city landmarks or within landmark districts. Programs in the residential classes offer abatements to encourage the development, rehabilitation, and long-term preservation of affordable multi-family rental housing. Some of the requirements include the property having 7 or more units, the maximum household income cannot exceed 80 percent of the average median income, and the units’ gross rent must be affordable to low and moderate-income households.

What are its intended outcomes?

One purpose of this program is to attract economic development by offering property tax reductions to developers. Programs also aim to help develop and preserve affordable rental housing units throughout the County. Additional intended outcomes include job creation, tax base growth and in-migration of new businesses, and property appreciation. Some research indicates that actual outcomes of Property Tax Abatements could include increasing property values, which could shift tax burdens geographically and from large businesses to small businesses; but research is inconclusive to date.