Legislative Update - October 2014

Mayor Emanuel and President Preckwinkle recently introduced the 2015 City of Chicago and Cook County budgets, respectively, each of which include no increase in the property, sales, or gas tax. A summary of the municipal and county budget proposals are provided here for your review. CAA will monitor the budget hearings closely and provide input on items that affect the apartment industry.

City of Chicago Budget

Mayor Emanuel unveiled his proposed 2015 budget at a special meeting of the City Council this week. The $7.34 billion budget proposes spending $360 million more than was appropriated in 2014. This represents an increase of 5.2% over the 2014 appropriation. To close the estimated $297.3 million shortfall in the 2015 budget, both expense reductions and revenue increases are bring proposed as outlined below.

Proposed Budget Reductions (quantified)

$49.7 million - Non-Personnel savings and reforms (zero based budgeting, lease, energy & IT savings, sale of excess city-owned land)

$31.2 million - Personnel savings and reforms (healthcare savings, vacancy eliminations)

$60.5 million - Improved fiscal management (sweep aging revenue accounts and grant funds, proper allocation of costs to citywide programs, TIF reform-surplus and value capture)

Proposed Revenue Increases (Quantified)

$26.1 million - Improved debt collection (increased vehicle sticker enforcement, improved collection from scofflaws)

$75.4 million - Growth in economically sensitive revenues and charges for service (increase in permits and inspections, projected growth in economically sensitive revenues-sales tax, transfer tax, hotel tax, income tax)

$20.1 million - Elimination of the existing exemption in the amusement tax for cable companies, elimination of the existing exemption applied to skybox and other special seating packages, application of the amusement tax to the resale of permanent seat licenses at sports stadiums

$13.1 million - Elimination of the existing tax credit provided to companies purchasing fuel or supplies in surrounding municipalities

$21.2 million - Increase the personal property lease tax from 8% to 9% and elimination of the exemption for hourly car sharing

Proposed New Expenditures (Quantified)

$14.3 million - After school opportunities for nearly 17,000 children

$16.1 million - Summer jobs for 24,000 youth

$15.5 million - Early education providing free pre-K to 25,000 4-year olds who qualify for the federal free or reduced student lunch program

Proposed New Expenditures (Not Quantified)
•Doubling pothole and street repair teams to provide year-round road maintenance
•Doubling the number of police officers trained on bikes in neighborhoods
•Increased funding for graffiti removal, rodent control, tree trimming, tree removal and tree planting
•Investing in ending homelessness among veterans by the end of 2015
•Increased support for vulnerable populations including homeless families, domestic violence victims, and unaccompanied migrant children
•Reduce existing waitlists, providing individual, family and group therapy, case management, and other support to ensure youth receive quality mental health services faster
•Strengthening citywide security efforts to prevent cyber criminals from entering the City's networks and enhancing enforcement against violators

Summary of Proposed Corporate Spending (% change over 2013 Appropriation)

$530.9 million (3%) - Finance & Administration (Mayor's Office, Budget, Innovation & Technology, Clerk, Finance, Treasurer, Revenue, Administrative Hearings, Law, Human Resources, Procurement Services, Fleet & Facility Management)

$52.5 million (36%) - Legislative & Elections (City Council, Council Committees, Legislative Inspector General, Legislative Reference Bureau, Council Office of Financial Analysis, Board of Elections)

$70.8 million (13%) - City Development (Cultural Affairs & Special Events, Planning & Development)

$147.6 million (9%) - Community Services (Public Health, Family & Support Services, Human Relations, People with Disabilities, Library)

$2.08 billion (5%) - Public Safety (Police Board, Police Review Authority, Police, Fire, Emergency Management & Communication)

$57.4 million (1%) - Regulatory (Inspector General, Buildings, Business Affairs & Consumer Protection, Animal Care & Control, License Appeal Commission, Board of Ethics)

$398.5 million (5%) - Infrastructure Services (Streets & Sanitation, Transportation)

$705.6 million (3%) - Public Service Enterprise (Aviation, Water Management)

$3.94 billion (11%) - General Financing Requirements (Pension Funds, Loss in Collection of Taxes, Finance General)

Cook County Budget

President Preckwinkle introduced her 2015 budget totaling $3.99 billion. This is an increase over the $3.56 billion budgeted in 2014 and represents a 12.1% increase in spending. The 2015 budget contains $48.8 M in expenditure reductions. Larger reductions are quantified below. Other expense reductions not quantified include savings on electricity, natural gas, vehicle maintenance and fuel.

Expense Reductions (Quantified)

$9.6 M - Vacancy elimination and delayed timing of hires
$13.3 M - Debt service savings
$8.1 M - Health benefit savings

The proposed 2015 budget contains no new or increased taxes or fees. Additional revenue to support the budget is being generated largely through economic growth, including:

Revenue Growth (Quantified)

$36.6 M - Improved forecast trends and reimbursements from the State

$23.4 M - Improved revenue projections from preliminary budget
•$3.6 M - TIF surplus
•$2.6 M - Non-retailer vehicle transaction tax
•$2.5 M - Use tax
•$1.8 M - Sales tax
•$13.3 M - Reimbursement from transition of JTDC to Chief Judge

$22.5 M - Enhancements to management and enforcement of revenues and payments to vendors
•$7.1 M - Tobacco, gas, liquor and parking lot enforcement
•$3.5 M - Non-retailer vehicle transaction tax and traffic court debt

The remaining $61.1 M of the County's preliminary shortfall was made up through Cook County Health and Hospital System initiatives. This includes an additional $56.3 M in revenue from County Care and expenditure reductions throughout the rest of the system that totaled $4.8 M.

2015 Expenditure by Office/Department

Office/Department - 2015 Expenditure
Health & Hospital System - $1,551,839,571
Offices Under President - $391,513,073
Cook County Board of Commissioners - $7,552,037
Assessor - $25,188,754
Board of Review - $8,506,129
Board of Election Commissioners - $1,063,158
Chief Judge - $219,354,725
Clerk of the Circuit Court - $100,969,335
County Clerk - $28,718,058
Recorder of Deeds - $13,804,477
Sheriff - $506,230,256
State's Attorney - $123,517,776
Treasurer - $11,485,930
Land Bank Authority - $7,006,927
Independent Inspector General - $1,843,297
Public Administrator - $1,109,485
Veterans Assistance Commission - $400,000
Fixed Charges - $726,961,472
Capital Equipment Plan - $56,587,388
Capital Improvement Plan - $182,006,606
Highway Improvement Plan - $33,853,000

City Council Update

Below is a summary of new ordinances introduced at the October 8th City Council meeting. CAA's Legislative Committee is in the process of reviewing these measures. Please let us know if you have any questions about these items.

Building Registration (Alderman O'Shea) -- Housing & Real Estate

This ordinance amends Chapter 13-10 of the Municipal Code relating to registration of multi-family buildings. It would expand the application of the ordinance to include buildings containing less than 4 dwelling units, if the building owner owns 5 or more such buildings in the City. It adds a definition for dwelling unit to match the definition that exists in the zoning code. It also adds a definition for rental unit and defines it as any dwelling unit which is not owner occupied and which is held out for rent to tenants, including any single-family home held out for rent to tenants. It requires owners to register within 15 days of becoming the owner. It would require the existing $10 per building fee to be paid with each registration rather than annually. Additionally, it requires the owner to register annually and pay the $10 per building fee. It requires the Building Commissioner to notify the Alderman of each registration in their ward. Further it increases the penalties for failure to register from between $50 to $200 for the first offense to $100 to $500 and from between $100 and $30 for the second and subsequent offenses to $500 and $1,000. Penalties for submitting false information, which are presently $100 to $500 would be eliminated and instead those who provide false information would be subject to the penalties contained in the City's False Statements ordinance. Penalties under this ordinance range from $500.00 and not more than $1,000.00, plus up to three times the amount of damages which the city sustains because of the person's violation. The ordinance takes effect 10 days after passage and publication.

Smoke & Carbon Monoxide Detectors (Mayor Emanuel) -- Zoning, Landmarks & Building Standards

This ordinance amends Chapter 2-14-155 of the Municipal Code to eliminate the fact that a violation of the smoke and carbon monoxide detector ordinance has been corrected as an affirmative defense. Specifically, it eliminates this defense for failure to comply with all specific smoke detector requirements applying to bed and breakfast establishments, residential units, business live work units, assembly units, existing buildings, type III schools, day care centers Class II, and those Type I schools operating as or containing a day care center Class I, hotels over four stories and temporary overnight shelters. It also eliminates this defense for failure to comply with all specific carbon monoxide detector requirements applying to residential units and existing buildings. The ordinance takes effect upon passage and publication.

Zoning Text Amendment - Chicago River Corridor (Mayor Emanuel) -- Zoning, Landmarks & Building Standards

This ordinance adds a new Chapter 17-12-1104 to the Zoning Code and amending Chapter 17-12-1005-D of the Zoning Code to establish a Chicago River Corridor Special Sign District. Specifically, it limits to one the number of high-rise building signs that can be on a building. It changes the definition of principal tenant to a tenant that occupies 51% or more of the floor space in a high-rise building, which is higher than the present requirement that a principal tenant must occupy at least 30% of the building's total floor area. It also eliminates the Zoning Administrator's ability to reduce the percentage of the occupancy requirement. It sets the boundaries of the Chicago River Corridor as all lots adjacent to the Chicago River from Roosevelt Road on the south to Kinzie on the north and Lake Shore Drive on the east and all lots with street frontage on Wacker Drive from Lake Street to Lake Shore Drive (extended). It also sets forth supplemental standards that apply in addition to the existing zoning regulations.

Employment Discrimination (Mayor Emanuel) -- Human Relations

This ordinance amends Chapter 2-160 of the Municipal Code to prohibit an employer from inquiring about an applicant's criminal history until after the applicant has been determined qualified for the relevant position and been notified that he/she has been selected for an interview or a conditional offer is made if there is no interview. It applies to employers who are not subject to the Illinois Job Opportunities for Qualified Applicants Act, including Chicago and the sister agencies (Chicago Public Schools, Chicago Park District, Chicago Transit Authority, City Colleges, Chicago Housing Authority and Public Building Commission). It defines an employer as: 1) subject to one or more of the City's license requirements in Title 4 of the Code, and/or 2) maintaining a business facility within Chicago. This requirement does not apply if: 1) federal or state law excludes certain criminal convictions from the relevant position, 2) a standard fidelity bond is required for the relevant position and the individual's criminal conviction would disqualify them from obtaining a bond, or 3) the relevant position requires a license under the Emergency Medical Services System Act. The requirement does not prohibit providing written notice of specific offenses that will disqualify an applicant.

ARO & SRO Recommendations Expected Soon

CAA has been monitoring progress on separate efforts to amend the City of Chicago's Affordable Requirements Ordinance (ARO) and SRO Ordinance. The ARO Task Force is scheduled to conduct its final meeting and issue recommendations on October 30. CAA submitted comments to the task force urging the adoption of incentives, rather than penalties or increased fees, to induce the development of affordable units and ensure that the healthy apartment development market continues unimpeded. CAA also expressed concern about the definition of "SRO" in early drafts of the SRO ordinance re-write, in order to ensure that market-rate efficiency apartments and other property types are not affected.

(Content contributions provided by CAA contract lobbyist Mary Kay Minaghan, MKM Services.)