(The Center Square) – As part of a larger housing proposal by Gov. J.B. Pritzker, a bill that would impose a yearly fee on medium-to-large scale housing investors, which would scale based on how many properties are owned, made progress in the Senate this week.
Critics of Senate Bill 331 said in a committee hearing late Tuesday that the proposal seems like an additional property tax on some owners in Illinois.
The goal of the bill – as said by state Senate sponsor Rachel Ventura, D-Joliet – is to shut private equity out of homeownership in Illinois, which both Republicans and Democrats on the committee agreed at least somewhat contributed to an ongoing housing shortage.
According to the proposal, which is just one of multiple highly contentious housing-related bills advanced Tuesday, the fee would apply to property-owning companies with eight or more multi-family properties or with 10 or more single-family homes.
“The fee collected is to be deposited into the Illinois Affordable Housing Trust Fund with the purpose of funding public housing projects and developments in providing rental and mortgage assistance,” Ventura said.
According to Ventura, the fee begins at 10% of the yearly appraised value of each property, and scales by 10% for each additional eight multi-family units or 10 single-family homes, and is capped at 100% of property value.
According to Luis Sanjraade from the Illinois Department of Human Services, the fee could even be unconstitutional.
“The fees that are collected here can escalate up to 100% from a legal perspective that could be considered excessive, possibly taking a look at a violation of the 8th Amendment of the Constitution, cruel and unusual punishment,” said Sanjraade.
The bill may also shut out some unintended entities, who live in and contribute to the state, according to Sen. Sue Rezin, R-Morris.
“This bill penalizes investors that hold eight multi-family units or times single family units,” Rezin said. “[Private equity] investors only account for about 1.2% of the market and over 89.6% of investors in Illinois are mom and pops.”
Ventura disagreed with the legal argument, but said the proposal has been amended to take effect later, allowing the state agency to exercise more rulemaking powers.
The bill ultimately passed the Senate Executive Committee, and is expected to be taken to the floor in the coming days.
