How A Chicago-Based Law Firm Has Shaped A Major Industrial Tax Incentive

With tax season in full swing, the commercial real estate industry is focused on how to get the most out of any tax incentives available. In Cook County, Illinois, this includes the Class 6b incentive, which was created to encourage the development of new industrial facilities, the rehabilitation of existing industrial structures and the industrial reutilization of abandoned buildings.

Properties that qualify for this incentive will be assessed at 10% of market value for the first 10 years, 15% in the 11th year and 20% in the 12th year, resulting in significant tax savings. Qualifying properties can receive a reduced assessment from the date that new construction or substantial rehabilitation is completed and initially assessed or, in the case of abandoned property, from the date when it is occupied by new tenants. 

According to the 6b eligibility bulletin published by the Cook County assessor, the goal of this incentive is “to attract new industry, stimulate expansion and retention of existing industry and increase employment opportunities.” 

Brian Liston and Peter Tsantilis of the Chicago-based law firm Liston & Tsantilis have a personal history with this incentive. Four decades ago, while working in the Illinois Attorney General’s Office, Liston helped draft several key property tax incentives with Cook County President George Dunne, including 6b. 

“At the time, the county was experiencing a bit of an exodus when it came to manufacturing, with many companies moving elsewhere to build industrial space for less,” Liston said. “We put these incentives into place so they could lower the assessment classification on certain projects, making a significant difference.” 

Years later, Liston and Tsantilis were instrumental in drafting the legislation that allowed industrial owners to renew this incentive. Tsantilis, reflecting on the changes that have been made to the incentive since its inception, explained that initially, a building needed to be vacant for two years to qualify. That term was then shortened to less than two years, then less than one year under the special circumstances arm of the incentive — if there is a transfer of title. Otherwise, with no transfer of title, there must be at least one year of vacancy.

“Several different variations have been developed over the years based on the needs of property owners and tenants,” Tsantilis said. 

Tsantilis mentioned the Sustainable Emergency Relief component of the incentive, which allows a company to remain in a building if it has been there for 10 years and can show declining revenue and other mitigating factors.

“This incentive is the only one that does not run with the real estate and therefore terminates if the tenant leaves the site,” Liston said. 

This is a municipality-driven incentive, Tsantilis said, so each municipality has the power to approve or deny it. According to Liston, however, there have been clear consequences for areas that have chosen not to move forward with 6b. 

“Some municipalities have chosen to not renew any incentives, and you can see that properties in those areas are having issues in terms of getting tenants or buyers because of the high taxes,” Liston said. 

Liston & Tsantilis has been at the forefront of refining how this incentive can be properly utilized. Tsantilis said that over the years, he and Liston have brought real-life stories from their real estate clients to the county as examples for why 6b needs to be modified or expanded, which has led to many of these changes. 

“We’re on the ground and see the real projects and situations that may not necessarily fit the mold of what 6b was initially designed for but could benefit from it,” Tsantilis said. “These examples have helped shape 6b into what it is today.” 

Liston encouraged manufacturers in Cook County to visit the Cook County Assessor's Office website to see how they might benefit from the incentive and speak with an attorney who can help them get the most out of any tax benefits they may qualify for. 

This article was produced in collaboration between Liston & Tsantilis and Studio B. Bisnow news staff was not involved in the production of this content.

Studio B is Bisnow’s in-house content and design studio. To learn more about how Studio B can help your team, reach out to studio@bisnow.com.