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Developers feared
<br /> that the study
<br /> would lead to
<br /> residential assessed value; the median I ! increases. For both the county as a
<br /> residential property tax levy; and the I higher impact tees, whole and the smaller units within it,
<br /> jratio of the tax code area to total mu- 1 there are many reasons why the two
<br /> 1 I growth controls •
<br /> nicipal assessed value. I g phenomena might occur simultane- ;
<br /> Even though the study carefully oush%Below are several possible expla-
<br /> stated that it did not point to nonresi- or a two-tiered tax nations; some may be unique to Du-
<br /> dential development as the cause of Page County, but others may occur
<br /> assessment system.
<br /> counav tax increases,observers widely elsewhere as well.
<br /> i t
<br /> perceived the investigation as doing
<br /> just that. In fact, the study declared ment to review all the studies and cri- Loss of revenue from other sources
<br /> that"a one percent increase in nonres- tiques.'We concluded that the original Some taxing bodies in DuPage may i
<br /> idential development is likely to result study was adequate for an exploratory have had to increase property taxes
<br /> in a tax levy increase that is three times effort, though not as a "conclusive more rapidly than others to offset larg-
<br /> larger than a similar one percent in- study." er revenue losses associated with other,
<br /> crease in residential development." For instance, the 1986-1989 study nonpropemr-based sources. Our pre- j
<br /> This was attributed to two effects of period was largely atypical in that it liminary investigation suggests that
<br /> nonresidential development:the addi- embraced the height of the building lost revenue is an important factor for
<br /> tional workers, shoppers, and others boom. In addition,the results of the DuPage County as a whole compared
<br /> i
<br /> who demand new services, and resi- study are somewhat difficult to inter- to other suburban Chicago counties;it
<br /> dents'increased demand for more ser- pret because of the particular variables may also differentiate individual tax-
<br /> vices and amenities as an area urban- selected for analysis. For example, ing bodies within DuPage.A large part
<br /> izes. rather than comparing tax rates, the of this revenue loss is attributable to a
<br /> Responses to the DuPage Study study used the total tax levy as the de- reduction in state school aid. Given
<br /> pendent variable.In fact,as an area de- that school aid is distributed to indi- I
<br /> �he development community reacted velops, the total levy inevitably rises; vidual school districts on the basis of
<br /> _. to the study with outrage. Developers the expectation is that rates will de- local tax effort,districts with large in- I j
<br /> feared that the study would lead to cline. Further, the study's measure of creases in their tax base (due, in part,
<br /> higher impact fees,growth controls,or nonresidential development was to nonresidential development) prob-
<br /> a two-tiered tax assessment system somewhat indirect; it counted the ably received reduced aid and thus had
<br /> such as that imposed by neighboring number of firms rather than,say,the to increase their property tax levy
<br /> Cook County. That system assesses square footage devoted to nonresiden- more than districts without nonresi-
<br /> nonresidential real estate at two and tial uses. Given that various types of dential development.
<br /> one-half times the rate of residential development were measured in differ-
<br /> proper.In response,the DuPage De- ent units(number of firms versus resi- Lowered tax price
<br /> m
<br /> velopment Council retained North- dential assessed value),analysts cannot The larger the proportion of the tax I
<br /> western University's Professor Edwin accurately compare the results of the base that is nonresidential, the less
<br /> Mills, one of the pioneers of urban regression analysis and conclude that costly it is for residents to demand
<br /> economics,to write a critique;at the one variable has a three times greater more services and thus increase public
<br /> request of the DuPage Association of effect than another. expenditures. The reason is that the
<br /> Realtors,the University of Illinois Of- But,even assuming that the empiri- "tax price" (i.e.,the share of the costs
<br /> Fite of Real Estate Research issued a re- cal findings are basically correct,it is of local services borne by the average
<br /> port with a strongly worded attack; still difficult to conclude that nonresi- household) for government services
<br /> and other groups brought in experts dential development brings about in- demanded by DuPage residents may
<br /> from the University of Chicago and creased property taxes.The simultane- have declined because of the growth of
<br /> Harvard University to denounce the ous occurrence of high rates of non- the commercial tax base.This hypoth-
<br /> study's assumptions, methodology, residential growth and increasing tax esis fits with the finding that areas with
<br /> data,and conclusions. levies does not necessarily imply that a high nonresidential tax base experi-
<br /> Seeking to bring some reason to the the costs of development lead to tax ence increases in the total tax levy.The
<br /> i,debate,the East West Corporate Cor-
<br /> ridor Association, a coalition of major I Il .hwqucnt section o f t his article a hand un the rel—n ktid tstifte 1 hvvinpwrrr,trni llrvptriy 74,vcs m th+J'u c '
<br /> /t Cmmry Frmd Report h% John McDonald.Charles Orlehcke,Ashish 4n.and Wim Wic%vrl,Cemer for Urban
<br /> corporations in the county, retained P
<br /> E.corn:rnic Development.University of Illinois at Chicafiu.Chicago,ivy .A sum mars of the stuJc arl+cared earlier
<br /> the U niversity of Illinois at Chicago's in wtm Ww-cl et al.,-Commercial Uevclopmcnt and),rupertl•Taxes:Who Pars the It ills?". Public hnx•stm 1,
<br /> I Center for Urban Economic Develop- Anscrrcan Planning Association.1.3:March I9142.
<br /> i
<br /> 12 Land DevelopmentlSpring-Summer 1993 j
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