Monday, March 20, 2006

Special service area and special assessment areas

Does everyone know about these?

They're tricky and you need to be aware of them...particularly in the outlying, new growth areas. I remember running into one on a deal in Bolingbrook not too long ago. And in this post, I'm going to wear my residential real estate attorney hat.

Here's the gist of the special service or assessment area, a developer finances their new development (roads, sewers, sidewalks, ect.) through tax-exempt bonds. Then, these bonds actually get re-paid by the benefited properties. Why are they important? They can carry a pretty large price tag for the undiscerning buyer in these new developments over many years.

What to know:
  • Look closely at your title committment...the ordinance creating the service area must be recorded against the properties.
  • Most municipalities require the developer to provide a disclosure rider to the sales contract of the initial buyer.
  • Be particularly wary of secondary transactions...does the assessment have to be paid off by the Seller?
  • Has the Buyer's acceptance of the assessment been accurately reflected in the purchase price?
These can be tricky. Get proper disclosures up front and make sure you/your client is getting compensated appropriately.

2 Comments:

At 9:42 PM, Anonymous David Weiss said...

The SSAs are popping up all over Chicago. The one I am most familiar with is the SSA in the Six Corners area on the Northwest side (Irving/Milwaukee/Cicero).

The intent is for the local businesses and land owners to use their own tax dollars in a way that is controlled very locally. Usual uses include street cleaning, snow removal, promotion of the collective businesses with in the SSA, etc.

If implemented properly, the SSA seems to be a great tool for revitalization and promotion of local business.

 
At 2:50 PM, Blogger Mike Kerwin said...

Michael Kerwin, Cary, IL We have an SSA tax on our property the proceeds of which were used for water mains and other infrastructure in our new residential development. Each year our real estate tax bill includes some $2,200.00 specifically labeled for this SSA. I wonder why this SSA is not the same each year. It went up by a few hundred dollars last year and I don"t know where to go to find out why. Does anyone know why this bill might vary each year? Thanks. Mike

 

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