About Mike Scobey

Mike Scobey is Assistant Director - Advocacy and Local Issues. He supervises and coordinates the IAR Issue Advocacy Program which includes the coordination and management of Issue Advocacy campaigns, inside research, outside research and polling, legal analyses of local government proposals and public relations/education projects. He is responsible for the production of educational and advocacy pieces related to the local government affairs program. He also oversees the local Governmental Affairs Director (GAD) program which includes serving as a liaison to the local GADs and other staff on issue development and prioritization and overall campaign design. He provides staff support to the Commercial/Industrial/Investment Committee.

How far can REALTORS® go with criminal background checks?

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Tyler Craddock of the National Association of Residential Property Managers warned REALTOR® attendees at last week’s NAR Property Management Forum that if their leasing policies disallow tenants who have committed a felony, it could have a “disparate impact” on a certain group of people — which is a violation of fair housing law. Unfortunately, he said, the U.S. Department of Housing and Urban Development (HUD) guidelines on this issue are vague.

Property managers cannot consider arrest records when considering tenant applications, according to HUD, and only convictions related to threats to property or other tenants are relevant. “You have to look at the nature of the crime, the severity, the age of the [prospective tenant] at the time of the crime, and how much time has passed since conviction,” NAR’s Megan Booth said. She suggested property managers consider only the last seven years of a prospective tenant’s criminal history.

Look at work history and check credit on prospective tenants before conducting a criminal background check, said Booth. If the credit history and work history do not meet the owner/property management company’s standards, then a criminal background check may not need to be done.

When denying prospective tenants based on their criminal background, said Booth, property managers should be honest about that and give tenants an opportunity to explain their situation.

Historic preservation incentives for property owners

This historic home is located in Joliet (Bigstock Images).

This historic home is located in Joliet. (Bigstock Images)

If your municipality has a historic home preservation program, keep in mind that existing programs — mainly through the State of Illinois and the federal government — are beneficial to the property owner.

The Property Tax Assessment Freeze for Historic Residences (owner-occupied, single family homes, condominiums, cooperative unit or multi-family building up to six units) freezes property taxes over a 12-year period after rehabilitation of the property. There is a minimum investment of 25 percent of the property’s market value, as determined by the County Assessor. The building must be a certified historic structure, and the work must meet the Secretary of Interior’s Standards for Rehabilitation.  The program is administered by the Illinois Historic Preservation Agency.  For more information, go to: www.illinois.gov/ihpa/Preserve/Pages/taxfreeze.aspx

Bigstock Images

Bigstock Images

Federal Rehabilitation Tax Credit is available for rehabilitating an income-producing building. This dollar-for-dollar Federal income tax credit equal to 20 percent of the construction costs may be used by the building owner or sold to a tax credit investor. The minimum investment is 100 percent of the building’s “adjusted basis”; that is, the purchase price minus the land cost and depreciation, plus prior improvements. The building must be a certified historic structure.  This program is also administered by the Illinois Historic Preservation Agency.  For more information, go to:  www.illinois.gov/ihpa/Preserve/Pages/taxcredits.aspx

 

Another real estate tax provision potentially up for discussion

Concept related to taxes. The enlarged magnifying glass word tax with other words related taxes in the background.

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Many in Congress are talking tax reform (which is not likely until after this year’s election).  Illinois REALTORS® are on Capitol Hill this week discussing the importance of the Mortgage Interest Deduction, the deduction for property taxes, as well as the “like-kind exchange” provision.  Another set of tax provisions that is very important to the real estate industry is the depreciation schedule.

NAR recently released a study on the economic value of depreciation provisions of the federal tax code.  This study was done with the Massachusetts Institute of Technology and other real estate groups.  The study finds that depreciation accounts for $700 billion in economic activity each year; that’s 4 percent of the national gross domestic product.

Scobey

Scobey

Current depreciation schedules are: 23 years for residential properties, 39 years for non-residential properties and 15 years for leasehold improvements.

Any effort in Congress to extend these schedules or limit the amount of depreciation will be strongly opposed by NAR and Illinois REALTORS®.

IAR representatives on hand for governor’s economic development announcement

Illinois REALTOR® Pradeep Shukla meets with Illinois Gov. Bruce Rauner at an announcement on Feb. 3 about changes to how the state handles economic development.

Illinois REALTOR® Pradeep Shukla meets with Illinois Gov. Bruce Rauner at an announcement on Feb. 3 about changes to how the state handles economic development.

Illinois Gov. Bruce Rauner on Wednesday, Feb. 3, 2016, announced the creation of a public-private partnership with a goal of attracting new businesses and jobs to Illinois.

The Governor signed an Executive Order which will create a new economic development entity, called the Illinois Business and Economic Development Corporation. This not-for-profit corporation is charged with recruiting new businesses to Illinois.

On hand for the announcement today were REALTOR® Pradeep Shukla and IAR Government Affairs staff Mike Scobey and Kris Anderson. Shukla, a member of IAR’s Global Task Force and IAR Consulate Liaison for India, said he was pleased to hear the Governor say that the corporation and its Board will work with the consulates of various nations.

The Governor opened up his press conference/announcement this morning by stating “we have been inadequate in selling our state.”

Rauner cited the “anemic job growth” that took place in 2015. He also noted that with the State’s current economic development agency, the Department of Commerce and Economic Opportunity (DCEO), only 14 percent of the agency’s staff is devoted to business development.

The new corporation, a 501(c)(3), will work within the DCEO, but will be funded with private money.  All recruitment measures worked on and recommended by the corporation will need final approval from DCEO.

“Every year, we’re going to set goals for how many companies we’re recruited, how many jobs we’ve brought from other states and other nations here to Illinois.  We’re going to measure and report on it on a constant basis,” Rauner said.

Rauner answered criticism of this concept that it would lack transparency by saying that the corporation and its Board will be subject to the Freedom of Information Act.

Get municipal property inspection information

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Find out the residential property inspection requirements in communities near you by referring to the Illinois Association of REALTORS®’ municipal requirements list for more than 150 Illinois municipalities.

With owner-occupied single-family homes, the inspection is usually done at the “point of sale,” which means the owner/seller must notify the municipality of the upcoming transfer.  That notification is followed by an inspection done by a municipal staff member, usually before the closing, with the seller typically paying for the repairs.  The inspector looks for building code violations.

Also, several municipalities inspect rental properties, either when there is a change of occupancy or on a regular basis (e.g. once every two or three years). Check the list for that information too.

Illinois REALTORS® can use the IAR list to see what nearby communities require for inspections:

http://www.illinoisrealtor.org/sites/illinoisrealtor.org/files/Advocacy/Inspections.pdf

We hope you find this list useful as you work with sellers and prep them for transfer of their properties.

IAR Advocacy and inspection ordinances
The IAR advocates for the inclusion of fair and reasonable inspection standards and procedures.  For example, IAR lobbies for:

  • Reasonable inspection fees.  Fee revenue should reflect the cost of the inspection program and not be a general revenue-raiser.
  • Inspection checklist.  This helps to ensure that the owner will know exactly what the municipality is inspecting for.
  • Adherence to health and safety standards.  Municipalities should not be requiring cosmetic repairs or upgrades.
  • Escrow provision.  With a municipality’s “point-of-sale” home inspection requirement, IAR lobbies for an escrow provision whereby, if the two parties agree, the buyer can make the required repairs to the property after the closing. The buyer would provide to the municipality an escrow to ensure that the repair work is done in a reasonable amount of time after closing and occupancy. IAR always lobbies for an escrow amount that is not excessive.