Many of the prospective home buyers who walk into Phil Peterson’s office at Re/Max Suburban in Schaumburg have heard that property taxes are lower in Schaumburg.
“But they don’t always know why it’s lower,” said broker associate Peterson, who’s happy to give them a bit of good news.
To explain the lower taxes, all Peterson has to do is pull out a property tax bill for a Schaumburg home, which lists all of the taxing bodies (park district, schools, library, etc.) and shows how much the homeowner is paying each agency in taxes for the year.
At the end of the line that says Village of Schaumburg, there’s a zero. That’s because the village doesn’t charge a property tax, and it never has, since the village was incorporated in 1956.
The reason can be summed up in one word: shopping.
Schaumburg gets so much sales tax revenue from its malls and auto dealers that it has never had to institute a property tax.
In Illinois, only the City of Chicago takes in more than Schaumburg’s whopping $2.1 billion in retail sales each year.
That’s a lot of money changing hands, and the focus of the activity is the 2.5 million square-foot Woodfield shopping center. But the many smaller malls and the auto dealers who line Golf Road also keep a property tax at bay. Schaumburg Finance Director Keith Wendland said that roughly 30 percent of the village’s sales tax revenue comes from auto-related sales.
For a homeowner, the savings works out to several hundred dollars per year for a home priced around $200,000.
Property taxes also are low in Schaumburg because Cook County has a lower residential tax rate than the collar counties. Residential property taxes in Cook County are 16 percent of the home’s appraised value. In the other counties, the rate is 33.3 percent of the home’s appraised value. Cook County makes up the difference by charging twice as much for commercial property tax as residential.
Dane Hooper, a real estate broker at Century 21 Advisors in Arlington Heights, said similar houses in Buffalo Grove, on the same street, in the same school district, will have widely different property taxes when one house is in Cook County and the other is in Lake County.
“With the two together (the lower Cook County tax and the absence of a municipal property tax in Schaumburg), it really can make a big difference,” said broker and co-owner Patti Podjasek of Century 21 AAA Homes in Schaumburg.
People are more likely to be aware of the lower county taxes, said several brokers, perhaps because it’s a more significant savings.
“I think schools are the most important thing people look at,” said John Sopocy, a broker with Century 21 World Class in Schaumburg, “then crime and then taxes are maybe third. But many people who come looking in Schaumburg do know about the lower county tax.”
Sue Garcia knew about the lower taxes when she moved from Hoffman Estates to Schaumburg a year and a half ago. It was one of several factors in selecting a new home.
“I knew it had to do with Woodfield mall and, of course, I’m very pleased,” said Garcia, who is married and has an 8-month-old daughter. “But I don’t mind paying taxes in Schaumburg because of all the wonderful facilities for families and children, the parks, the library, the schools.”
A new concern for any community that relies heavily on sales tax is the emergence of on-line shopping. Currently, people who shop by computer pay no sales tax. Congress imposed a three-year moratorium on taxes on Internet sales in October of 1998. Whether the moratorium will be continued after the three years is anyone’s guess.
“No question, we’re concerned about how that is going to wash out,” said Wendland. Schaumburg gets 64 percent of its general operating budget from its sales tax. “It’s hard to tell if it’s affected us yet. Our sales tax growth has been real strong (up 13 percent last year) but we won’t know (about an Internet effect) until we see our sales receipts from Christmas.”
Schaumburg isn’t the only suburb without a municipal property tax. Oak Brook, which also has a big mall, and Carol Stream don’t charge residents a municipal property tax.
HOW TAXES STACK UP
1998 municipal property tax rates
Municipality Rate
Buffalo Grove …… $0.670
Carol Stream ……. $0
Elk Grove Village .. $0.525
Hanover Park ……. $0.822
Hoffman Estates …. $1.158
Palatine ……….. $1.097
Rolling Meadows …. $1.014
Roselle ………… $0.786
Streamwood ……… $1.172
Schaumburg ……… $0
