Estate Development and Property Taxes in DuPage County:
Project Number: 342
Report Date: February 1992
Author(s): J. McDonald, C. Orlebeke, A. Sen, W. Wiewel
presents results of an analysis of the issue of the relationship between real
estate development and property tax increases in DuPage County, Illinois during
the 1980's. The motivation for this analysis is the interest of the East-West
Corporate Corridor Association in clarifying issues raised by the report Impacts
of Development on DuPage County Property Taxes (DuPage County Development Department,
1991a and 1991b).
The report by the DuPage County Development Department points
out, among other findings, that there is a significant statistical relationship
between increases in property taxes and real estate development, especially nonresidential
development. This, of course, is contrary to the common wisdom that nonresidential
development helps reduce the residential property tax burden.
The methods of
the DuPage study have been criticized extensively and we concur with many of the
points raised by the critics. Nevertheless, we do not believe that the methodological
shortcomings entirely invalidate the statistical associations found in the study.
At the same time, the study goes beyond what is warranted by its data in suggesting
causal explanations. While the study does not claim to offer proof for these,
its selection clearly focuses on costs imposed by non-residential development,
and leaves out most other possible explanations.
Both the weakness of the empirical
findings, due to methodological problems, and the problematic nature of the causal
explanations, suggest a different, more comprehensive study is needed to answer
the key questions: what is the relationship between property tax increases and
different kinds of development in DuPage County, and why do these relationships
occur? We suggest several components of such a study.
Our report starts out
with a brief review of data on development and property taxes in DuPage County.
We then review the methodology employed in the study by the DuPage County Development
Department. Next, we discuss some alternative explanations for the relationship
found in the study and suggest a series of questions or hypotheses for further
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