Highland Park Has Proposed a Higher Teardown Tax While Budgeting for Fewer Teardowns

In Highland Park, the Demolition Tax on a single-family house is due when the City issues the demolition permit. It is not due at closing. Normally that timing is a minor detail. This year it matters, because the City has a rate increase on the calendar, and several steps have to happen between a signed contract on an older house and the day that permit is issued.

The rate went from $10,000 in FY2025 to $15,000 in FY2026. The 2027 Proposed Budget would raise it again, to $18,000. The same document expects the tax to bring in less money than it did in either of the past two years. For anyone selling or buying a house whose value is mostly the land, that is the most useful fact in the budget.

The Rate Has Moved Twice in Two Budget Cycles

The FY2026 Annual Fee Resolution lists the tax separately from the regular building permit fee. All of the money goes to the City's Affordable Housing Trust Fund. The City still links an older handout that shows $10,000. The fee resolution has replaced that figure.

The Record North Shore listed the jump from $10,000 to $15,000 among the larger fee increases in the 2026 budget, which the Council approved on Nov. 24, 2025. The $18,000 figure is still only a proposal. The City's FY2027 Budget Timeline set a public hearing on the proposed budget for Nov. 9, 2026. The Council is scheduled to approve the budget and the Annual Fee Resolution on Nov. 23, 2026. Because the tax is owed when the permit is issued, a teardown permitted after the 2027 rates take effect would pay whatever rate the Council adopts.

Less Money at a Higher Rate

Here is the revenue the City expects from the tax, set beside the rate that applied each year. Dividing one by the other gives a rough count of how many single-family charges each total represents.

The budget states the 2026 estimate and the 2027 figure directly. The 2025 actual comes from the budget's own comparison column, which puts the 2026 estimate $40,300 below 2025.

These are equivalents, not a count of houses torn down. Multifamily projects pay on a different schedule. Some projects pay nothing at all: in October 2026 the Council approved changes to two development agreements that waived the Demolition Tax, as an offset for including affordable units. The direction is still clear. In 2025 the tax brought in roughly fifteen single-family charges. The 2027 budget plans for about a third as many, at almost twice the 2025 rate. The City is planning on fewer teardowns, each charged more.

For a seller, a smaller pool of teardown buyers is the part that matters. When an older house is likely to sell for its land, the people bidding on it are mostly builders and buyers who plan to rebuild. Each of them now has to account for a larger City charge, and for a review process whose length depends on the house itself.

What Sits Between a Signed Contract and the Permit

Highland Park's demolition review applies to any complete residential demolition permit application in the R1 through R7, RM1 and RM2 districts. Under the 2018 ordinance, removing 50 percent or more of a structure counts as a demolition. The steps run in this order:

1. The application has to be complete. That means all applicable fees are paid and the site management plans and other required submittals are filed. An application can be counted as complete before the utilities are disconnected. The permit itself cannot be issued until the City has every disconnection notice.
2. The City sends it to the Historic Preservation Commission within ten days. One exception exists. If the City's Comprehensive Architectural Survey lists the house as non-contributing, it can skip review, but only if the Commission chair approves in advance and in writing.
3. The Commission meets within 60 days. It decides how many of the nine landmark criteria the house meets.
4. The count sets the delay. A house that meets one criterion or none moves ahead right away. Two or three criteria bring a 180-day delay. Four or more, with enough integrity left, bring a 365-day delay. The delay is counted from the date the application was complete.

A delay can end early. That can happen if the Commission finds that no criteria are met, or if the applicant shows the house could not be sold despite reasonable efforts. The rules themselves are on the City's Historic Preservation Commission page, which links to the current ordinance.

Two Recent Reviews Show How Long the Clock Can Run

A Sheridan Road house. At its January 8, 2026 meeting, the Commission found that a house on Sheridan Road met five of the nine landmark criteria and imposed a 365-day delay. The City lists the delay as expiring December 8, 2026. That is nearly a full year between review and a possible permit.

A Howard Van Doren Shaw house. The Record North Shore reported that a demolition permit was requested in February 2025 for a house Shaw designed around 1909. That March, the Commission found the house met seven criteria and set a 365-day delay ending Feb. 14, 2026. In September 2025, the Council voted 4-3 to require consent from every owner in a proposed noncontiguous historic district before a nomination can be made, instead of 25 percent.

Both cases show the same thing. With a full-year delay, a demolition permit application filed in one budget year can lead to a permit, and a tax bill, in the next.

Where the Money Goes, and Why the Policy Is Still Changing

The tax pays into the Affordable Housing Trust Fund. That same fund is projected to drop sharply in 2027. Payments developers make in lieu of building affordable units are estimated at $815,800 for 2026 and budgeted at $220,000 for 2027. The Council is also reworking how affordable housing requirements fall on new development. At its Committee of the Whole meeting in October 2026, it continued reviewing the Inclusionary Housing Policy and asked for more information before taking it up again, according to the City Council recap. The staff report included several options: a fee-in-lieu for projects built below maximum density, and ways for standalone or existing homes to count as affordable units. The Demolition Tax is one part of a set of housing-policy rules that is still changing, and the 2027 numbers are the City's current forecast.

What This Means When Pricing an Older House

When a buyer plans to replace the house, the price they offer reflects the lot minus everything that stands between them and a building permit. In Highland Park, two parts of that are public and can be checked before listing. One is the Demolition Tax line in whatever fee resolution is in effect. The other is how the house appears in the Comprehensive Architectural Survey, which affects whether it can skip review or will go before the Commission. A house that might meet four or more landmark criteria carries a possible year of delay. Builders and rebuild buyers will treat that year as a cost, and their offers will reflect it.

For a seller, that makes preparation part of pricing. Knowing the house's survey status and the current tax rate before the first showing means the listing price starts from the same numbers a teardown buyer will use. This is general information and not legal, tax or financial advice. Confirm how these rules apply to your property with the City of Highland Park and with your attorney or tax advisor.

Quick Answers

Is the $18,000 rate in effect? No. As of this writing it is proposed. The Council is scheduled to vote on the 2027 Annual Fee Resolution on Nov. 23, 2026.

Is the Demolition Tax the same as the demolition permit fee? No. The City lists them separately. The budget projects $15,000 in demolition permit revenue for 2027 and $90,000 in Demolition Tax revenue.

Does gutting a house count? Under the ordinance, removing 50 percent or more of a structure counts as a demolition.

If you own an older Highland Park home and want to know how a teardown buyer would look at it, including its survey status, possible review time and the tax rate that would apply, The Wexler Gault Group can work through those numbers with you before you set a price. Get a Complimentary Home Consultation.