Oak Lawn officials want to close a loophole in their property tax transfer tax, but they need voters’ approval.

Oak Lawn has had a property transfer tax for decades, but only recently realized what they describe as a loophole allowed at least one commercial property to avoid paying the village a transfer tax of more than $250,000.

In general, the way the village’s tax is written, it applies only to the sale or transfer of properties by deed, both commercial and residential, Village Manager Thomas Phelan said.

Unlike Illinois’ and Cook County’s transfer taxes, Oak Lawn’s tax does not apply to the transfer of controlling interests of real estate, such as through the sale of shares of stock in a corporation.

That was the case when the Stony Creek Promenade development, on the northwest corner of 111th and Cicero Avenue, was sold in December. The 158,000-square-foot shopping center has Mariano’s, TJ Maxx and HomeGoods as its anchor tenants.

When MEPT Stony Creek LLC sold the shopping center to BCORE Stony Creek LLC, the seller paid transfer taxes to Illinois and Cook County, but not Oak Lawn, Phelan said.

Adam Metz, the village finance director, estimates the $51,571,000 sale price would have generated $257,860 in revenue for the village.

Commercial properties, if not exempt, pay the same property transfer rate as residential landowners, $5 for every $1,000 of the valuation of the property.

Metz and Phelan are not aware of any other large corporate real estate sales that were similarly spared from the transfer tax.

For example, when the Oak Lawn Commons shopping center at 95th and Pulaski Avenue was sold for about $76 million, the seller paid the village a transfer

tax of $380,000, Metz said.

The revenue helps pays for a variety of services the village provides, Phelan said. The Village Board wants to revise its ordinance to ensure no other sales of large corporate property are exempt.

“I just think it’s long overdue,” Village Trustee James Pembroke said during a public hearing Tuesday.

No members of the public spoke during the hearing. Oak Lawn residents, however, must permit the change by voter referendum.

The Village Board voted Aug. 16 to put a binding referendum on the Nov. 8 ballot asking voters whether the village should add a real estate transfer tax on the transfer of controlling interests in real estate entities owning property in Oak Lawn. The exact wording has yet to be decided.

“Generally the public has to grasp the concept that they are paying the tax, but certain corporations are not paying the tax,” Mayor Terry Vorderer said. “The wording has to be right.”

Kimberly Fornek is a freelance reporter for the Daily Southtown.