Demolition Tax

The demolition tax applies to all residential demolitions administered by the City’s Building Division. Demolition, defined as the removal or destruction of 50 percent or more of the structure, is measured by the removal of any combination of interior and/or exterior elements. The tax is $15,000 for a single-family home and $5,400 per unit for multi-unit buildings. The tax is paid by the property owner before the City issues a demolition permit.

The demolition tax can be waived under some circumstances:

• When the permit applicant has entered into an agreement with the Housing Commission to provide affordable housing in the new structure;
• When the applicant has owned the property for at least five years prior to the demolition and covenants to own the property for the next five years;
• When the demolition is necessary due to a natural disaster; or
• If the property owner is low or moderate-income and qualifies for a medical exception.

Additionally, property owners may be able to defer payment of the demolition tax until an application is submitted for a building permit for the property on which the demolition will occur or until a plan of subdivision is recorded for the property.

To date, the City has raised several million dollars for the Affordable Housing Trust Fund through the demolition tax, which is the Fund’s largest contributor. In the early 2010’s, the City saw an average of roughly 16 demolitions per year, and an average of 18 per year between 2023 and 2025. Based on the consistent pace of residential demolitions in Highland Park since the implementation of the tax, the tax does not appear to be a significant deterrent to development and has provided critical funding for Highland Park’s various affordable housing initiatives for more than two decades.