Tax appeals to Kaegi’s office plummeted last year as Board of Review braced for record workload
Thursday, January 07, 2021
The Daily Line
by Alex Nitkin
Nearly 30 percent fewer Cook County property owners filed appeals with the Cook County assessor’s office last year than in 2019, even as the county’s Board of Review braces for a familiar surge of taxpayers contesting their assessments.
County Assessor Fritz Kaegi lauded the sharp downward trend in requests to his office as a sign that more homeowners than ever trust the accuracy of his team’s valuations. But some real estate professionals believe the opposite: that disillusioned property owners have lost faith in Kaegi’s methods and are simply taking their chances with the more binding Board of Review instead.
At the same time, Kaegi’s team granted more than four times as many reductions to commercial property owners as it did in 2019, reversing a practice that rankled business leaders who believed their requests for reductions were being unfairly thrown out.
During Kaegi’s first full year in office in 2019, the assessor’s office granted property tax assessment reductions to fewer than 12 percent of the commercial property owners who contested their valuations. Thousands of those decisions were later reversed by the Board of Review, which serves as a kind of court of appeals for property owners who believe the assessor overvalued their homes for tax purposes.
Kaegi’s predecessor, former Assessor Joseph Berrios, consistently reduced the assessments on more than half of commercial property owners who filed appeals with his office. Kaegi defeated Berrios at the polls in 2018 after accusing him of granting appeals based on personal and political connections instead of real estate data.
At the end of 2019, Kaegi conceded that his office’s rules for accepting appeals were too stringent, and he promised to soften his policy so that fewer requests would be thrown out on technicalities.
Related: Kaegi promises ‘more flexibility’ on next year’s tax appeals after rejecting most complaints
The assessor told The Daily Line in an interview late last month that the policy changes paid off, and his record on appeals in 2020 bore him out. Kaegi’s team granted reductions on 9,123 properties in 2020, compared to 2,249 in 2019, according to data provided by his office.
The assessor’s office gave reductions to more than 60 percent of commercial owners who appealed, almost the same percentage granted by Berrios in 2017.
The sharp rise in appeals’ success rate “makes us feel good,” Kaegi said.
“It’s a reflection of how we’re calibrating our process, because we saw a little too much in 2019 of appeals being rejected because there might have been a small documentary or technical error,” he said. “This year we really focused on changing the rules so it’s about substantive compliance, even if there might be one technical deficiency.”
He added that the appeals process was made smoother after his office invited real estate owners to fill out documents called “real property income and expense forms” that detail the economic health of their properties.
Differing explanations for drop in appeals
Still, part of the reason the assessor’s office’s rate of approval was so high was because of a nosedive in the number of commercial property owners who filed appeals with his office last year. Just over 15,000 commercial owners across the county filed appeals in 2020, compared to more than 19,200 in 2019. Both figures are sharply down from 2016 and 2017, when more than 26,000 commercial property owners asked Berrios for reductions each year, records show.
A similar downward trend occurred among residential property owners, 136,064 of whom filed appeals in 2020 compared to more than 190,000 in 2019 and about 163,000 in 2017, the last time the county’s triennial reassessment process was at the same stage. Fewer than 63,000 homeowners in Chicago’s south and west suburbs filed appeals in 2020, representing about a 35 percent drop below 2017, the last time that part of the county was reassessed.
Kaegi takes the sharp drop-off in appeals as a sign that “we’re doing better quality work,” he said.
“I think it points in the direction that our initial assessments are coming out more accurately,” the assessor said. “We’re putting a lot of evidence behind that and showing it to people, so maybe there’s less agitation to feel like they have to go through all the trouble and cost of [appealing their assessments].”
However, multiple property tax attorneys who have long been critical of Kaegi’s methods have a different theory as to why so many fewer property owners contested their valuations.
Molly Phelan, an attorney with the firm Siegel Jennings, said she did not file any appeals with the assessor’s office last year, saying it would have been a “waste of time” after he rejected most appeals in 2019.
“We didn’t get anything last year, so we didn’t expect him to do anything this year,” Phelan told The Daily Line last month, adding that many of her peers in real estate law acted similarly.
“He gave us all no-changes last year,” Phelan said. “So we’re not going to waste our time and energy when we’re going to get all our relief from the Board of Review anyway.”
She added that Kaegi’s application of a “Covid factor” adjustment to factor in the economic impact of the pandemic made it harder to plan appeals, since some of the adjustments were registered after appeal deadlines passed in some townships.
“Why would we submit any information when we don’t even know where our clients are starting from?” Phelan said.
Scott Smith, a spokesperson for Kaegi, wrote in an email to The Daily Line on Wednesday that the assessor’s office made Covid-related adjustments after appeals had opened for just five of 38 county townships, which “had already been mailed by mid-March when the full effects of COVID-19 were being felt.”
“We had no choice but to apply them then,” Smith added.
Board of Review racking up appeals
The Board of Review ultimately reversed billions of dollars in assessment hikes for the 2019 tax year, substantially backsliding decisions by the assessor’s office that would have shifted the county’s tax burden from homeowners toward landlords in 2020, according to a 64-page report Kaegi’s office released this week. The report also showed evidence that the assessor’s office mostly valued properties in line with standards set by the International Association of Assessing Officers, according to Smith.
The Board of Review will continue accepting appeals for property owners in some townships until Jan. 29, meaning it will likely take another month to register the total number of complaints the board will have received for the 2020 tax year. But Board of Review Comm. Larry Rogers (D-3) said during a county Board of Commissioners Finance Committee meeting on Dec. 15 that the board was on pace to see another uptick in appeals beyond the previous year’s record caseload.
“While the assessor’s appeals numbers have gone down, our appeals numbers have gone up, largely because, from what we hear, they have not seen as much consideration being given at the assessor’s office,” Rogers told commissioners.
As of Wednesday morning, the board had received 204,353 appeals for the 2020 tax year, according to Board of Review Chief Deputy Commissioner William O’Shields.
The sum so far is well short of the record 253,000 appeals the board fielded during the previous year, but O’Shields expects a deluge of additional requests to come in during the next three weeks, he said.
“There’s been a slow ramp-up, but it speeds up at the end so it’s too early to say what the volume will be in the end,” said O’Shields, noting that the board received about 45,000 appeals in the five county townships whose appeals were due on Tuesday. As of Wednesday, the board was still accepting appeals in eight of the county’s 38 townships.
The board accepted its last round of appeals for the 2019 tax year during the first week of 2020, but the deadlines have been pushed back by three weeks this year because of Kaegi’s “Covid factor” adjustment, which delayed publication of some first-round assessments by several months.
The assessor’s office published its last round of appeals decisions in mid-December, about two weeks behind its typical schedule. But the delay also pushed back the Board of Review’s schedule for accepting appeals and presiding over hearings, O’Shields said.
Related: Victory in hand, Wendt plunges into historic appeals backlog with big power over property taxes
The board’s quasi-judicial hearings typically get underway in early September and wrap up in March, but its hearings on 2020 tax appeals did not start until December and could stretch into May, O’Shields said. He added that this year’s hearings will all be done by phone or over Microsoft Teams, a “heavy lift” that makes the process “a little more labor-intensive.”
And like in the assessor’s office, Board of Review staffers are scrambling for the tools to correctly value properties in a “year unlike any other,” O’Shields said.
“We’ve never encountered valuation arguments based solely on the impact of a pandemic or damages caused by civil unrest,” he said. “It’s a challenge to determine that impact without a reliable pool of sales…so we have little or no reference for that.”
Processing all the appeals virtually and on a shortened timeframe will “require a considerable amount of sacrifice” from board staffers, some of whom have been assigned a mandatory 10 hours of overtime work each week, O’Shields said.
The board must deliver its final determinations to Cook County Clerk Karen Yarbrough by June so her office can calculate tax rates in time for county Treasurer Maria Pappas to send out accurate bills.