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Column: Cook County assessment report verifies what many already knew: Our property tax system is unfair

Sunday, September 27, 2020
Daily Southtown
by Ted Slowik

The Cook County assessor’s office within the past week announced findings of a new study that verified conclusions reached by other researchers and investigators.

The new study concluded that assessments in Cook County are unfair.

Many south suburban homeowners will greet this information with about as much surprise as discovering that Thornton Quarry is a big hole in the ground. They’ve felt for some time that they’re on the losing end of a rigged property tax system.

The winners are fat-cat corporations that occupy downtown Chicago high-rises and the politicians who moonlight as tax appeal attorneys. When privileged, well-connected moneybags pay less than their fair share, everyone else pays more.

“If there’s a large group of properties that is under assessed, that means that they have shrunk their share of the pie at everyone else’s expense to pay for local government,” Cook County Assessor Fritz Kaegi said Friday during a telephone interview. “That means everybody else has been picking up the tab for them.”

Kaegi was elected in 2018 on a reform agenda. He has criticized methods used by his predecessor to calculate assessment values, saying they were unscientific and lacked transparency.

For the new study, researchers with the International Association of Assessing Officers compared assessments of commercial buildings in Cook County to actual recent sales prices.

They found that in general, expensive properties are assessed at values lower than their true worth and lower value properties in the south suburbs and elsewhere are assessed at values greater than their actual worth, Kaegi said. Assessment professionals call this regressivity.

The study found that assessments deviated from actual market values by about 40% countywide, on average, Kaegi said. In the city of Chicago, values were off by 50%, the report found. In the south suburbs, it was a little better, but assessed values still differed from market values by about 30%, Kaegi said.

“I’m not aware of anywhere in the United States where the numbers are this far off,” Kaegi said. “The industry standard is to get it within 15%.”

Discrepancies in assessments mean that the typical homeowner in the south suburbs is overpaying property taxes by about $1,000 a year, Kaegi said.

Cook County reassesses properties every three years. Last year, properties up north were reassessed. This year the focus is on townships in the south suburbs. Next year, it will be the city of Chicago’s turn.

“Fixing the commercial base, as we did in the north suburbs last year, in Chicago it makes a big difference because you have this huge base, where there are millions of people living who can benefit from making sure the commercial (values are) accurate,” Kaegi said.

The south suburbs, in general, have fewer occupied commercial and industrial properties than other parts of the county. The impact here of Kaegi’s new assessment methods will be less dramatic here compared to Chicago and the northern suburbs.

“Even if we get the assessments right we are spreading the fixed costs of education and local services across very narrow shoulders,” Kaegi said.

Another finding of the new study was that more expensive commercial properties were more likely to be improperly valued than less expensive business properties, he said. Little guys have been picking up the tabs for bigger taxpayers.

“Think about all our struggling small businesses,” Kaegi said.

Unfair assessments are one part of a complex system that has made some parts of the south suburbs look like a disaster has unfolded in slow motion. Some neighborhood are characterized by vacant lots, fire-damaged structures and abandoned buildings.

The area has some of the state’s highest tax rates. Costs are high to provide services in Cook County compared to other parts of the state. There are fewer commercial properties in the south suburbs to shoulder the tax burden, so homeowners bear a greater share.

High tax rates discourage business investment. Why should a company open a shop in Matteson when tax rates are much lower right next door in Will County? Why invest in Chicago Heights when lower taxes are just across the border in Indiana?

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Home values here have been slower to recover from the Great Recession than virtually anywhere else in the nation. A home often is a family’s biggest investment and best opportunity to transfer wealth to the next generation.

“It’s a spiral,” Kaegi said.

Taxes have become so repressive throughout the region that owners of many commercial properties do not pay real estate taxes that they owe. Tax collection rates in Harvey and other communities are below 60%, officials have said.

Since real estate taxes are the primary source of funding for public schools and other local services, the lack of revenue affects the quality of education, public safety, recreation and other quality-of-life concerns.

“We know these problems. We need to focus on solutions,” Kaegi said. “There are some things we can do with the assessment system to fix that. The assessment system is not a cure-all.”

Kaegi said he is doing what he can to make assessments more fair and address that part of the equation. His office has pushed for legislation, which his office has called the Data Modernization Bill, that would require collection of information about monthly property rents and other data.

“A big part of why we see the disparities identified in this report is that data gaps create a lot of these disparities,” he said. “Third-party data doesn’t do a good job representing what is happening in smaller suburbs or communities that are not economically thriving because economic databases tend to cover the areas that are thriving.”

The COVID-19 pandemic’s impact on businesses has complicated efforts to correct imbalances among commercial and residential assessments, he added. Also, the state’s overreliance on property taxes to fund education has amplified the system’s negative effects in the south suburbs.

In March, the Chicago Tribune published an opinion piece in which Kaegi wrote that even a modest increase in federal funding for education could help reverse the crippling, spiraling effects of high property taxes in the south suburbs.

Title I funding for K-12 education is about $15 billion annually, he said.

"It hasn’t gone up in the past decade,” Kaegi said. “It would make a real difference in the south suburbs.”

Ted Slowik is a columnist for the Daily Southtown.



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