Some Chicago homeowners could get a break when property tax bills arrive later this year based on Cook County Assessor Fritz Kaegi’s reassessment of every property in Chicago — while some businesses will be forced to pay more, according to data released Monday.
Kaegi unseated one of the most powerful politicians in Cook County in 2018 by vowing to overhaul the county’s unjust and error-ridden property tax assessment system to make it more equitable, transparent and free from political influence.
Kaegi told WTTW News on Monday that he believes the results of his 2021 reassessment of the value of all properties in Chicago fulfills that promise.
“We have a better finger on the pulse of the market,” Kaegi said, adding that some of Chicago’s biggest properties were the most undervalued.
The results of the reassessment of Chicago’s properties could boost Kaegi’s bid for re-election, allowing him to tout the success of the changes he championed as paying off for homeowners. But it could also fuel the backlash from commercial property owners who profit from building and development.
“It is really important that we get this right,” Kaegi said, which will make the system more “equitable.”
Kaegi faces Kari Steele, the president of the Metropolitan Water Reclamation District of Greater Chicago, in the Democratic primary on June 28.
In a statement released by her campaign, Steele called the increase "beyond the pale."
"Implementing these kinds of increases overnight is frankly irresponsible and harmful to taxpayers," Steele said.
The data used to compile the assessments is available online in a new database published Monday. The value of properties in Chicago is reassessed every three years, and the last analysis was conducted in 2018 by former Cook County Assessor Joe Berrios.
The analysis concluded that the 882,207 properties in Chicago were worth a combined $42.08 billion, 31% more than in 2018, despite the ravages of the COVID-19 pandemic and the economic catastrophe it triggered, according to the data released by the assessor’s office.
The value of Chicago properties grew nearly twice as fast between 2018 and 2021 than it did between 2015 and 2018, when the value of all properties increased 16.4%, and did not trigger an across-the-board increase in the tax rate, according to the assessor’s office.
The nearly one-third increase in the value of property in Chicago was driven by a surge in the assessed value of properties used for commercial and industrial operations as well as large apartment complexes, according to the data released by the assessor’s office.
The value of commercial properties increased 56% from 2018 to 2021, compared with 10% for single-family homes and small apartment buildings, according to the data released by the assessor’s office.
That could result in a consequential change in how Cook County’s property tax burden is carved up, with homeowners carrying less of the load. If Kaegi’s property value assessments are upheld by the Cook County Board of Review, state officials and ultimately the courts, businesses would be responsible for paying 54% of the property taxes collected by taxing agencies in Cook County, an increase from 45%, according to the data released by the assessor’s office.
The value of commercial properties would have grown faster if not for the ravages of COVID-19, Kaegi said.
“Our assessments are much more transparent and predictable than they have ever been,” Kaegi said.
That would shift 9% percent of the property tax burden from homeowners to businesses, and could correct at least some of the inequities identified in “The Tax Divide,” an investigation published by the Tribune and ProPublica Illinois that defined Kaegi’s insurgent campaign against Berrios in 2018.
“Homeowners and small businesses were picking up the tab for big properties,” Kaegi said.
That change could translate into an additional $500 million staying in Chicago’s neighborhoods depending on the results of appeals and the final tax levy set by taxing districts, Kaegi said.
Since the Central Business District fuels much of Cook County’s economic activity, the results of the 2021 reassessment of the city had been highly anticipated by business groups — and those watching Kaegi’s bid for re-election.
The value of properties in the Loop and West Loop had the fastest growing share of the total value of Chicago’s properties in 2021, as compared with 2018, according to the data released by the assessor’s office. That is another indication the tax burden could shift from mostly residential neighborhoods to more commercial neighborhoods as part of changes made by Kaegi, according to the assessor’s office.
At the same time, properties in the mostly residential areas of the Near North Side, Lakeview and Lincoln Park declined the most as a share of the total assessed valuation of properties in the city. The share of the total value of Chicago’s properties in 2021, as compared with 2018, remains flat in several South and West side neighborhoods, according to the data released by the assessor.
The Chicago reassessment findings are in line with reassessments conducted by Kaegi in suburban Cook County, according to the assessor’s office.
Despite the jump in the value of property in Chicago Kaegi’s reassessment found, Chicagoans’ tax bills are unlikely to increase solely because of that growth, officials said. Tax bills are determined by not only the assessed value of the property, but also the tax levy approved by elected officials and any exemptions the property owner can claim.
When the value of properties in a city, or other taxing district, rise but the tax levy stays the same, the amount of each person’s share of the district-wide tax bill shrinks, officials said. At the same time, tax bills can rise even if the value of the property drops, if the tax levy is hiked by elected officials.
But property tax assessments are a zero-sum game: if homeowners pay less, commercial property owners will pay more.
While changes made by Kaegi might be good news for Chicago homeowners weary of seeing their tax bills increase every year, it is likely to fuel an already significant backlash from commercial property owners who claim Kaegi’s actions have damaged the city’s real estate market and economy by making investors unwilling to risk getting socked with a massive tax bill.
Criticism of Kaegi has been led by Chicagoland Chamber of Commerce officials as well as the Building Owners and Managers Association of Chicago. Representatives of both groups could not be immediately reached for comment.
Steele has echoed those complaints and accused Kaegi of “mismanagement.”
The city’s real estate market is robust, Kaegi said.
“There is no evidence that the city’s real estate market is suffering,” Kaegi said.
When he took office in 2018, Kaegi scrapped the system that Berrios used to assess the value of commercial properties and large apartment complexes. Figuring out how much commercial property is worth is more difficult than determining a home’s value, which can be compared to similar homes in the same neighborhood.
The value of a commercial property is pegged to the amount of annual revenue generated by a store, office, warehouse, apartments or factories. Using that information, the assessor’s office determine what is known as a capitalization rate, usually referred to as a cap rate.
Berrios left no documentation to show how he determined each commercial property’s cap rate, Kaegi said. In most cases, the cap rates set by Berrios undervalued commercial properties across Cook County.
The system for setting cap rates developed by Kaegi relies not only on sale prices of commercial properties but also public documents and databases. The results of that analysis found those properties were undervalued across the board, Kaegi said.
Kaegi said the results were a validation of the changes he oversaw, even as the Illinois General Assembly rebuffed his efforts to change state law to require small commercial properties to disclose their operational costs, which can be hard to determine from publicly available sources.
“We’re being a better mirror to the market that we always should have been,” Kaegi said.
Chicago property owners will see Kaegi’s new assessment of their properties reflected on the second installment of their property tax bills, which will arrive in mailboxes later this year.
Those bills usually must be paid by August, but that is likely to be pushed back significantly amid delays caused by the switch to a new system by the assessor’s office.
While Cook County Board of Review Commissioner Larry Rogers blamed Kaegi for the delay, Kaegi has said the Board of Review is responsible for the holdup, blaming it for failing to participate in the technological upgrades, which began in 2015.
Chicago property owners displeased with the reassessment of their property’s value can appeal to the assessor’s office, and then contest that decision at the county Board of Review. If they are still unsatisfied with the assessed valuation of their property, they can appeal to state officials and ultimately file a lawsuit, giving a judge the final say.
The number of appeals filed with his office in 2021 challenging the value of properties in Chicago as compared with 2018 dropped 26%, according to data provided by the assessor’s office.
“I think it is a sign that the system is becoming healthier,” Kaegi said, adding that the number of appeals have dropped every year for the past three years.
The release of the Chicago reassessment by Kaegi is sure to reverberate in his contest against Steele.
While Kaegi was endorsed by the Cook County Democratic Party, Steele won the backing of the Chicago Federation of Labor.
Both Kaegi and Steele can now raise nearly unlimited amounts of cash for their campaigns, after Steele contributed $100,0001 to her campaign on May 4, according to records filed with the Illinois State Board of Elections.
That contribution lifted the state-mandated limits on campaign contributions to candidates in the race. The law is designed to even the playing field between wealthy candidates and those who cannot self-fund their campaigns by allowing them to raise bigger amounts from contributors.
Steele’s contribution paved the way for a $1 million contribution from the Fight Back Fund, which is supported by the International Union of Operating Engineers Local 150.
The union benefits from building and development and is a major force in local and state elections in Illinois.
The union’s financial support could give Steele even the financial playing field with Kaegi during the final 45 days of the campaign. As of March 31, Steele had $107,000 in cash on hand, according to records filed with the Illinois Board of Elections.
As of March 31, Kaegi had $874,200 in cash on hand in his campaign account, according to records filed with the Illinois Board of Elections. Since then, Kaegi has reported another $25,000 in contributions of more than $1,000, records show.
Steele apologized on Thursday for antisemitic comments made on a radio talk show hosted by her husband commentator and lobbyist Maze Jackson in an interview with the Chicago Tribune’s Editorial Board.