Kaegi is in the second year of a three-year reassessment cycle in Cook County, an often opaque process that determines who pays what in property taxes used to fund schools, police and fire departments and other local government functions. His office assessed the north and northwestern suburbs last year and will tackle the city of Chicago in 2021.
Higher assessments don’t automatically result in higher property taxes. What matters is the relative change in assessed value. If a single-family homeowner’s assessment rises, but everyone else in the neighborhood receives a bigger increase, the homeowner’s tax bill would likely decline.
Taxes also depend on the levy: how much local governments decide they need to collect in property taxes to fund their operations.
Kaegi has irked landlords mainly with his use of a common real estate valuation metric called a capitalization, or cap, rate. He contends his predecessor, Joseph Berrios, used unreasonably high cap rates, resulting in especially low, and unfair, assessments of office and apartment buildings, shopping centers, hotels and warehouses.
Kaegi says his office uses lower cap rates that more accurately reflect true—and in many cases, much higher—market values.
“I’m not a sadist. It doesn’t give me pleasure to do that,” he said. But he’s “correcting for substandard procedures from previous administrations.”
Nonetheless, the correction resulted in tax hikes for commercial landlords in the northern suburbs. Kaegi’s office boosted total commercial assessed values in the northern suburbs by 77 percent last year, versus a 14 percent increase for residential. After the Cook County Board of Review acted on property owners’ appeals of their assessments, total commercial assessed values rose by a smaller amount, 25 percent, as did residential, increasing 11 percent.
But many north suburban landlords suffered sticker shock when they received their tax bills earlier this year: The average commercial and industrial tax bill rose 15.8 percent, while the average residential bill rose 1.1 percent, according to the Cook County Treasurer.
Landlords in the south and west suburbs won’t receive tax bills based on their new assessments until next year, but some could be in for some hefty increases. In Orland Park, Kaegi’s office valued the Orland Square Mall at $227 million, more than double its previous value of $110 million. The assessor’s estimated value of Oak Park Place, a 204-unit apartment building in downtown Oak Park, rose 85 percent, to $36 million.
Representatives of Indianapolis-based Simon Property Group, which owns Orland Square, and Oak Park Place owner John Hancock Real Estate, a unit of Toronto-based Manulife Financial, did not respond to requests for comment.
via Crain’s Chicago Business
November 5, 2020 at 01:36PM