Assessment breaks coming to Northwest Cook homeowners

Cook County announced a plan Monday aimed at bringing residential assessments in line with the current real estate market, but the action was not quick to attract the attention of collar counties, who contend their assessment systems already do this.

As property values plummet and the number of foreclosures explodes, Cook County Assessor James Houlihan said he would cut homeowners' assessments between 5 percent and 15 percent this year in advance of scheduled reassessments that wouldn't otherwise have been undertaken until at least next year. The degree to which the reductions will actually translate into reduced tax bills -- if at all -- will vary from township to township and depend on various factors, including the proportion of a township's commercial real estate base, its home sale prices and the number of foreclosures it has seen.

Houlihan's proposal did not apply to businesses.

"The housing market is facing an extraordinary time," Houlihan said at a Chicago news conference Monday. "We've seen a rapid erosion in home prices, and sales markets in some areas that are barely a flicker. We are also seeing foreclosures at historic levels."

The Northwest suburbs were last assessed in 2006, meaning homeowners have been stuck with high assessments pegged to the height of the real estate bubble. The county isn't scheduled to reassess the Northwest suburbs until next year, but Houlihan's plan will provide quicker discounts on next year's bills.

Homeowners should receive the new assessments in the mail by year's end. The plan will not affect this year's tax bills.

Reducing a property's assessed value doesn't directly mean the tax bill will go down, because local taxing bodies, like school districts, determine how much money they need to gain from bills across their coverage area and fix a tax rate to produce that amount.

Since Houlihan's plan does not affect commercial property, the reduction for homes effectively shifts more of the tax burden to strip malls, office buildings and industrial parks. This shift could lead to a break for homeowners and potentially an increase for commercial and industrial properties.

Houlihan said he is not worried about making businesses pay more, contending they already pay less overall compared to homeowners because of their rate of successful appeals, a contention heavily disputed by business groups.

"We are trying to make fair the entire process," Houlihan argued Monday.

Officials in neighboring counties had little interest in commenting specifically on Cook's plan, but noted that in most cases, their reassessment systems already take into account falling home values. Cook's system, they note, is unique among Illinois counties in that it reassesses all residential property in three-year cycles, so that a value established at a particular assessment remains in place until the property is reassessed years later.

That, indeed, was the reason Houlihan gave for declaring the reductions throughout Cook County. Residences in the Northwest suburbs, for example, were last assessed in 2006 at the height of the real estate price explosion, and those homeowners would not otherwise see a reduction in valuation until at least next year.

By contrast, DuPage, Kane and Lake counties operate on a system that assesses property each year, based on sales data from the three previous years. Therefore, they insist, their valuations already reflect declining property values and will continue to do so in each successive year.

"For this year's assessments as of Jan. 1, 2009, we will be using sales data from 2006-2008 (for notices going out later this year)," explained Marty Paulson, chief county assessment officer for Lake County, in an email to the Daily Herald,. "Using that time frame, the falling sales prices in 2008 are included in our processes for 2009, and they will temper assessments this year and beyond ... The 2008 numbers are just a part of the data used."

Within Cook County, assessors in Wheeling and Elk Grove townships both said Monday that Houlihan's move could lead to some form of tax break for homeowners, but only if businesses are taxed more.

"We still have the same total tax liability. It is just how it is going to be distributed that may change," said Connie Carosielli, the assessor in Elk Grove Township, which has one of the largest industrial parks in the nation. "If this causes a shift onto commercial and industrial, perhaps residents would see a reduction."

Carosielli said she is going to encourage both homeowners and business owners to appeal their assessments if they suspect errors.

Wheeling Township Assessor Dan Patlak said he is "concerned" about rising business property tax bills, but ultimately remains uncertain what the impact will be on homeowners.

"It is yet to be seen," he said.

That is because numerous factors play a role in determining property tax bills.

For example, even Houlihan's reduced assessments have not been calculated and likely won't come out until close to the end of the year. Plus, local governments and school districts have not yet figured out how much they will tax next year.