Bill needed to fix 'backward' property assessment process
If you are a Cook County taxpayer, you know the feeling: Every three years you receive a notice in the mail and hope your assessment has not increased dramatically from the previous assessment. If it has gone up, you know the drill: hire an attorney and an appraiser who will file some papers and, in most cases, obtain a reduction. You then pay the attorney and the appraiser for their services in securing the assessment you probably deserved to begin with.
This system has been the norm for decades and has been accurately described as costly, inefficient, unfair, ripe for abuse, and opaque. Last fall voters decided it was time for a change in the system and elected Fritz Kaegi as the new Cook County assessor. He is now undertaking the Herculean task of fixing a broken assessment process.
Creating accurate assessments is most challenging with income-producing commercial and industrial properties, where the actual income and expenses generated by the property is the essential information needed to provide a fair and accurate assessment. Under the current system, property owners provide this information only after the assessment has been made, when an appeal is filed. This is backward; it leads to unnecessary appeals and hidden costs to taxpayers, both of which could be avoided.
To address this problem, Assessor Kaegi has proposed legislation that all Cook County taxpayers should support: Illinois House Bill 2217.
HB 2217 would require the owners of larger income-producing properties to file annual income and expense data on their properties with the assessor. The data would be private, digitally secure and not subject to disclosure under public records laws. The data would be used to generate an accurate assessment for income-producing properties from the start, rather than through a costly and time-consuming appeals process. The data requested is the type property owners already submit to the IRS, and, for publicly traded property owners, to the SEC.
Starting with good data will greatly increase the likelihood of finishing with good assessments for both taxpayers and taxing districts. Why do accurate assessments matter to taxing districts? One word: refunds. When taxpayers appeal their assessments to the Circuit Court or the Illinois Property Tax Appeal Board, the result is often a refund paid from the budgets of local taxing districts. So dollars allocated for the classroom, recreation programs, or police and fire services wind up getting diverted to post-appeal payouts.
Here's an example: In south suburban Cook County, the prior assessor assessed a 300,000-square foot shopping center at a market value of $15.9 million for 2017. In 2017, the property sold for $1.9 million. The property owner appealed to the PTAB seeking a revised assessment consistent with the sales price. If successful on appeal, the property owner will secure a refund of more than $2 million. The elementary school district affected by the appeal will then owe a refund of over $700,000, the magnitude of which will be devastating to a school district already hurting by declining property values.
Examples like this are not unusual. Starting with accurate income and expense data can eliminate these situations and the cuts in government services they force on local school boards, park districts, and municipalities.
Assessor Kaegi deserves to have the tools provided by this legislative change that will lead to more accurate assessments, greater transparency and lower costs for all Cook County taxpayers. The Cook County assessment process has been broken for a long time. HB 2217 is a positive step forward to fix it.
Ares Dalianis is co-Chair of the Education Law group at Franczek P.C. where he represents Illinois school districts.