George Cardenas: Property tax burden has shifted to homeowners, but businesses are still in distress
The recent report issued by Treasurer Maria Pappas presents just one part of the property tax assessment system in Cook County — the appeals process. While raising important points about regressivity, the report makes brief mention of the broader context, but for the rising property tax bills, that is where the focus needs to be.
To begin with, the assertion that nearly $2 billion in property taxes has shifted from businesses to homeowners through the appeals process neglects the significant economic distress currently affecting commercial properties.
The COVID-19 pandemic dramatically devastated the valuation of commercial properties nationwide, particularly in downtown Chicago, resulting in unprecedented vacancies, reduced rental income and a general economic downturn for businesses. As anyone can see, downtown Chicago has dramatically changed during the last four years. There are fewer places to eat, many retail shops on Michigan Avenue and the Loop have closed, and workers have not fully returned. All the above absolutely had an impact on market valuation.
As a point of fact, according to the Cook County assessor's office in January 2021: 'The adjustment process (the COVID-19 factor) for the City of Chicago started with an understanding of where current market values stand relative to recent sales. In a sales ratio study of 2018 estimated market values conducted by the International Association of Assessing Officers, many commercial properties were already under assessed when compared to 2018 market sales and therefore further decreases to reflect the effects of COVID-19 were not needed.' Thus, even though commercial properties in Chicago were dramatically impacted by COVID, the assessor's office provided little relief through the COVID factor.
Decisions by the assessor's office, such as the ill-designed COVID-19 factor, necessitated careful consideration of the real value of property by the Board of Review. Upon appeal to the Board of Review in 2021, the resulting decreases from the assessor's office increases were justified to reflect actual market conditions.
Moreover, the focus of discussion needs to be the other major contributors to property tax increases: the significant growth in property tax levies from various taxing bodies, most notably Chicago Public Schools.
According to the Cook County clerk, CPS alone increased its property tax levy from 2014 to 2023 from $2.4 billion to $3.8 billion, respectively. By focusing on appeals, are we missing the primary drivers of property tax increases?
Additionally, the disparities in appeal rates among neighborhoods highlighted by the treasurer's report largely stem from inequities in information access and education regarding the appeals process, rather than just the appeals mechanism itself.
The Board of Review actively promotes homeowner education and conducts numerous outreach efforts, particularly aimed at underserved communities. Last year, the Cook County Board of Review's 1st District hosted 50 town halls, where the board accepted approximately 7,400 appeals. Pappas' office, as the issuer of tax bills, can assist in this essential role in addressing these disparities by proactively notifying homeowners of appeal opportunities in multiple languages already available through Cook County.
The Cook County Board president commissioned a thorough study by Josh Myers Valuation Solutions, titled 'Analysis of Commercial Valuation Practice in the Cook County Property Tax System,' published in December. This comprehensive report recommended improvements including standardizing valuation methodologies, improving data sharing between the assessor and the Board of Review, and enhancing overall assessment accuracy and uniformity. These solutions directly address the core issues within our property tax system, unlike the treasurer's focus solely on appeals outcomes.
Lastly, the report raises valid concerns about the regressive nature of the property tax system but offers no practical or comprehensive solutions. The Cook County Board of Review has consistently advocated for reforms to improve initial assessments and ensure equitable outcomes for all taxpayers. Real and lasting change will require collaboration across all county offices, including the treasurer's office, to enhance transparency, fairness and equity in the assessment and appeals processes.
We invite Pappas and all relevant stakeholders to partner constructively with the Board of Review in developing and implementing comprehensive reforms that address the root causes of property tax regression and promote fairness for all Cook County residents.
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