But so many landlords have gotten deep reductions by appealing their assessments that Chicago landlords as a whole will actually bear a greater portion of the city’s total tax burden this year, 52.8%, than they did so in 2021, 52.1%, according to a report by the assessor’s office. Nonresidential property, meanwhile, makes up 47.2% of the city’s property tax base this year, up from 47.9% in 2021. Read the report below.
In the zero-sum world of property taxes, this change raises the odds that more Chicago homeowners will pay higher taxes this year than some officials predicted a few months ago.
The small change – just 0.7 percentage points – suggests a status quo outcome, but it represents a major win for the city’s commercial real estate sector, which was bracing for steep tax hikes after Kaegi reassessed the city last year. It increased Chicago non-residential property assessments by 53.7% in 2021 while increasing residential assessments by just 21.7%.
Kaegi, who took over as an assessor in 2018 and won re-election last week, believes commercial properties in the county have been undervalued for a long time, placing too much of a tax burden on property owners. Many owners complain that he is out to curry favor with voters, arguing that his valuations are scaring off investors and hurting Chicago’s economy.
But homeowners have an ally in the County Board of Review, a three-person panel where homeowners can challenge assessor assessments. The council uses a different valuation methodology for commercial properties that is much more owner-friendly than Kaegi’s.
The review board has reversed Kaegi’s increases on non-residential properties so much that property owners in the city as a whole will take a slightly larger share of the overall property tax tab in Chicago than they do. did in 2021. Kaegi’s assessments reduced the residential share of the overall tax burden to 46.2% this year from 52.1% last year, according to the report.
Nonresidential property owners, meanwhile, would have accounted for 53.8% of the city’s property tax base according to Kaegi’s assessments, up from 47.9% last year.
But the review board shifted the burden back to homeowners, who now bear 52.8% of the city’s tax burden, with nonresidential owners bearing 47.2%. Beneficiaries of the council include Donald Trump’s hotel in Chicago. Kaegi’s office appraised the 339-room riverfront property at $105.3 million, but the review board reduced its value to $73 million.
Asked about his reaction to the actions of the review committee, Kaegi did not hide his frustration.
“Choose your adjective for shocked. Stunned? Horrified? ” he said.
As a second step in the appeal process, the board of review always reduces the property values originally set by the assessor. But it’s “absolutely unprecedented” that the council has gone this far, Kaegi said. The COVID-19 pandemic has depressed the value of many office and retail properties, but others, including data centers and industrial buildings, have actually increased in value over the past few years. did he declare.
“The property tax base is very skewed as a result of the (council) changes,” Kaegi said.
The changes will shift hundreds of millions of property taxes from Chicago homeowners that would have been paid by nonresidential property owners according to Kaegi’s assessments, he said. Individual homeowners will know how much they owe in property taxes when the county posts bills online this week.
William O’Shields, chief deputy commissioner of the Board of Review, said Kaegi’s position on assessed values is good policy, shifting the burden on owners, but bad math. He argues that the council has been using a long-accepted commercial property valuation process, and Kaegi is not.
“It’s just a different methodology,” O’Shields said. “There’s nothing evil in that.”
Kaegi and the review board developed an adversarial relationship, pointing fingers at each other as it became clear property tax bills in the county would be late this year. But Kaegi is heartened by the departure of two of the three board members after losing re-election bids this year.
Kaegi also plans to reset the values of some Chicago commercial properties this year to bring them closer to their original valuations. It’s a break from the past: Typically, the appraiser assesses properties in the county once every three years, but Kaegi decided to make an exception in Chicago in response to Board of Review cuts.