Putting the blame where it squarely belongs when commercial property taxes jump

For decades in Cook County, the size of your property tax bill was dictated way too much by whether you were rich, had the right friends or hired a politically connected lawyer.

Commercial landlords caught a break, as did people who owned North Shore mansions. Middle-class and lower income homeowners got stiffed.

Then, in a historic moment for local political reform, the voters of Cook County in 2018 gave the boot to a county assessor, Joe Berrios, who was notorious for playing the favor game. They replaced him with a straight-shooter, Fritz Kaegi, who vowed to assess all property values fairly and squarely, following the best national practices.

Now, as the first property tax bills based on Kaegi’s reassessments begin to show up mailboxes in north and northwest Cook County, commercial landlords are howling, and anybody can see why. The average tax bill for commercial and industrial properties there has risen 15.8% this year over last, according to Crain’s Chicago Business. The average tax bill for residential properties has risen just 1.1%.

We understand what a hit this is for commercial landlords, many of whom already were reeling because of lost business due to the coronavirus pandemic. They apparently blame Kaegi, by and large, with one landlord group even running a public relations campaign against him.

But the target of their ire is misplaced.

Who’s really to blame

The true irresponsible parties here are Berrios, Illinois House Speaker Michael J. Madigan — who runs a tax appeals law firm — and a small club of other tax lawyers, including Chicago Ald. Ed Burke (14th). For years, they quietly worked hand in hand to undervalue commercial properties at the expense of residential properties. That’s where the money was. They raked in legal fees and campaign donations.

Once the assessor’s office finally was run on the up-and-up, it was inevitable there would be a painful day of reckoning. From the day Kaegi was elected, everybody knew a big hike in commercial property assessments was coming, and higher tax bills would follow.

Kaegi’s office actually hiked the total assessed value of commercial and industry properties in north and northwest Cook County by 77%, Crain’s reports, and he hiked the total assessed value of residential properties by 14%. But the Cook County Board of Review tempered those increases to just 25% for commercial and industrial properties and 11% for residential properties.

Zero-sum game

It’s important to stress that if commercial property tax bills in northern Cook County had not been increased by as much this year, residential property taxes would have been increased by more. Property taxes are a zero-sum game; a dollar not paid by one taxpayer must be paid by another.

Having reassessed property values in the northern third of Cook County last year, Kaegi’s office is reassessing values in the west and south suburbs this year. Next year, his office will turn its attention to the city of Chicago.

As Kaegi carries on, it will be important to watch not only whether commercial landlords are required to pick up a greater share of the total tax burden, but also whether the wealthiest homeowners are required to do so — because that, too, has been an area of great inequities.

A 2018 a study by the Civic Consulting Alliance found Cook County’s property tax system was so skewed that the mansion crowd got a better deal than the bungalow crowd. The average owner of a $600,000 home in Chicago, to cite a less extreme example, paid an effective tax rate that was 24 percent lower than the owner of a $300,000 house.

And a 2017 Chicago Tribune investigation showed that, as a rule of thumb, the poorer a community in Cook County is, the higher the property tax rate.

COVID-19 complications

What nobody could have predicted when Kaegi began his reform of Cook County’s property assessment process was that a massive disease pandemic would hit, throwing the economy into a deep recession. Now, in response to that, Kaegi’s office has been reminding property owners that they can submit appeals to their assessments.

That is only right and fair.

It’s also only right and fair that Kaegi’s overall reform effort be supported, putting an end to favors for those who need a favor least.

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