Cook County Assessor Fritz Kaegi needs to deliver on promises this year. Owners of more expensive properties in the city, whether the business or residential variety, worry they’ll foot the bill for those promises.
Business lobbyists have been sounding the alarm about a spike in commercial and industrial assessments. Jack Lavin, the head of the Chicagoland Chamber of Commerce, has said property tax hikes and other factors could shock the region into a recession.
Developers have warned that investors are bypassing Chicago because of property-tax anxiety, although you wouldn’t know it from the volume of projects and zoning changes sought for hot districts such as Fulton Market or the Near North Side.
Tensions are ratcheting up because Kaegi, elected in 2018 as a reformer, has his first crack this year at reassessing property values within the city of Chicago. It’s his biggest test, and he must face it while fixing errors in the program granting assessment freezes for certain seniors, an issue the Sun-Times has revealed.
Cook County parcels are reassessed on a three-year cycle, and this year is the city’s turn, with changes showing up on next year’s bills. Kaegi, in an interview, said the labyrinthine system here benefits the big players despite his progress.
“The greatest shortfall, the greatest area we are addressing is this Chicago commercial undervaluation, especially on the bigger properties relative to the smaller ones,” Kaegi said.
A study of 2018 assessments by the International Association of Assessing Officers found that under Kaegi’s predecessor, Joe Berrios, commercial properties in the city were undervalued by nearly 50%. Across the county, the report found the undervaluation at almost 40%.
Homeowners and landlords would have made up the difference. But the residential side isn’t off the hook in Kaegi’s world. He said data show owners of higher-priced homes often get an undeserved break.
Also, his office’s work this year is picking up the higher housing prices in many neighborhoods stemming from a pandemic buying binge. Property owners in Rogers Park Township were the first in Chicago to get their assessment notices, and some hikes are steep.
Kaegi’s staff is working through the city’s seven other townships, divisions with no importance other than at tax time. Properties in West Township, which runs from the West Loop to the city limits, will receive notices soon, Kaegi said. It will be an early indicator for other parts of downtown, where notices will hit later this year.
The office, he said, is on schedule with the property reviews but is late sending notices because it is porting data to a new system and wants to get everything right. The changes come in the name of transparency and service. Kaegi said he’s aiming for valuations that are fair and, importantly for investors, predictable.
“We have changed a culture that was really sick,” Kaegi said, citing prior assessments set with little justification. “It was all a black box,” he said.
Since taking office, he has instituted an ethics code for employees, published visitor logs and tried other ways to rein in clout.
“We’ve anonymized commercial [assessment] appeals, so that our analysts do not see the identity of the lawyer or the building owner. They’re just looking at the data when they are considering the appeals,” he said.
“We show all the valuation drivers that we use not only because we think transparency is good, but it makes us accountable.”
Kaegi said he’s making changes people want. “The public does not understand our assessment system. They understand what was wrong with it. The black box is dead.”
But it can seem like Kaegi is wrestling a dragon called The System. Beyond his office, there are three other avenues to appeal an assessment. The most common one is the three-member Cook County Board of Review, heavily used by commercial landowners.
Many hire politically connected lawyers, such as Ald. Edward Burke (14th), who saved former President Donald Trump $14 million on taxes for his Chicago tower, the Sun-Times found. Former Illinois House Speaker Michael Madigan also is big in the field.
His firm, Madigan & Getzendanner, had a hand in a property Kaegi cited as an example of what he’s up against. A 21-story apartment building in Oak Park, Vantage Oak Park, sold for $102 million to a partnership involving Goldman Sachs in 2018. Kaegi’s office valued it at $90 million in 2020. The Board of Review sliced that to $54 million.
Jeffrey Holland, the attorney who represented the property, said the board’s valuation accounted for comparable properties nearby and the building’s expected income. The case sticks out in his mind, Holland said, because “the assessor’s valuation was way off base.”
Kaegi said he plans to run for re-election next year to continue attacking a system tilted toward special interests.
“Some of them were doing pretty well by hiring an insider, getting an assessment which they know very well was completely having nothing to do with the market value of their property,” he said. “There are a lot of people who want to keep that in place.”