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A year after Chicago property owners were battered by skyrocketing property tax assessments, early signs are emerging that a similar onslaught is headed to the city’s south and west suburbs.
Cook County Assessor Fritz Kaegi last week sent reassessment notices showing sharply higher valuations for homes in Riverside and Calumet townships, and even steeper hikes for businesses.
Higher assessments do not necessarily translate to higher taxes, but they do paint a picture of which properties will shoulder the heaviest burden of a local government’s property taxes. And three years after Kaegi made a controversial move to shield homeowners and some retailers from assessment hikes, those property owners are in line for the biggest sticker shock when next year’s tax bills go out, data show.
“I think we’re in line to see this pendulum swing,” said Kristi DeLaurentiis, executive director of the South Suburban Mayors and Managers Association. “The valuations might very well be unprecedented.”
Commercial properties in Calumet township, which includes the suburbs of Riverdale, Blue Island and Calumet Park, saw their collective assessments jump by 81%, while the assessor’s valuation of all the township’s residential properties increased by 50%. The township has fewer than 300 commercial properties, including 92 retail buildings.
Hikes were more muted in wealthier west-suburban Riverside, where commercial assessments went up by about half and residential assessments jumped by one-third.
Property owners may appeal to the assessor’s office or the Cook County Board of Review, meaning many of the assessment values will change before tax bills go out. Still, the latest reassessment notices signal a stark shift is in store for the south suburbs.
Kaegi’s office reassesses different parts of Cook County on a three-year cycle. In 2020, the last time his team reexamined west- and south-suburban property values, Kaegi decided to pause reassessments in the spring and restart the process to account for the impacts of COVID-19.
The assessor offered the steepest breaks to retailers like restaurants and bowling alleys that were forced to close amid the pandemic. But his office also offered breaks to single-family homeowners on the prediction of a housing market crash that never materialized.
As a result, many south-suburban homes whose property values were already low had their entire tax obligation wiped away, shifting the burden onto higher-value buildings like office and apartment complexes.
“We had houses … ended up having zero tax bill” after homeowner exemptions kicked in, said Sandra Zoellner, director of economic development for the village of Park Forest. “We had to give them rebates after their first installment [tax payments].”
Zoellner and a group of her colleagues in Park Forest asked Kaegi to correct the under-valued homes last year, but he declined, opting instead to wait until 2023 assessments gave the region a fresh look.
Now, homeowners in Calumet township are staring down significant hikes as the assessor’s office accounts for the booming housing market of 2020-22. The median sale price for the township’s approximately 4,000 homes jumped from $96,000 to $144,000, according to data published by Kaegi’s office.
“The current increases in assessments reflect market changes since 2020, which include significant increases in home sale prices during the pandemic and the rebound of rents in commercial spaces,” Kaegi chief of staff Scott Smith wrote in a statement Tuesday.
But DeLaurentiis fears that the assessor may be behind the times again. The nation’s housing market has slowed significantly since Jan. 1, the date to which assessments are pegged for each year. The median home sale price in Calumet Park fell by nearly half from $165,000 in December to $86,000 in February, according to data from the brokerage Redfin. Homes in Blue Island and Riverdale followed similar trends.
“In more recent times, with inflation and whatnot, the market has softened, and the price points are dropping,” DeLaurentiis said. “That’s not going to be reflected in the [reassessment] values if he’s using last year’s averages.”
Smith wrote in a statement that assessments are “meant to be a snapshot of the market at a specific moment in time,” not “to predict market values at a later point in the tax year.”
Exemptions crank up tax pressure
Zoellner predicted the coming property tax crunch will be exacerbated by the growing use of exemptions and freezes that funnel tax obligations into a narrower and narrower pool of property owners.
In 2017, the Illinois General Assembly voted to expand the Senior Citizens Homestead exemption from $5,000 to $8,000 in Cook County as Chicago property owners were reeling from an unprecedented 2015 tax hike. State lawmakers followed up in 2019 with a new law championed by Kaegi that automatically enrolled seniors in the exemption instead of requiring them to apply anew each year.
As a result of the exemptions, nearly 1,000 Park Forest homeowners have paid no taxes on their homes since 2020, forcing more of the burden onto local business owners, according to Zoellner.
A 7-Eleven convenience store in Park Forest valued around $300,000 paid almost $99,000 in property taxes last year, almost double what it paid in 2020, Cook County tax records show. At the same time, a single-family home around the corner valued above $58,000 paid no taxes.
“With these exemptions, the state is basically saying they value homeowners, seniors and veterans over business owners and renters,” Zoellner said. “Rental properties and homeowner properties have access to the same services — the same streets, the same fire [department].”
The hike in residential assessments also means significant numbers of senior homeowners in the south suburbs who have become accustomed to paying no taxes will be hit with bills again next year — all during the second installment.
Higher bills for homeowners and businesses alike could also spell trouble for municipalities, many of which are already struggling to pay bills in a region with relatively high poverty rates.
Taxing bodies in Riverdale collected less than 63% of the property taxes they charged last year, according to the Cook County Treasurer’s Office. Collection rates were even lower in nearby Robbins, Phoenix and Harvey.
“All of this is worrisome,” DeLaurentiis said. “We’re worrying this will escalate to more challenges for homeowners … and it’s a very real concern that we may see additional businesses leaving.”
Smith said commercial landlords with high vacancy or low rent collection rates should consider appealing their reassessments online.
Reporting on equity issues by the BGA is supported by Joel M. Friedman, president of the Alvin H. Baum Family Fund.