North suburban retailers, office owners and apartment landlords were apoplectic in 2019 when Cook County Assessor Fritz Kaegi jacked up tax assessments on commercial properties as one of his first acts after taking office. Although the effect was blunted through thousands of appeals to the county’s Board of Review, many homeowners breathed sighs of relief as their commercial neighbors caught the worst of the following year’s tax hikes.
Four years later, taxpayers can expect the opposite impact.
Residential valuations in five north suburban townships are 15% higher for the 2022 tax year than they were in 2019, the last time north Cook County was reassessed, new data from the county Board of Review show. At the same time, combined commercial and industrial valuations edged downward by 1% compared to their last turn under the microscope.
Assessments are not a direct stand-in for property tax bills, and high-level changes in valuations can obscure a wide variation in results for individual properties. But the numbers from Schaumburg, Hanover, Barrington, New Trier and Norwood Park townships — the first newly reassessed townships whose appeal results have been finalized by the Board of Review — send a clear signal that homeowners are in for higher taxes while many commercial landlords are set to take less of a hit.
Because of the county’s delayed tax cycle, the impact of the new assessments from the 2022 tax year will show up on this year’s property tax bills. Second-installment bills due later this year will reflect the impact of the new assessments.
The latest appeal results are a trial run for the newly constituted Board of Review after two of its three commissioners were ousted in last year’s elections. Homeowners and landlords who feel they’ve been shortchanged by the assessor can appeal to the Board of Review to argue their property’s taxable value should be lower. If they are still not satisfied, they can take their grievance to the state’s Property Tax Appeal Board or even sue in court.
Many real estate and business leaders who were at odds with Kaegi over his commercial assessment hikes feared that the election of Board of Review Commissioner Samantha Steele (D-2), a former Kaegi deputy, would tip the appeals body toward his vision and erode the Board of Review’s role as a lifeline for landlords.
Indeed, the latest round of data shows petitioners to the Board of Review found significantly less relief than they did three years ago, when the north Cook County suburbs were last reassessed.
Almost the same number of property owners from the five north suburban townships appealed to the board this cycle as did during the 2019 tax year. But this time, only about one-third of homeowners and 61% of non-residential property owners who appealed were granted reductions, down respectively from 48% and 73% last time.
But the Board of Review’s apparent stinginess may be explained by another important wrinkle: Kaegi valued overall commercial properties lower than he did in 2019, giving the Board of Review a lower baseline to start from.
Kaegi, for instance, assessed the Woodfield Mall Macy’s in Schaumburg at about $4.1 million last year, down from $7.1 million in 2019. His office pegged the assessed value of a Red Lobster in Norridge at $336,000 in 2022, just over half the value he gave it during the previous cycle. And a law office on Devon Avenue in Park Ridge was assessed under $50,000 last year, three years after Kaegi’s team assessed it at about $110,000.
“Three years ago, the assessor came out aggressively in assessing commercial properties quite high — some people were seeing their assessments double or triple,” said Michael Elliott, a Chicago-based property tax attorney. “Increases now remain high for many people, but they don’t appear to be as extraordinarily off target as it was then … Maybe they figured, ‘We hit them hard last time, we can’t do it again.’”
Kaegi says his softer touch with commercial landlords in 2022 was hardly a sign of his office’s inaccuracy in 2019. In fact, he argues it shows the opposite.
“In 2019, we were correcting for significant underassessment of non-res[idential] properties in the previous administration,” Kaegi’s chief of staff, Scott Smith, said in a statement Tuesday. “Because we assessed more accurately in the initial reassessment, those properties were more in line with the market than previous years.”
Smith pointed to an independent market analysis showing evidence that Kaegi’s 2019 assessments were closely in line with the real estate market at the time.
No matter the reason for Kaegi’s and the Board of Review’s calculations coming closer in line, Steele lauded the outcome as a positive sign. She noted that fewer commercial property owners from the north Cook suburbs filed appeals in the last year than did in 2019.
“While the data is too preliminary to draw conclusions, we highlight the fact that the percentage of granted appeals resulting in a reduction is contingent on the precision of the initial assessments conducted by the assessor’s office,” Steele wrote in a statement Tuesday.
Landlords’ gain is homeowners’ loss
Because assessments determine the zero-sum distribution of property taxes, every break for a commercial property owner can translate to a little more heartburn for everyone else — including homeowners.
Kaegi has repeatedly expressed frustration with the Board of Review for undoing many of his commercial assessment hikes, sliding much of the county’s property tax burden back onto single-family homeowners and small apartment landlords.
The board took the same approach in 2022. Whereas Kaegi’s calculations would see homeowners in the five completed north-suburban townships paying about 71% of their overall property tax burden, the Board of Review left residential homeowners there on the hook for nearly 75%.
Compounded with Kaegi’s softer approach with landlords last year, homeowners are in for a harder hit on this year’s taxes, especially in some of the county’s toniest areas. New Trier Township, which includes Glencoe and Winnetka, saw its combined post-Board of Review residential assessments jump by nearly 18%, while its non-residential assessments barely budged. Hanover Township, which includes Streamwood and parts of Bartlett and Elgin, saw an even bigger spike in residential values while combined non-residential assessments ticked down.
North suburban homeowners could be in for an even bigger shock as this year’s bills correct for Kaegi’s “COVID adjustment,” the 10% assessment haircut he gave to residential properties countywide on the assumption that the pandemic would tank the housing market. His 2022 assessments account for the opposite effect, tracing rising trends in home sale prices since 2020.
Early data from Kaegi’s 2023 reassessment of Cook County’s west and south suburbs indicate that many homeowners there are in for hefty tax hikes when their bills come due next year.