Long-time senior citizen homeowners in the Old Town and Lincoln Park neighborhoods may be forced out of these swank enclaves by record high real estate tax increases planned by Mayor Rahm Emanuel, who is seeking to raise $543 million in new tax revenue.
One long-time resident, a 71-year-old owner of a brick three-flat, was shocked last week when he received a 40-percent assessment increase from Cook County Assessor Joseph Berrios.
“Your home’s market value increased to $1,356,050 from $968,260 in 2015,” the triennial reassessment notice coldly stated.
Based on the 10-percent level of assessment, Berrios estimated the market value of the vintage 127-year-old three-flat at $109,442, and added $26,163 for land value for a total assessed value of $135,605.
Assessor Berrios’ staff computed the assessment increase based on a sampling of recent sales of a half dozen similar vintage Old Town properties, real estate experts said. Recent home resale prices in the neighborhood ranged from $211 to $226 per square foot.
However, one real estate expert wondered if the sales of these “comparable renovated and highly upgraded properties” really matched up with properties owned by long-term residents, many who purchased modest worker’s cottages in the area in the 1970s when it was a blue-collar neighborhood.
The three-flat owner already has paid real estate tax bills totaling $53,815 for the past three years. If the 40-percent assessment hike translates into a 40-percent tax hike the owner will pay a whopping $23,983 real estate tax bill in 2016.
Skyrocketing assessments in Old Town and Lincoln Park sparked a barrage of phone calls and email complaints to 43rd Ward Ald. Michele Smith’s office asking for relief.
Homeowners are being forced out by “crushing taxes due to spikes in the ‘paper value’ of their property that is exceeding 70-percent in some cases, and looming tax increases,” Ald. Smith said. “As we all know, the ‘paper value’ of a home does not correlate to an ability to pay taxes, especially in the 43rd Ward.”
One 43rd Ward homeowner, who has lived in the same house for 45 years and currently receives the Senior Citizen Exemption, said: “This only amounts to a couple hundred dollars [in savings]. My taxes are huge while my income is fixed. I am caught between not qualifying for a freeze and really hurting with an increase.” (To qualify for the assessor’s Senior Citizen Assessment Freeze Exemption a homeowner must have a household income of $55,000 or less.)
The outcry prompted Smith to advocate the following property-tax rebate for long-term homeowners which would be offered if the new assessed value is more than 30 percent greater than the previous year's assessment:
• Homeowners over age 60 who have lived in their home for more than 18 years would receive a tax rebate.
• Homeowners who earn less than $100,000 in annual income would receive a tax rebate.
“This rebate plan will have the impact of phasing in the reassessed values that signal a jump in property taxes, even without the Mayor’s proposed increased,” Smith said.
Earlier, Mayor Emanuel proposed a freeze in taxes for “bungalow-belt” homeowners with properties valued at under $250,000.
“If we are going to consider exemptions for some Chicago homeowners, then we have to make it fair and include our vulnerable populations everywhere in the city, especially the urban pioneers who have made our communities what they are today,” Smith said.
“These people are close to, or already retired, and living on fixed incomes. They have shouldered their civic responsibility for decades and they want to stay in their homes,” Smith said.
Ald. Smith's rebate plan expands a proposal by 1st Ward Ald. Proco Joe Moreno, who is seeking rebates for property owners who earn less than $100,000 per year.
“We need to find a way to keep our thriving communities stable,” said Smith. “It makes no sense to drive taxpayers out of the city when we are looking for new sources of revenue at this critical time.”
Don DeBat is co-author of “Escaping Condo Jail,” the ultimate survival guide for condominium living. For more information, visit www.escapingcondojail.com.