Already battered and financially bleeding from several years of being hit with higher real estate taxes and new municipal fees, Chicago’s beleaguered property owners are wondering what tax increase are on the horizon for 2019.
While the City Council recently approved a 2019 budget that added no new taxes or fees, Chicagoans will still have to dig deeper in 2019 as three previously approved tax and fee hikes continue to effect or increase their tax bills.
Chicago property owners will also have to foot the bill for a $63 million increase in the city’s property tax, the fourth and final installment of the largest property tax hike in Chicago’s history—$589 million phased in over four years.
Chicago aldermen approved the first hike in 2016 to pay for pensions for the city’s police officers and firefighters. The city property tax hike means the owner of a $250,000 home will continue to pay $97 more, according to city data.
The Chicago Public Schools also approved a property tax hike for 2019 bills in an effort to bring in an additional $75 million in property tax revenues and a $12 million in personal property replacement taxes.
The recent reassessment of North Township—which includes the wealthy Gold Coast and the upscale neighborhoods of Old Town and Lincoln Park—has left thousands of long-time property owners flabbergasted.
Former Cook County Assessor Joseph Berrios determined that the market value for homes, townhomes and apartment buildings with six units or less in these prime neighborhoods surged to $1.3 million from $1.1 million—an appreciation of more than 18% in only three years. Berrios declared that the median assessed value of one to six-unit properties increased to $129,082—a whopping gain of 23.32%.
In 2018, the entire City of Chicago was reassessed. For many of the properties the assessments have increases ranging from a manageable 12% to an excessive 112%, according to a spot survey by The Home Front column.
Some 65,000 homes, townhomes and small apartment buildings were reassessed in North Township, along with 5,000 condominiums. The assessment level is 10% of market value for residential property.
Water tax hike coming
The third installment of the 30% increase in the city’s water and sewer taxes approved by the City Council will hit homeowners’ bills starting this month. The cost for Chicago water will rise from $1.28 per 1,000 gallons used to $2.01 per 1,000 gallons used, city officials said.
That means the median household with a water meter will pay $39.05 more in 2019. Most homeowners who do not have a meter will see their bills rise $79.94, officials said. When the tax is fully implemented by 2022, the owner of the average home will pay $228 more a year in water and sewer taxes than in 2016.
The additional revenue is earmarked for the city’s Municipal Employees’ Annuity and Benefit Fund, which includes most city employees who are not firefighters or police officers.
Despite the former assessor’s so-called “improved” assessment model, which is designed to create value uniformity among similar properties, there obviously are glitches in the state-of-the-art computerized system.
For example, the former assessor hiked the estimated fair market value of a vintage Old Town 3-flat a whopping 93% to an astronomical $1,973,610 from $1,021,100. The 2017 real estate tax bill on the building was $21,981. In August of 2019, the bill could double to $40,000.
Michael Griffin, a Chicago real estate tax appeal attorney, said the Old Town property owner likely has a strong case for a hefty reduction of the new assessment of the building if they appealed. Similar properties in the neighborhood received reassessment increases of only 28% to 34% and could be good comparables.
Old Town and Lincoln Park aren’t the only neighborhoods being whacked with sharply higher reassessments.
A Logan Square graystone 3-flat owner was surprised when the assessor said his property’s fair market value rose 72.8% to $732,630 from $424,010. The building is within walking distance to the CTA Blue Line. The assessed value jumped to $73,263 from $42,401.
The assessor’s lofty market-value increases translate into sharply higher assessed values. And, that could spark some mind-bending real estate tax hikes when bills arrive in 2019, analysts say.
In Chicago, the 2018 expected property tax bill increases will come due in August of 2019, when the second installment of the bill arrives. Many North Side apartment building owners are planning hefty rent increases next year to pay the expected sharply higher 2018 tax bills, experts say.
Mayor Rahm Emanuel says the city needs to raise hundreds of millions in new revenue to pay for a $28 billion pension shortfall for teachers, police and firefighters. However, crystal-ball gazing into the outlook for the expected 2018 property tax hike, payable in 2019 is cloudy, experts say.
“The property tax bill is determined by four factors: the assessment, the equalization factor, or ‘multiplier,’ the tax rate and the exemptions,” said Griffin. “In 2018, a triennial tax-assessment year in Chicago, homeowners should have appealed their assessment because they are likely to see a new higher assessment.”
Homeowners also should review their exemptions because they can reduce their tax bill if they have the proper exemptions applied to their tax bill, Griffin noted. The three main exemptions are the Homeowner’s, Senior Citizen, and Senior Freeze.
The Homeowner’s exemption recently was increased to $10,000 from $7,000, and the Senior Exemption was hiked to $8,000 from $5,000. Those amounts are deducted from equalized assessed value of a home to which tax rates are applied to determine individual tax bills.
Also, more seniors can qualify for the Senior Freeze because the Illinois Legislature increased the maximum annual income to receive the freeze to less than $65,000 from less than $55,000.
“Every homeowner should review their last tax bill to see if they received the proper exemptions and contact the assessor if the exemptions are wrong,” Griffin advised.
Real estate taxes for 2018 are expected to rise when paid in 2019. However, predicting a hefty property tax increase next year really centers on two wild cards—the tax rate and the state equalization factor, which can’t be challenged by taxpayers.
The equalization factor, or “multiplier,” is established each year for Cook County to bring property tax assessments in line with other parts of Illinois. The value is determined by the Illinois Department of Revenue. The multiplier was pegged at 2.9627 in 2017, up from 2.8032 in 2016.
The main engine that drives up property tax bills is the amount of money spent by local government. For example, homeowners who read their 2017 tax bills will see the continued increased spending for schools and police, firefighter and teacher pensions.
Chicago’s 2017 tax rate rose slightly to $7.266 per $100 of assessed valuation up from $7.169 per $100 of assessed valuation in 2016.
“The 2017 tax rate in Chicago was higher, and so was the state equalization factor,” noted Griffin. “With the sharply higher 2018 assessments in the city, the multiplier and the tax rate should go down if the amount of money that local governments request remains the same as last year.”
Griffin said another problem is that the assessment increases vary from small to large for Chicago homeowners, “so everyone should appeal their assessment to reduce the assessment increase to as small a level as possible.”
Property owners who think they are over assessed should appeal now before they receive next year’s tax bill. If they wait until the tax bill arrives in 2019, it will be too late to appeal the 2018 dramatic assessment increase.
Visit the assessor’s website: www.cookcountyassessor.com, or call 312-443-7550 to find comparable properties or start the appeal process.
Deadlines for filing at the assessor’s office already have passed, however property owners still can file an appeal with the Cook County Board of Review (312-603-5542) or www.cookcountyboardofreview.com and the Illinois Property Tax Appeals Board (217-785-6076), or www.ptab.illinois.gov. Or, call Michael Griffin, an expert tax assessment lawyer, at 312-943-1789.
For more housing news, visit www.dondebat.biz. Don DeBat is co-author of “Escaping Condo Jail,” the ultimate survival guide for condominium living. Visit www.escapingcondojail.com.