City Needs $1 Billion, And North Side Property Values Skyrocket
(First of two articles on the impact of rising real estate tax assessments.)
Skyrocketing tax assessments on homes, condominiums and small apartment buildings in 2018 led to dramatic increases in real estate tax bills payable in 2019 for hundreds of thousands of property owners on Chicago’s North Side and Northwest Side.
Out-going Cook County Assessor Joseph Berrios raised the estimated fair market value of some properties from 30% to more than 140% in North Side and Northwest Side neighborhoods. This comes as a parting shot from Berrios after he lost his re-election campaign to challenger Fritz Kaegi, the newly elected assessor.
In 2018, the entire City of Chicago was reassessed. The sharply higher assessed valuations sparked mind-bending real estate tax hikes when bills arrived this month. In Chicago, the 2018 property tax bill increases are due August 1st, when the second installment of the bill must be paid.
“There’s nothing uniform when it comes to real estate tax assessments in Chicago,” said a North Side property owner.
Facing huge tax increases based on what many believe are ununiform assessments, many apartment building owners are planning to strike back with large rent increases to pay the expected sharply higher 2018 tax bills, but the tax hikes may take years to recoup.
Mayor Lori Lightfoot reports the city needs to raise nearly $1 billion in new revenue to pay for unfunded city pension liabilities for teachers, police and firefighters. Experts say the bottomless pension pit is a growing problem elected officials talk about, but never have solved.
An informal survey by The Home Front column revealed the following wide lack of uniformity in assessments for homes, condos and small apartments on Chicago’s North and Northwest sides:
• Former Assessor Berrios hiked the estimated fair market value of a vintage Old Town 3-flat 93% to an astronomical $1,973,610 from $1,021,100. After a mildly successful appeal at the Board of Review, the assessed value was lowered 28% to $141,919 from $197,361. However, based on the final 65% assessment increase, the 2018 tax bill jumped a hefty 27.5% to $28,033 from $21,991 in 2017.
Even though the Board of Appeals granted a reduction to the owner of the Old Town building, Michael Griffin, a Chicago real estate tax appeal attorney, said the property owner likely has a strong case for a further reduction in 2019 by appealing at both the assessor and the Board of Review because many comparable properties in the neighborhood received reassessment increases of 28% to 34%.
• The assessor unilaterally determined the 2018 estimated fair market value on a historic red brick Lincoln Park 6-flat rose a hefty 34% to $1,373,510 from $1,022,100. The assessed value jumped to $137,351 from $102,210.
After a successful appeal at the Board of Review, the assessed value was lowered to $111,443 from $137,351. The property owner was relieved to learn that the 2018 tax bill rose only $59 to $21,335 from $21,276 in 2017.
• A Logan Square graystone 3-flat owner was shocked when former Assessor Berrios raised his property’s fair market value 61% to $683,000 from $424,010. The assessed value jumped to $68,300 from $42,401.
The graystone owner raised the question of “uniformity” because the assessor set the market value of several nearby properties much lower. After appeal to the Board of Review, no reduction was granted. As a result, the 2018 tax bill jumped a whopping 52.5% to $12,812 from $8,401 in 2017.
• Irving Park. Former assessor Berrios said the 2018 estimated market value on a red brick 6-flat in the Old Irving Park neighborhood skyrocketed an incredible 112% to $949,190 from $448,350. As a result, the assessed value of the building jumped to $94,919 from $44,835. After a successful appeal to the Board of Review, the assessed value was lowered 25.8% to $70,420 from $94,919. However, the 2018 tax bill still jumped a hefty 43.3% to $13,888 from $9,688 in 2017.
• The Villa. The 2018 estimated market value on a vintage stucco home in the Villa Historic District near Addison Street and Pulaski Avenue shot up 81% percent to $625,000 from $346,020, according to calculations by former Assessor Berrios. The assessed value of the home rose to $62,500 from $34,602.
After a successful appeal to the Board of Review, the assessed value was lowered 15.2% to $53,009 from $62,500. However, the 2018 tax bill still skyrocketed a whopping 50.6% to $9,285 from $6,164 in 2017.
Not all North Side and Northwest Side homeowners were hit with unreasonable 2018 tax-bill increases.
• North Park. The 2018 estimated market value on a newer frame home in the North Park-Hollywood Park neighborhood on the Northwest Side rose a modest 12.46% to $588,190 from $523,010. The assessed valuation of the home increased to $58,819 from $52,301. Because the elderly homeowner had successfully applied for both the Senior Citizen exemption and the Senior Freeze Exemption, the 2018 tax bill was reduced from $11,656 to $8,755. Paid in 2017, the 2016 tax bill on the property was $9,650.
• North Lincoln Square. The 2018 estimated market value on a 1920s yellow brick 4-flat in the Arcadia Terrace section of the neighborhood increased 40.67% to $506,580 from $360,100. The assessed valuation of the building rose to $50,658 from $36,010. After a successful appeal to the Board of Review, the assessed value was lowered 22.1% to $39,435 from $50,658. The 2018 tax bill rose only $38 to $7,789 from $7,751 in 2017.
• West Ridge. The assessor said the 2018 estimated market value on a 2-bedroom, 1-bath condominium on the Far North Side increased 19.9% to $128,640 from $107,210. The assessed valuation of the condo jumped to $12,864 from $10,721.
After a successful appeal to the Board of Review, the assessed value was lowered 15.6% to $9,042 from $10,721. As a result, the 2018 tax bill declined $472 to $1,107 from $1,581 in 2017.
NEXT WEEK: Property owners feel the pinch of soaring real-estate taxes on escrow requirements.
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.