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Real Estate Tax-Escrow Short Falls Plague North Side Homeowners

(Second of two articles on the impact of rising real estate tax assessments.)

Most Chicago homeowners still haven’t recovered much of the home-market value they lost after the Great Recession, but that hasn’t stopped property tax bills from climbing. Average home prices in Illinois are still 21% lower today than in 2007, reports the most recent data from the Federal Housing Finance Agency.

Even though many Illinois homes are worth less than they were more than a decade ago, property tax bills statewide have jumped by 9%, after adjusting for inflation, and after the city’s 2018 reassessment, the numbers are much worse in Chicago.

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.

The sharply higher assessed valuations sparked mind-bending real estate tax hikes in most North Side neighborhoods 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.

The recovery of home prices in Illinois is more painful compared with the national recovery. Since 2007, the decline in home values remains 300% worse in Illinois than the national average–with homeowners nationwide seeing property values just 5% lower today on average than they were in 2007.

While city-wide real estate tax hikes average only 11% because bills declined in many South Side and West Side neighborhoods, hefty increases hit the North Side, and even after successful appeals tax bill increases of 50% or higher were commonplace.

“What this means to me is, between the shortfall new tax and the shortfall in real-estate tax escrow, my mortgage payment could increase $500-plus a month,” complained Humboldt Park homeowner Chris Montgomery, in a letter to the editor of Crain’s Chicago Business. “This is just not something I can plan for, and it’s going to be a burden trying to cover it.”

After three years of property tax increases, “culminating with what feels like a coup-de-gras of a 2018 tax bill, this might be just too much to bear,” Montgomery said.

The overlooked real-estate tax escrow issue is like the tip of the ice berg that sank the Titanic.

For example, 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.

In June, after learning of the Berrios’ 93% boost in assessment level on an Old Town 3-flat, the mortgage lender, a major Chicago bank, reviewed the real estate tax escrow and on property and erroneously concluded the estimated tax bill would rise to $33,373 based on an adjusted assessed value.

In March of 2019, the 3-flat owner paid the $12,095 first installment of taxes. Based on the astronomically higher assessment, the bank erroneously estimated that the second installment, due August 1st, would be $21,277. As a result, the bank immediately increased the monthly escrow payment from about $1,500 to nearly $6,400. However, the second installment bill came in at only $15,944 because both the city tax rate and state equalization rate declined.

Before the taxes jumped to $28,033 from $21,991, the monthly tax escrow was $1,465. Suddenly the bank demanded an escrow of $6,386 a month for four months to replenish the depleted escrow account. After that, the bank said it plans to escrow $2,356 a month for 2019 taxes due in 2020.

The lender wrote in a terse email: “It is the bank’s intention to continue collecting the current escrow payment of $6,386 over the next four months (July, August, September and October) amounting to $25,546, prior going through the next escrow analysis at the end of October, so the starting escrow balance in in the black, plus or minus $500.” How tax bills are computed

“The property tax bill is determined by four factors: the assessment, the equalization factor, or ‘multiplier,’ the tax rate and the exemptions,” said Michael Griffin, a Chicago real estate tax appeal attorney. “In 2019, homeowners should appeal their assessment because they are likely to see a new higher assessment next year.”

Homeowners also should review their exemptions because they can reduce their tax bill if they have the proper exemptions, 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 are qualified 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. Predicting a property tax increase 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 2.9109 in 2018, down from 2.9627 in 2017. In 2016, the multiplier was 2.8032.

The main engine that drives up property tax bills is the amount of money spent by local government, such as increased spending for schools and police, firefighter and teacher pensions.

Chicago’s 2018 tax rate decreased slightly to $6.786 from $7.266 per $100 of assessed valuation in 2017. In 2016, the tax rate was $7.169 per $100 of assessed valuation.

“The 2018 tax rate in Chicago was lower, 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 have moved lower if the amount of money that local governments request remains the same as last year.”

Griffin said other problem is that the assessment increases vary by neighborhood and 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.”

Experts say 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 2020, it will be too late to appeal.

Visit newly elected assessor Fritz Kaegi’s website:, or call 312-443-7550 to find comparable properties or start the appeal process. If appealing at the assessor’s office does not lower the assessed value, there are two other appeal options: the Cook County Board of Review (312-603-5542) or, and the Illinois Property Tax Appeals Board (217-785-6076), or Or, call Michael Griffin, an expert tax assessment lawyer, at 312-943-1789.

For more housing news, visit Don DeBat is co-author of “Escaping Condo Jail,” the ultimate survival guide for condominium living. Visit

“The book is Escaping Condo Jail by Sara Benson and Don DeBat. I would say that anybody thinking about buying a condo, or even anybody serving on a condo board, or anybody who has any connection to a condo, this is must reading—all 600 and something pages. Thanks a lot for a great book!”


Steve Sanders, “Your Money Matters” WGN TV, December 22, 2014

By Don DeBat

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