Chicago Property Taxes Have Nearly Doubled In Past Decade
Tens of thousands of Chicago property owners recently received by mail the first installment of their 2021 real estate tax bills, due March 1st.
The owner of a vintage brick 3-flat in Chicago’s Old Town neighborhood will pay a first-installment bill of $13,932. That represents 55% of the property’s $25,331 total 2020 real estate tax.
What’s worse, the second installment of the owner’s 2021 tax bill, due around August 1st, is expected to be much higher following last year’s reassessment.
Cook County Assessor Fritz Kaegi estimated that the fair market value on the 3-flat rose 38% to $1,570,000 from $1,137,100 in 2020. The assessed value jumped to $157,001 from $113,710.
A study by the Illinois Policy Institute, a nonpartisan research organization, found that Chicago property taxes rose 92.3% between 2010 and 2020.
Two years ago, Mayor Lori Lightfoot oversaw passage of a new city ordinance that promises beleaguered property owners a ticking time bomb—guaranteed annual real estate tax increases of up to 5%.
“The mayor has all but guaranteed an increase in property taxes by some $1 billion over the next four years,” said Paul Vallas, former budget director for the city, and former CEO of Chicago Public Schools.
“Chicago taxpayers already pay the highest property taxes among all but two Midwestern cities, and the highest among large cities,” Vallas noted.
Despite the pandemic, Assessor Kaegi said that the Near North Side—bounded by Fullerton Avenue on the north, Lake Shore Drive on the east, and the Chicago River on the south and west—posted “surprisingly robust” real estate values in 2021.
In 2021, most Near North Side single-family homes ranged in market value from $920,000 to $1.59 million. Condo values ranged from $270,000 to $420,000.
The entire city of Chicago was reassessed in 2021. The assessment level is 10% of market value for residential property.
As a result, many North Side apartment building owners will be passing along hefty rent increases this year to pay the expected sharply higher 2021 tax bills coming this summer.
During the COVID-19 pandemic, a massive stimulus from the federal government led to higher stock prices, growing housing values, and a boost in tax revenues for states and local governments, according to the Illinois Policy Institute.
While Chicago could have used part of the $3.1 billion in windfall federal COVID-19 relief to freeze property taxes, it did not.
“This year, the city’s gross property-tax levy will increase by another 4.9%,” said Orphe Divounguy, chief economist for the Illinois Policy Institute. “This is because the city’s budget includes large increases in debt service and pension payments.”
Pension-fund contributions increased by 24.7% from the prior year, Divounguy said. “That adds up to nearly $1 billion in pension spending increases since Lori Lightfoot became Chicago’s mayor. Pension costs already exceed the city’s total property-tax levy of $1.7 billion this year.”
Over the decade, the city’s public pensions cost has increased 239%, while spending for city services only grew by 18% during that same period, Divounguy noted.
With inflation topping 7% in 2021–the highest rate in 40 years–the city’s property tax levy “is likely to increase even more in 2022, and Chicagoans will face even larger property tax bills,” Divounguy predicted.
“These looming property-tax hikes are the direct result of the absence of responsible budget-making at City Hall, in addition to the lack of regard for long-term financial planning or real budgetary contingencies,” Vallas said.
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.