Cook County Assessor Fritz Kaegi is planning to reevaluate every single property in the county in the wake of the coronavirus pandemic.
It’s a momentous endeavor that has never been done before and could have significant ripple effects in years to come, both for local governments that rely heavily on property tax revenue to fund operations and property owners who would have to pick up the tab. But that impact won’t be known until 2021, when property tax bills based on 2020 values are mailed out.
Kaegi says the sweeping reassessments are necessary as the coronavirus wreaks havoc on the economy. Commercial landlords are expected to see a significant reduction in rental income, as stores and restaurants remain closed. Similarly, residential landlords face uncertainty in their ability to collect rent as unemployment numbers reach record highs.
“Our job is to estimate the market value of real estate and the crisis has a significant effect on many kinds of real estate,” Kaegi told WBEZ.
Normally, only a third of Cook County is reassessed in a given year in what’s known as the triennial assessment. That’s when many property owners appeal their assigned value because they are locked into that figure until the cycle repeats in three years.
Kaegi’s office told WBEZ that people who believe their property has lost or will lose value due to the pandemic will be encouraged to file appeals in the coming months. It’s still working on a schedule, but the assessor’s office plans to use those appeals and other historical data to reassess the value of some properties. Those new assessments — which become the basis for property tax bills — will go out to property owners on a rolling basis, and completed by December.
But even those who do not appeal their property values now could see changes to their assessments, Kaegi said.
For the south suburbs, which were already due for reassessment this year, the process will remain the same once his office can resume its reassessment work. Kaegi’s office halted assessments once it became clear all the values would be skewed by the growing pandemic fallout, he said.
The value the office places on properties determines their share of the property tax burden when local governments and taxing bodies determine how much they’ll need to fund schools, public safety and other services. The higher your property is valued, the larger your tax burden. In Cook County, residential property is taxed at 10%, commercial at 25%.
Taxpayers won’t know the full effect of this pandemic reassessment until August 2021, when their second installment 2020 property tax bills are mailed out.
Kaegi says even landlords who have worked out temporary rent reductions or forbearance agreements with tenants could still see their properties credited for losses, an issue that was brought up in conversations with building owners and tenant organizations.
“We know that so many people’s lives have been turned upside down in this crisis,” Kaegi said. “That building owners and tenants are working together, figuring out what accommodations they can make, and we want to make sure that we are being good partners in that process, that we’re reflecting the real circumstances out there that everyone is facing.”
As part of the pandemic appeals process, Kaeigi plans to ask commercial property owners to use a form his office created called the Real Property Income and Expense Form. The form was initially rolled out as part of reform efforts to address Cook County’s opaque and convoluted system of assigning values to commercial property. His office is developing a similar form for residential property owners who rely on tenants for income — called a rent income affidavit form — to be used in this pandemic appeals process.
Despite never having done such a wide-reaching reassessment in one year before, Kaegi’s office said he was “confident” it could be done. Kaegi is a first-term Democrat who campaigned on changing inequities in Cook County’s complicated property tax system. It’s unclear what impact these assessments may have on Kaegi’s reforms to make commercial property owners share a more equitable portion of the overall tax burden.
Laurence Msall, with the budget watchdog Civic Federation, says there’s “great potential” this work “will impact people’s assessment, probably to the advantage, or a reduction in many assessments.” But he adds we won’t know what impact it has until the tax bills come out in August of 2021.
Msall warns that the next property tax bill that will be mailed out this summer won’t include any of the changes Kaegi plans to make.
As for the long-term impact to local governments’ ability to rely on property taxes, Msall says only time will tell. “We don’t know, right,” he added.
One issue that may arise, however, is whether the reduction of assessed values in Cook County could have an impact on local government bodies, which will have less of a tax base to tap for their budgets.
“Well, in fact, if every tax parcel in Cook County is reduced, then yes, they will have less of a tax base,” Msall said, adding the caveat that it’s unclear if all properties will be impacted at the same rate or if new properties coming online will be subject to the same reduction.
“There are a lot of unknowns,” he said.
Posted by WBEZ.org