More recently, Kaegi went to Springfield with a bill that he hoped would give his office the ability to collect operating income and expense data from commercial and industrial properties, describing it as the "single most important step we can take to reform our property tax system" by giving his team more current data than relying on past appeals.
Landlords, who have complained that Kaegi's new assessments are way off, complained again about this measure, opposing it on privacy grounds. Kaegi's proposal—Senate Bill 1379—had pros and cons that merited debate, but the General Assembly essentially ignored it before adjourning and declaring that it would not convene again until November, after the election.
That left the assessor to do what he's doing now, in a moment of crisis, as the pandemic roils the economy and upends the real estate market.
As Crain's senior reporter Alby Gallun reported on May 28, the assessor's office is lowering assessed values of single-family homes and condominiums in south and west suburban Cook County by 8 to 12.2 percent, citing the negative impact of the pandemic. Kaegi also is reducing values on apartments, office buildings, shopping centers and other commercial properties in the south and west suburbs, part of a broader plan to ease the burden of the health and economic crisis on all property owners.
"Record-breaking unemployment, widespread loss of rental income, and significant downturns in commercial sectors all demonstrate a clear need for our office to include COVID-19 market effects in our assessments," Kaegi said in a statement to Crain's.
Kaegi's office is forecasting a major drop in home values due to rising unemployment. The assessor calculated an expected unemployment rate for each of Cook County's 1,319 census tracts and used that to estimate the change in residential property values. Depending on a property's location, the office will apply an 8 to 12.2 percent "COVID-19 Adjustment" to single-family homes and condos in the south and west suburbs.
The assessor clearly feels he needs to at least appear to be doing something to ameliorate the pain that COVID has brought to all taxpayers, particularly those in the southern end of the county, whose properties haven't been reassessed yet. But basing his estimate of home values on one variable—unemployment—is too simplistic to encompass a situation with all sorts of other contingencies. Kaegi appears to be taking his cues from what happened to real estate values during the global financial crisis earlier this century, ignoring the fact that the housing bubble and crash were a big driver of that catastrophe. We don't have an inflated housing market now.
The idea of providing tax relief to hard-hit areas of the county during the COVID crisis is a well-meaning concept, but Kaegi has planted some land mines for himself with this plan. He's already earned the enmity of commercial landlords by attempting to de-Berrios assessments. But what he brought to the office was a commitment to building a more consistent analytical, data-driven process. The Band-Aid he's created through this COVID relief plan seems so arbitrary that Kaegi risks losing the one political advantage he's had until now: his reformer bona fides.
What the county and the state really need, of course, is comprehensive tax reform, something that's not in Kaegi's hands to fix but in the Legislature's. And that brings us to the real point: It's easy to get caught up in arguing about whose property tax bill is higher than whose, and why, and who's to blame for that, and more. But take a step back and recognize the underlying problem: We rely too heavily on property taxes here. Illinois has the second-highest property taxes in the country—more than double the national average. We need to invest more in the assessor's office so that his team can assess properties annually rather than every three years. We need those assessments to be based on available market data that accurately reflects the value of property, not the owners' ability to pay. We need to clear out the clutter left behind because the General Assembly continues to refuse to provide a sustainable way to fund schools. And we need to fix these things because the property tax burden is likely to be a drag on our state's recovery when the COVID crisis is over.
These are all huge problems—and none of them were addressed during the last legislative session in Springfield. Our General Assembly tends to decide not to decide when it comes to matters like this and hope for a good outcome. It's unconscionable that, in a time of unprecedented crisis, our elected leaders in Springfield are taking their hands off the steering wheel and leaving it to others, like Kaegi, to come up with ad hoc solutions on their own.
SOURCE: Crain's Editorial Board
VIA: CRAIN'S CHICAGO BUSINESS