North Chicago assessments confirm fears of downtown homeowners
It is a familiar model to anyone who has followed the office of the assessor over the past two years. It should make North Chicago owners happy, but it could drive many homeowners crazy.
Through the reassessment process, Kaegi’s office reduces the property tax burden on residential taxpayers and places more on owners of apartments, office buildings and other commercial properties. Residential properties now account for 38% of all estimated value in North Chicago, up from 46% in 2018. Non-residential properties represent 62%, up from 54% three years ago.
When he ran for office in 2018, Kaegi vowed to shake up the office of the assessor, which had been accused of favoring business owners – and their appeal lawyers – under his predecessor, Joe Berrios.
Claiming that Berrios produced inexplicably low valuations on commercial properties, Kaegi tried to reform the office and produce more accurate and generally higher business valuations. It annoys homeowners, who say higher property taxes will scare off investors and businesses.
A few tall buildings in downtown Chicago illustrate how Kaegi is changing the city’s property tax calculations. His office estimates that a 1.2 million square foot office tower at 353 N. Clark St. in River North is worth $ 550.6 million, up 68% from $ 327.1 million in 2020, according to the assessor’s website. Yet Kaegi’s value may still be low: the building sold for much more – $ 715 million – in 2014.
In Streeterville, Kaegi’s office valued Cityfront Place, a 480-unit apartment tower on the Chicago River, at $ 227.9 million, up 137% from 2020. That’s well above of $ 154.5 million, the property’s sale price last year.
The downtown commercial real estate market has generally thrived over the past few years, so it’s perhaps not surprising that valuations have risen since the last go-around, especially for apartments, the strongest sector. .
But Kaegi’s office has tried to adjust the ratings to account for the coronavirus pandemic, which has been particularly difficult for hotels and retail businesses. Vacancies on North Michigan Avenue have skyrocketed and the famous shopping street faces an uncertain outlook as more people shop online.
Water Tower Place, the large vertical mall at the north end of the Magnificent Mile, has lost several tenants in the past year, including Macy’s, its largest. The assessor’s office valued Water Tower at $ 240.1 million this year, down slightly from $ 241.1 million in 2018.
The Waldorf Astoria hotel on the Gold Coast also struggled. Burdened with too much debt, the hotel was sold last November to Morningstar founder Joe Mansueto for around $ 54 million, or about half the property’s sale price in 2015. Kaegi’s office valued the Waldorf Astoria at $ 59.3 million, up from $ 21 million in 2020.
Homeowners often experience sticker shock when they open a reassessment notice, fearing that they will be hit by a steep tax increase as a result. While assessments are a key variable used to calculate property taxes, they are not the only one. A contribution increase does not necessarily translate into a tax increase of the same percentage. In many cases, the tax increase is less. Sometimes a property’s valuation will go up, but its taxes will go down.
The owners also have another county office alongside them: the Cook County Board of Review. If an appeal of their appraisal to the appraiser’s office does not give a satisfactory result, they can appeal to the Board of Review, a second appeals body that has proven to be much more sympathetic to the owners.
In the northern suburb of Cook County, the review committee in 2019 and 2020 reduced the assessed value of all commercial and industrial properties by 32% of the appraiser’s total. Commercial property taxes have risen again, but not as much as many homeowners feared.
Kaegi evaluates properties on a three-year cycle, starting with the northern suburbs in 2019. His office evaluated the western and southern suburbs of Cook County last year, before moving to the city of Chicago in 2021. The Kaegi’s office has released the assessed values for four of the city’s eight townships, but it has yet to tackle south Chicago, which includes the Loop.