20-Jan-19 – While the Chicago City Council recently approved a 2019 budget that added no new taxes or fees, Chicagoans will still have to dig deeper this year as three previously approved tax and fee hikes continue to effect or increase their tax bills.

Chicago property owners will also have to foot the bill for a $63 million property tax increase, the fourth and final installment of the largest property tax hike in the city’s history – $589 million phased-in over four years.

Aldermen approved the first hike in 2016 to pay for pensions for the city’s police and fire personnel. The city property tax hike means the owner of a $250,000 home will continue to pay $97 more, according to city data.

Chicago Public Schools also approved a property tax hike for 2019 to bring in an additional $75 million in property tax revenue and $12 million in personal property replacement taxes.

The recent reassessment of North Township, which includes the wealthy Gold Coast and upscale neighborhoods of Old Town and Lincoln Park, has left thousands of longtime property owners flabbergasted.

Former Cook County Assessor Joseph Berrios determined that the market value for homes, townhomes, and apartment buildings with six units or less in these prime neighborhoods surged to $1.3 million from $1.1 million, an appreciation of more than 18 percent in only three years. Berrios declared that the median assessed value of one-to-six-unit properties increased to $129,082 – a whopping gain of 23.32 percent.

In 2018, the entire City of Chicago was reassessed. For many of the properties the assessments have increases ranging from a manageable 12 percent to an excessive 112 percent, according to a spot survey by The Home Front.

Some 65,000 homes, townhomes, and small apartment buildings were reassessed in North Township, along with 5,000 condominiums. The assessment level is ten percent of market value for residential property.

Now arriving in Chicago, water and sewer tax increases

The third installment of the 30 percent increase in the city’s water and sewer taxes approved by the City Council will hit homeowners’ bills starting this month. The cost for Chicago water will rise from $1.28 per 1,000 gallons used to $2.01 per 1,000 gallons used, city officials said.

That means the median household with a water meter will pay $39.05 more in 2019. Most homeowners who do not have a meter will see their bills rise $79.94, officials said. When the tax is fully implemented by 2022, the owner of the average home will pay $228 more a year in water and sewer taxes than in 2016.

The additional revenue is earmarked for the city’s Municipal Employees’ Annuity and Benefit Fund, which includes most city employees who are not police officers or firefighters.

New assessment model has glitches

Despite the former assessor’s so-called “improved” assessment model, which is designed to create value uniformity among similar properties, there obviously are glitches in the state-of-the-art computerized system.

For example, Berrios hiked the estimated fair market value of a vintage Old Town three-flat a whopping 93 percent to an astronomical $1,973,610 from $1,021,100. The 2017 real estate tax bill on the building was $21,981. In August 2019, the bill could double to $40,000.

Michael Griffin, a Chicago real estate tax appeal attorney, said the Old Town property owner likely has a strong case for a hefty reduction of the new assessment of the building if appealed. Similar properties in the neighborhood received reassessment increases of only 28 to 34 percent and could be good comparables.

Old Town and Lincoln Park are not the only neighborhoods being whacked with sharply higher reassessments. A Logan Square greystone three-flat owner was surprised when the assessor said his property’s fair market value rose 72.8 percent to $732,630 from $424,010. The building is within walking distance of the CTA Blue Line. The assessed value jumped to $73,263 from $42,401. The assessor’s lofty market value increases translate into sharply higher assessed values. That could spark some mind-bending real estate tax hikes when bills arrive in 2019, analysts say.

In Chicago, the 2018 expected property tax bill increases will come due in August 2019, when the second installment of the bill arrives. Many North Side apartment building owners are planning hefty rent increases next year to pay the expected sharply higher 2018 tax bills, experts say.

Mayor Rahm Emanuel says the city needs to raise hundreds of millions of dollars in new revenue to pay for a $28 billion pension shortfall for teachers, police officers, and firefighters. However, when gazing at the expected 2018 property tax hike, payable in 2019, the crystal ball is cloudy.

Over-taxed homeowners may appeal assessment and claim exemptions

“The property tax bill is determined by four factors – the assessment, the equalization factor or multiplier, the tax rate, and the exemptions,” said Griffin. “In 2018, a triennial tax assessment year in Chicago, homeowners should have appealed their assessment because they are likely to see a new higher assessment.”

Homeowners also should review their exemptions because they can reduce their tax bill if they have the proper exemptions applied, 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 Citizen exemption was hiked to $8,000 from $5,000. Those amounts are deducted from the equalized assessed value of a home to which tax rates are applied to determine individual tax bills.

Also, more seniors can qualify 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,” advised Griffin (left).

Real estate taxes for 2018 are expected to rise when paid in 2019. However, predicting a hefty property tax increase next year 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 2.9627 in 2017, up from 2.8032 in 2016.

The main engine that drives up property tax bills is the amount of money spent by local government. For example, homeowners who read their 2017 tax bills will see the continued increased spending for schools and teacher, police, and firefighter pensions.

Chicago’s 2017 tax rate rose slightly to $7.266 per $100 of assessed valuation, up from $7.169 in 2016.

“The 2017 tax rate in Chicago was higher 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 go down if the amount of money that local governments request remains the same as last year.”

Griffin said another problem is that the assessment increases vary 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.”

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 2019, it will be too late to appeal the dramatic 2018 assessment increase.

Visit the assessor’s website to find comparable properties or start the appeal process. Deadlines for filing at the assessor’s office already have passed but property owners still can file an appeal with the Cook County Board of Review and Illinois Property Tax Appeals Board – or call Michael Griffin, an expert tax assessment lawyer, at 312-943-1789.