4 Factors Driving Chicago Property Tax Increases

Tax bills are landing in mailboxes across Cook County – you can too find yours online — which means homeowners and business owners will finally know how much of the county’s $16.7 billion bill they’ll get.

The total figure is about 4% higher than last year. In an annual analysis of all 1.8 million bills, Treasurer Maria Pappas’ office — the one that sends out those bills — sought to determine what caused the tax increase.

Total billings across the county increased by $614 million over the previous fiscal year. Homeowners get $330 million of that increase, while businesses, industrial buildings and large apartments pay $285 million, according to the analysis.

Bills are calculated in several steps: Local governments, including school and park districts, levy property taxes to help pay for operations. The appraiser sets property values, then makes adjustments for exemptions or other incentives. The clerk then determines tax rates based on the various fees and total assessed value for each unit of government. The treasurer then sends out bills, collects payments and distributes money to local governments.

One is fundamental: In Chicago, both the city and Chicago Public Schools increased their levies — CPS by $114 million and the city by $94 million. (City new spending plan for 2023 no property tax increase, but the new bills just coming in reflect the city’s 2021 budget.)

Here’s what else the treasurer’s analysis shows is driving up the bill for Chicago taxpayers.

The district is reassessed on a three-year cycle. This is the first reassessment for Chicago homeowners under the leadership of Appraiser Fritz Kaega, and the first since the COVID-19 pandemic has turned real estate upside down.

Although the total amount charged by all tax authorities has increased, not all home and commercial property owners have to pay more. But given that residential grades after appeals to the Audit Committee have risen more than commercial ones, more homeowners will see their bills go up, while more commercial owners will see their bills go down, a new Treasurer’s study says.

Tax bills for more than 406,000 residential properties went up, while nearly 318,000 went down. The study found that tax bills for more than 32,000 commercial parcels increased — particularly in Lincoln Park, the South Side and Rogers Park — while nearly 37,000 decreased.

According to the report, the average commercial bill rose by $1,991 to $12,448, an increase of 19%.

“The average property tax for a home in Chicago is now $3,599, an increase of $261. This average increase of 7.8% was the highest in Cook County, although Chicago’s average home tax remained one of the lowest in the county,” the report said.

The analysis showed that Latino communities in the city’s north and northwest, which are rapidly renewing, recorded some of the biggest spikes, while scores fell sharply in many black neighborhoods in the south and west. Taxes rose faster on the north shore of the lake than anywhere else in the city.

The bill signed by Governor J. B. Pritzker last year gave local taxing authorities throughout Illinois the ability to collect refunds they had issued to property owners due to inflated property values, passing the cost on to other taxpayers. Instead of the tax authorities recording the compensation awarded to the taxpayer as a loss, this amount is included in future bills.

Refunds are made based on appeals to the county assessor or board of supervisors, as well as decisions by the state property tax appeals board. For example, if a commercial property was overassessed by $10 million, other property owners — who had already received notices and thought they knew what their tax burden would be — would add that $10 million to their tax bills next year.

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The bill was designed to allow taxing agencies — such as villages, schools, parks and libraries — to recoup money they gave back to taxpayers. Such reimbursements can cause multimillion-dollar damages to their operating budget, as those who struggle the most with the bill often occupy larger commercial properties. But the treasurer says it represents an ongoing “annual burden on taxpayers”.

As a result of the recapture law, tax bills in Cook County rose by another $131 million, according to a treasurer’s analysis. CPS is scheduled to pay back $32.3 million, the Metropolitan Reclamation District will receive $7.5 million and the Chicago Park District will receive $3.1 million.

The study found that the impact of tax increment financing, or TIF, districts came into “sharp relief” this year. There are 131 such districts in the city of Chicago. Tax revenues from the increase in property values ​​in these areas do not go into the city treasury. Instead, incremental increases are deposited into each district’s TIF coffers. So when commercial real estate goes up in value — like Willis Tower or the Google offices in Chicago — that means millions are funneled into TIF districts, where the proceeds go toward projects located in the area.

Willis Tower has the highest tax rate in the county. Of the $50.2 million bill, $8.7 million went into the LaSalle Central TIF coffers, according to the report. This year, taxes on the Google building at 1000 W. Fulton Market rose to $8.2 million, with $1.2 million going to the Kinzie Conservation TIF.

Chicago’s total billed TIF was $1.2 billion, an increase of nearly $141 million, according to the report.

The city does have the right to release money from TIF funds and often uses “surpluses” from TIF funds, returning some of the money to local taxing districts.

In 2020, citing the expected impact of the pandemic, Kaegi adjusted house values ​​downwards, resulting in a 9.3% drop in residential property values ​​in last year’s accounts, according to the treasurer. It also lowered the values ​​of some commercial estimates, but only by 4.4%. But overall, housing prices have risen during the pandemic. This fact is reflected in the reassessment in Chicago and in this year’s bills. The COVID-19 adjustment was essentially wiped out, and home owner assessments rose faster than they would have if Kaegi hadn’t made the adjustment.

According to the report, a sharp correction is expected in the northern and northwestern suburbs, which are currently overvalued. These new values ​​will be reflected in next year’s accounts. The same could happen in 2024 when the southern and southwestern suburbs are reassessed.