In the days since Mayor Emanuel jacked up property taxes, I’ve been fielding calls from millennials wanting to know how much more they’ll have to pay.
Not sure why they’re bugging me, other than I’m old. And property taxes, like hemorrhoids, are something you’re supposed to know a lot about as you get up there.
Anyway, I feel the time has come for a millennial-age edition of one of my famous property tax primers. No need to thank me, kiddies.
Generally, property taxes are directly linked to government spending. The more it spends, the more you pay. OK, that’s obvious.
Last month, Mayor Emanuel got the City Council to raise the property tax levy—how much the city spends—by roughly $588 million.
So property taxes will go up. But we won’t know exactly how much more any of us will pay until the tax hike takes effect this summer.
That’s because our property tax bill is paid in two installments and—oh, hell, let’s not get sidetracked.
Essentially, a property tax bill is based on the property value multiplied by the tax rate. Since the tax rate stays the same for everyone—at the moment it’s 6.8 percent—the real variable in this game is a property’s value. What officials call the EAV.
This stands for “equalized assessed valuation”—a phrase guaranteed to make anyone’s eyelids droop.
You might think that it would be as simple as this: if your assessed value goes up, your taxes go up. Oh, if it were that simple!
In reality, if your assessed value goes up more than everyone else’s, you will face a higher increase on your property tax bill than everyone else.
Conversely, if your assessed property falls relative to everyone else’s, you’ll either have a modest tax hike or no tax hike at all.
Now here’s where things get tricky.
Assessed property value is determined by Cook County assessor Joe Berrios. I assume you may have heard of him, if only vaguely, as he’s also the chairman of the Cook County Democratic Party—and he’s often been accused of nepotism in hiring in the past.
Berrios and his crew assess property value in Chicago every three years. And lucky us, in addition to the mayor’s property tax hike, this year we also get new assessments. Property values have rebounded in many areas thanks to overall improvements in the economy and a hot market in certain trendy neighborhoods like Logan Square and Avondale. Which means that especially in those places, assessed value is way up.
If you think Berrios and his crew have overestimated the assessed value of your property, you can appeal the assessment to the Cook County Board of Review, a three-person body I’m sure most of you have never heard of.
In fact, I’ll buy lunch at the fried chicken place of my choice to any reader who can name just one member of the Board of Review. And no cheating by doing a Google search!
In an appeal, you argue that the assessor has valued your property higher in relation to similar nearby properties. If the board agrees, it will lower the assessed value and your property tax bill will eventually go down.
As always, Chicago works best if you know how to work the system.
To demonstrate this point, I’ll cite the example of a guy named Ben who writes for the Reader.
You may have heard of him. He’s the guy who’s always so busy railing about Mayor Emanuel’s TIF scams and school board scandals that he rarely gets around to filing a property tax appeal.
In contrast, Ben’s neighbors almost always appeal.
So Ben’s assessed value stays high, while his neighbors’ goes down. As a result, the neighbors paid about $8,000 in property taxes last year while Ben paid about $9,300—even though their houses and lot sizes are very similar.
The moral of the story is—don’t be like Ben.
So now that you understand how this stuff works, let’s take a look at four millennials randomly chosen because I know them. Our task is to see who gets screwed the most when it comes to next year’s property tax hike.
Let’s start with Marian, who rents a Logan Square condo. On the surface, I’d say she’s facing a big-time increase, because Berrios upped her condo’s assessed value by about 19 percent in the last go-around.
As I said, Marian’s leasing. So maybe she can cut a deal and convince her landlord to absorb the tax hike instead of passing it on to her. Good luck with that, Marian.
Next we move to Janis, who lives in a coach house on the northwest side. Her property actually fell in assessed value this year.
That means she’s either living in a total rathole or her landlord is really well connected with the assessor’s office. Anything’s possible in Chicago.
Janis should be a big winner unless her landlord decides to jack up the rent even as his property tax bill falls.
Keep your eyes open wide, Janis.
Now, let’s consider Prairie, who lives in a courtyard apartment in Rogers Park. From a property tax perspective, it’s generally a good idea to live in such buildings, as they’re owned and operated by landlords who know enough to appeal their taxes year after year.
The assessed value for Prairie’s apartment stayed about the same, and the landlord is still appealing it. Smart guy.
So I think Prairie should do OK.
Noelle, on the other hand, well . . . She just bought a condo in the South Loop that went up in assessed value by 17 percent in the last round. So it looks like she’s going to get socked with a big increase.
But, hold on, consider this: Noelle’s appealed to the Board of Review, and because she owns her condo, she’s eligible for a home owner’s exemption, which for whatever reason the previous owner had not received.
That’s a tax break the county gives to people who live in the property that they own—as opposed to Prairie, Janis, or Marian, who live in units that someone else owns.
In any event, if Noelle gets the exemption she’ll shave hundreds of dollars from her annual tax bills. And should the Board of Review lower her assessed value, she’ll save even more.
Then she can brag about it over drinks at a bar with her friends. At which point, she’ll sound like a baby boomer. They love talking about how they outsmarted the tax man almost as much as they love bitching about their hemorrhoids.
As for Ben, sick and tired of paying for Mayor Rahm’s TIF scams and school scandals, he finally got around to filing an appeal.
It’s easier to work the system than to change it. v