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Cook County Reduces Property Values in Wake of Pandemic

Posted on June 2, 2020

The Cook County, Illinois, tax assessor has issued revised property assessment values that take into account the COVID-19 pandemic and resulting unemployment.

The revised assessment values, issued by the assessor's office May 28, are for commercial and residential properties in the south and west suburbs. The assessor’s office plans to issue a supplemental report describing its approach to the north suburbs and Chicago.

Single-family homes and condos have been reduced by between 8 percent and 12.2 percent, and multifamily apartments have been reduced by between 10 percent and 15.2 percent.

Commercial property capitalization rates on regional and neighborhood properties in certain sectors, such as shopping centers and hotels, were adjusted upward, which in turn reduces the property’s value.

The assessor’s office usually reassesses one-third of all property each year, but as this year’s assessment was getting underway, the coronavirus pandemic took hold in the country. The assessor’s office began seeing record-breaking numbers of unemployment claims, significant downturns in some commercial sectors, and widespread loss of rental income.

In April assessor Fritz Kaegi (D) announced his office’s intentions to adjust property values in light of the pandemic. “We’re looking at the impact of COVID-19 on each different asset class, each community, as best we can. Some asset classes — think small-level retail or hospitality — will be disproportionately hurt because of the crisis,” Kaegi told Tax Notes April 9.

In reassessing single-family homes, condos, and multifamily homes, the assessor's office estimated regional unemployment rates. Townships with larger unemployment rates saw larger reductions in their assessments.

In approaching commercial property rates, the office laid out broad expectations, such as lower rent collections and hotel occupancy rates, and included an analysis of the drop in value of publicly traded real estate investment trusts dedicated to each property class. Capitalization rates were adjusted upward by 50 to 200 basis points, a metric on which regional and neighborhood investors focus.

Although property owners can appeal their assessments to reduce their tax burden, there were concerns that the existing system “could create an inequitable tax burden borne by property owners who do not have the resources or access to file an appeal, particularly during a health-related pandemic,” according to the assessor's report.

In 2017 the Chicago Tribune and ProPublica published a series of articles chronicling systematic abuse by the Cook County Assessor’s Office under former assessor Joe Berrios, abuses that benefited wealthy and well-connected homeowners to the detriment of residents of minority neighborhoods. A subsequent lawsuit was settled in November 2019, with plaintiffs’ lawyers crediting Kaegi with making substantial reforms. 

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