Outrageous assessments

3710 N. Kenmore

Image of 3710 N. Kenmore from Cook County Assessor

Gary Lucido writes of a small parcel at 3710 N. Kenmore, offered at $9.9 million ($4950/sq ft) after failing to sell when offered at lower prices. While the price seems outrageous, the property is very close to Wrigley Field and could be used for a billboard or rooftop viewing platform. We know that the former use has commanded $350,000/year on a nearby building, which seems to justify a multi-million-dollar asking price.

So we have a parcel worth, let us say, five million dollars.  What are the taxes? Using data from the Illinois Department of Revenue, our friends at the Civic Federation publish estimates of the effective tax rate for various kinds and locations of property.  For residential parcels in Chicago, they estimate that the real estate taxes at 1.45% of actual market value. So on that basis, a parcel worth $5 million would pay $72,500/year.

But the Assessor doesn’t think this parcel is worth $5 million.  His estimate is $569,580.  (That is, the assessed value, which is supposed to be 10% of market value. is $56,958.)

Looks to me like this parcel is underassessed by something like 90%.  Even if we pretend it’s worth just $569,580, tax at 1.45% should be $8259/year.  Which is  $64,241/year less than the  “fair share” I estimate above.

So how much does the property actually pay? The Realtor’s listing says $147.  Surely this is a typo, no residential property in Chicago can pay so little?  Actually, the County Treasurer confirms it (I can’t seem to link to the actual record, but go here and search for parcel 14-20-218-047-0000).  This parcel receives three different kinds of exemptions: Homeowners, Senior Citizen, and Senior Freeze.  Apparently the net result is a tax bill of $147/year, on a multi-million dollar property which would “normally” pay about $72,500/year toward the costs of running the schools, parks, and various city services. Need we wonder why our local governments are in financial difficulty?

There are several additional points to be raised here.  First, assessment geeks may note that I have conflated data from several different years.  Of course that’s true, because taxes are always based on the value as of the start of the prior calendar year, and calculation assessment/sales ratios cause further delays. I also have not mentioned the multiplier, a factor which might help explain the details of this case but does not alter the basic fact that the property is severely underassessed.  Nor have I mentioned the owner of the property, beneficiary of this governmental failure.  The name of the apparent owner is on the Treasurer’s record, and he seems to have a Facebook page.

Finally, let’s give credit where credit is due.  Not only to Gary Lucido who might not realize the significance of the story he broke, but importantly to the open information policies of the Cook County Assessor and Treasurer.  Pretty much all assessment and real estate tax data is public record.  The income tax involves far worse outrages, but we rarely can see them since individual cases are confidential, and specifics have to be inferred from other sources (as for instance in this case.)

Postscript, a few hours later:

I was thinking about how the Assessor could come up with such a low value for this property.  Basically, what’s a very small residence on a tiny lot worth in the Wrigleyville neighborhood?  Very possibly the answer is $569,580. This particular parcel is worth many times that because of its precise location, but the Assessor does not consider that.  And if I owned the property, I would appeal any higher assessment.  Evidently the assessment rules need to be changed, so that the potential use of the property is considered. One does wonder how many dollars stay in speculators’ pockets because of this failure.

 

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