Posts Tagged ‘Cook County Assessor’

Let’s watch the Assessor on this one

Some people are Cubs fans, others find it more interesting to watch the Assessor.

Crains reports that a very prosperous Cub, Jon Lester, has purchased and demolished the building next door to his home,apparently so that he could have a side yard.  Purchase price was $1.35 million, so the land must be worth that much.  It cost Mr. Lester more, of course, since he had to pay to demolish the place, but let’s take the $1.35 million over to the Assessor’s office. There we see that the property was assessed at $100,463, indicating a market value of $1,004,630 for the land + building. Land alone is about a quarter of this, so the Assessor seems to be saying the land is worth $250,000.  But it isn’t. Obviously it was worth over a million dollars. (And, checking Zillow, I see that the price isn’t out of line for the area.  A 3125 sq ft lot at 1450 W. Grace is on offer for $1.05 million. )

Now, under Cook County’s current rules, the tax bill is based on the assessment of the total parcel and it makes no difference which part is land and which part is building.  But with the building gone, it’s important for the assessed value to represent what the land is really worth. Otherwise the rest of us taxpayers have to cover part of Mr. Lester’s share.

(In case the link above stops working, you can readily find the parcel on the Assessor’s web site. Search for 1446 W Berteau, or parcel number 14-17-305-025-0000)

From the Assessor’s web site

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? (more…)

Going to the candidates’ debate

Cook County Assessor candidates, that is. Five folks will be on the ballot, 3 Dems (one of whom will emerge from next Tuesday’s primary), one Green and one Repub.  Can you say “pandering to real estate homeowners?” Of course people hate to pay taxes, but whose burden is hardest to bear, those who own real estate or those who must rent their abodes? What it comes down to, of course, is that homeowners vote, and real estate tax bills have big black numbers.  Whereas renters are much less likely to vote, and are nickled and dimed (make that $5 and $10) by sales tax and income tax that are harder to see.

Anyhow, the debate is this Thursday, at the Union League Club (65 W Jackson), 4:30 PM.  It is open to the public without charge, but you must register in advance (by calling 312 435-5946) and you must dress in nothing less than business casual attire.  A bit more detail here.

Extra help for idlers, from Jim Houlihan

New data shows, once again in 2007, that Cook County Assessor Jim Houlihan doesn’t think our tax laws give enough subsidy to land speculators, so he’s doing something extra to underassess vacant land.

By law and ordinance, he is supposed to put assessments at a specific proportion of what he estimates the actual value of real estate to be. These ratios have been adjusted over the years, and documentation is sparse, but for 2007 it appears that parcels containing single family or apartment buildings up to six units are to be assessed at 16% of value, and vacant land at 22%.

Annually, the Illinois Department of Revenue calculates the ratio between value assessed by Mr. Houlihan’s staff, and actual sales prices. The results for 2007(pdf)? Residential 8.34%, vacant 7.81%. (Not quite as bad as some previous years, however.)

The County is not ignoring this problem. Since the Assessor seems unable to assess vacant land at a higher percentage of value than land people use, they have changed the assessment policy so that, beginning wtih 2009, both residential and vacant land are to be assessed at 10% of value. We shall see how this proceeds.

Real estate tax inequities aren't inherent

Last month I used Illinois Department of Revenue data to blog about the Cook County Assessor’s failure to properly value vacant land.  Our good buddies at the Civic Federation took that data a couple of steps further to estimate the effective tax rates (pdf) paid by homeowners in a dozen suburban Cook County communities.  The effective tax rate is the percentage of actual property value that is paid in taxes.  And, no surprise, the rates in Chicago Heights and Harvey are more than double the rates in Glenview and Barrington.

This discrepancy isn’t due to any inherent problem with the real estate tax, but may have something to do with the fragmentation of taxing units, particularly school districts.  Areas with relatively little taxable real estate need to collect a greater percentage of its value than do areas with a larger tax base, other things being equal.  But there’s no reason we couldn’t have an equalization system under which the strong-tax-base communities share revenue with the others, as has been done since 1971 in Minnesota.

It is said that lower-income neighborhoods have a greater share of their real estate value in improvements rather than land, in which case exemption of improvements from the tax would also tend to equalize the burden.

Unbroken record on overtaxing those who use land…

…and undertaxing those who just sit on land, waiting for its value to rise.

The 2006 data are now published, and once again the Cook County Assessor has overassessed houses (and the lots they occupy) in Chicago relative to vacant land.  As in the previous year, data from actual sales show that, as a percentage of  sales price, assessments on houses (including land) average 50% higher than assessments on vacant land. This is the reverse of the legal requirement, under which real estate which includes houses is supposed to be assessed at a 1/3 lower percentage of value than vacant land.

This amounts to is a further penalty on homeowners (and owners of condo’s, and 2-4 flats, too), as owners of vacant land aren’t carrying their legal (let alone fair) share of the tax burden.

Is Cook County uniquely corrupt or incompetent in this regard? Other Illinois counties do not even pretend to assess residential parcels at a lower percentage of value than vacant parcels.  Rather, they are obligated to assess everything at the same percentage of value.   In most cases where data are reported, however,  the assessment as a percentage of sales price is considerably lower for vacant parcels than for improved real estate.

Source: Data compiled by the Illinois Department of Revenue, which can be seen here (look at the “ratio” links under “property tax.”

Assessor Houlihan raises marginal income tax rates

I’ve commented before on the conclusion, by several analysts, that due to means-tested assistance many people of low an moderate income can face marginal tax rates approaching or even exceeding 100%. That is, if you accept a raise, you might lose some of your food stamps, or medical assistance, or subsidized housing, or federal and/or state earned income tax credits, or other benefits “targeted” for low-income people.

Last week Cook County Assessor James M. Houlihan was kind enough to tell me about another means-tested benefit, that apparently has put some people into a marginal tax bracket of 2,000% or more. And they didn’t even know it, because tho just announced, it’s based on 2006 income.

He calls it the “Long-time Occupant Homeowner Exemption,” and it only applies to “homeowners residing in their homes 10 years or more.”

  • If total household income for 2006 doesn’t exceed $75,000, the increase [in assessed valuation for the homeowner’s residence, apparently] will be limited to 7%.
  • If total household income for 2006 doesn’t exceed $100,000, the increase will be limited to 10%

In both cases there is no maximum exemption amount.

Somewhere there is a longtime homeowner, whose 2006 income was, say, $100,005. That extra $5 might now cost her hundreds (or thousands?) of dollars in real estate taxes.

The impossibility of intelligent tax planning is far from the only reason this is a dumb idea, of course. The savings these longtime homeowners receive will be made up by the rest of us– including the first-time recent buyer struggling to cover an adjusting mortgage.

But I don’t mean to blame Assessor Houlihan exclusively for this nonsense. He says, and I’m sure it’s true, that it is established by the Illinois Legislature. And furthermore, he seens toi be embarrassed enough by it that it’s not on his web site at http://www.cookcountyassessor.com (or at least I couldn’t find it there). There is some mention of it at the City of Berwyn site.