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P R A C T I C E   L I M I T E D   T O   T H E   T A X A T I O N   O F   C O M M E R C I A L ,  I N D U S T R I A L  &  I N V E S T M E N T – G R A D E   R E A L   E S T A T E            

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Project Proceeds Without Tax Incentive

$60M Amazon facility in Pullman takes giant step forward — without property tax break

At the behest of local Ald. Anthony Beale (9th), the Transportation Committee sub-divided the massive site once owned by Ryerson Steel. The political feud between Beale and Mayor Lori Lightfoot did not stand in the way.

Ald. Anthony Beale (9th) (left) congratulates David Doig, president of Chicago Neighborhood Initiatives.
Ald. Anthony Beale (9th) (left) congratulates David Doig, president of Chicago Neighborhood Initiatives, after the City Council’s Transportation Committee sub-divided the site at 103rd and Woodlawn that will now be developed for a $60 million Amazon facilty.
Fran Spielman/Sun-Times

It looks like a long-vacant Pullman industrial site will be turned into a $60 million Amazon distribution center in time for the Christmas holidays — and without a lucrative “Class 6B” property tax break.

The City Council’s Transportation Committee on Monday took the first concrete step to deliver the 200-job, 150,000 square-foot prize on a site at 103rd and Woodlawn once owned by Ryerson Steel.

At the behest of local Ald. Anthony Beale (9th), aldermen approved the so-called “plat and sub-divison,” creating the legal parcel that will now be developed by Chicago Neighborhood Initiatives and the Ryan Companies, Amazon’s designated developer.

The land is owned by Chicago Neighborhood Initiatives, a non-profit created by U.S. Bank and run by David Doig, who served as planning and development commissioner and Chicago Park District superintendent under former Mayor Richard M. Daley.

In late January, Beale said the project would require Mayor Lori Lightfoot’s administration to expedite building permits and put a so-called “Class 6B” property tax break on a fast-track toward City Council approval.

On Monday, developers changed gears. They decided to forge ahead without the lucrative property tax break because they need to get the center done by mid-October — in time to start delivering packages for the Christmas holidays.

“We need to deliver this facility to our tenant by the fall of 2020 and the schedule does not allow for us to pursue a Class 6B incentive,” said Curt Pascoe, director of real estate development for the Ryan Companies, developer and builder of the project.

Was the developer and builder concerned about being a casualty of the running political feud between Beale and Mayor Lori Lightfoot?

“No. It’s a matter of us being able to move forward and begin construction on the project and this is the quickest way forward,” Pascoe said.

Beale is a 20-year veteran alderman who was stripped of his committee chairmanship for opposing Lightfoot’s choice of Ald. Scott Waguespack (32nd) as Finance Committee chairman. He has since become one of the mayor’s most outspoken council critics.

On Monday, the alderman said he never had a conversation with the mayor about the project. And he’s not at all surprised that she didn’t stop it.

“We’re all looking to create jobs. It doesn’t make sense for anybody to get in the way of progress,” Beale said.

“It’s great access off the expressway. We’ve been able to get the Whole Foods Distribution Center, Method, Gotham Green — all those others. … This is just another great fit for this region for people to be able to get their packages in a day or so.”

Beale once touted the parcel as a site for a Chicago casino. But he opted Monday to grab the bird in hand.

“A casino could be, possibly, three or four years down the road. We’re bringing jobs to the community right now,” the alderman said.

Pascoe noted the vacant land, across the street from the 135,000-square-foot U.S. Bank Pullman Community Center has “never been developed.”

“It’s going to bring economic investment to the Far South Side and turn land that has never generated taxes, never generated jobs onto the tax rolls to bring jobs and taxes to the city,” he said.

In late January, Beale went public about the project, only to have Lightfoot tell reporters there was nothing “to talk about yet.” She accused Beale of “getting a little ahead of himself.”

Hours later, however, the mayor’s office acknowledged that, although it hadn’t “connected with Amazon on this deal directly,” city planners had, in fact, “spoken with the developer to discuss underlying zoning” for the proposed site.

“The City welcomes opportunities to drive inclusive economic growth for our South and West Side communities, and Pullman is one of our priority areas,” a statement from the mayor’s office said at the time.

List of municipalities that doesn’t levy a property tax may soon be one fewer

Pension costs force suburban Illinois village to weigh new property tax

Rising pension costs could force suburban Carol Stream to impose a property tax for the first time in five decades.

The suburban village of Carol Stream is one of only a handful of Illinois communities that does not impose a local property tax. But that may change soon, thanks to the village’s rising pension costs.

Carol Stream levied a property tax only temporarily in the 1970s, but local officials say the village needs a new property tax to make up for declining local sales tax revenue, which has fallen 2.4% between 2017 and 2018, according to the Daily Herald. The village last raised its sales tax in 2018 to 8%, where it stands now.

But sales tax revenue would need to increase by 1.9% to pay for rising pension costs. The village’s required police pension contribution will be $2.8 million for fiscal year 2021, a $224,850 increase from fiscal year 2020.

Those increased pension costs, coupled with the decline in sales tax revenue, are placing pressure on Carol Stream’s budget. At this rate, officials project, the village would run out of capital funds during the third year of a five-year infrastructure plan without new revenue. The village used to transfer surpluses from the general fund into the capital fund to finance those projects – but it hasn’t generated a surplus in two years. Carol Stream started charging drivers a local gas tax in 2018, which also funds road improvements.

The village estimates Carol Stream homeowners with a median property value of $231,400 would owe $61 annually in property taxes, according to the Herald. Residents across DuPage County – where Carol Stream is located – pay some of the highest property taxes in the nation.

Across the state, local communities are seeing pension costs eat into spending on public services. Only 14% of property tax dollars received by local police departments in DuPage County went to public safety services in 2016 – the rest when to police pensions.

Carol Stream is not the only municipality searching for additional revenue as pensions strain local budgets. In 2018, the southern Illinois city of Carterville hiked its property tax levy by over 30% – the largest in its history – while north suburban Highland Parkraised their levy by nearly $1 million to pay for pensions.

Illinois spends nearly double the national average on pensions, measured as a percentage of all state and local government spending – more than any other state in the nation. Without meaningful reform, local governments in Illinois will continue to ask taxpayers to foot the bill for rising pension costs.

Lawmakers must amend the constitution to address this problem, and to protect taxpayers as well as the retirement security of those enrolled in the pension systems.

Carol Stream will host a forum Sept. 30 for residents to ask questions about the property tax proposal.

Cook County commission exploring property tax hike despite depressed home values

Average home prices in Cook County are 31% lower today than in 2007. Meanwhile, property tax bills have increased by 22%.

Cook County’s chief financial officer is floating the possibility of future property tax hikes, according to WBEZ. And a spokesman for Cook County Board President Toni Preckwinkle said she expects an independent commission “to review this matter in the near future.”

Discussion of property tax hikes should be especially concerning for Cook County homeowners, who have yet to recover much of the home value they lost after the 2007 housing market crash.

Average home prices in Cook County are 31% lower today than in 2007, adjusted for inflation, according to the most recent data from the Federal Housing Finance Agency. And even though homes are worth less than they were prior to the Great Recession, property tax bills in Cook County have on average jumped by 22%, after adjusting for inflation.

Cook County’s poor housing recovery is a national outlier: While home prices nationwide still have yet to return to their pre-recession peak, they are down just 5% since 2007. To put Cook County’s housing plight in perspective, its current decline in average home values is an alarming 500% worse than the nation as a whole.

The biggest factor driving rising property taxes? Unsustainable growth in pension costs for government workers. Pension liabilities have risen faster than taxpayers’ ability to pay, forcing state and local governments to constantly scramble for new sources of revenue – often in the form of property tax hikes.

This diminishes homeowners’ standard of living, and potentially their home equity, while jeopardizing government workers’ retirement security.

With constitutional pension reform, Illinois can protect workers’ already-earned benefits while slowing the accrual of future benefits not yet earned – and eliminate the need for endless property tax hikes.

U.S. Real Estate Peaked?

Overseas Investors Unload U.S. Real Estate

In the second quarter, foreign investors pulled more money out of the U.S. commercial real-estate market than they put in

In the second quarter, Ivanhoé Cambridge sold its stake in Ritz Plaza, a 479-unit rental apartment building in Midtown Manhattan. PHOTO: BESS ADLER FOR THE WALL STREET JOURNAL

A strong appetite among foreign investors for office buildings, apartments, malls and other real estate has in part fueled the long-running bull market in U.S. commercial property.

Now, amid a maturing property market cycle and rising uncertainties in geopolitics and the global economy, foreign investors have sold more U.S. commercial real estate than they bought in a quarter for the first time since 2013.

After years of amassing huge portfolios, investors from abroad sold $13.4 billion worth of property in the second quarter of 2019, according to data firm Real Capital Analytics. During the quarter, foreign investors purchased $12.6 billion of real estate.

European and Canadian investors have been active sellers recently, along with some high-profile investors from China. “U.S. real estate is priced very high right now, and people think we’re close to the top of the market,” said Matt Posthuma, a partner in Ropes & Gray’s asset management practice.

The waning appetite of foreign investors for U.S. property contrasts with their intensifying interest in other asset classes. Foreign money managers still see U.S. assets as a haven and have been piling into U.S. stocks and bonds, buying nearly $64 billion in these assets in June, the largest sum since August 2018, according to data from the Treasury Department.

Cutting BackIn the second quarter, foreign investors soldmore U.S. commercial real estate than theybought.

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What’s the difference? Compared with buildings, stocks and bonds are easier to buy and sell. If a recession hits, property owners may find it more difficult to sell their assets.

“For someone looking out three to five years, their investments may not be worth as much as they are today,” Mr. Posthuma said. “That’s the fear.”

Some domestic investors in commercial property also are moving to the sidelines. Overall, sales volume of commercial U.S. property fell 9% in the first quarter of this year from one year ago and rose a modest 2% in the second quarter to $127 billion.

For decades, sovereign-wealth funds, insurers, pension funds and family offices across the world have sought assets in the U.S. to diversify their investments and seek steady returns. Many also are drawn to the market’s relative stability, vast pool of consumers and deep and liquid market.

But, with the dollar strong, overseas investors unloading U.S. assets can chalk up foreign-exchange gains against weaker local currencies along with profits from higher prices. The strong dollar also means buying U.S. property has become more expensive for them. Some investors are shunning investments in flood-prone areas, as rising sea levels and hurricanes amplify costs to mitigate damages, particularly in older buildings.

Finding good deals also has become trickier in the U.S. as a possible recession looms and other regional and economic trends—including the impact of e-commerce on the retail sector—cast a shadow over some property types.

One of the biggest foreign sellers during the second quarter was Ivanhoé Cambridge, the real-estate arm of Canadian pension fund Caisse de dépôt et placement du Québec, which completed the sale of $2.2 billion worth of properties, according to Real Capital.

In the second quarter, Ivanhoé Cambridge sold two office towers in Seattle and its stake in Ritz Plaza, a 479-unit rental apartment building in Midtown Manhattan.

“It’s investment discipline,” said Sylvain Fortier, chief investment and innovation officer at Ivanhoé Cambridge. “When you reached the level you set out at the beginning, don’t get greedy. Get out and recycle your money into something else.”

The Quebec pension fund is focusing more these days on industrial real estate and less on other property types. Late last year, Ivanhoé Cambridge invested in IDI Logistics, an Atlanta-based developer and operator of warehouses.

In another megadeal in June, Singapore-based investment manager GLP agreed to sell a U.S. network of industrial warehouses, totaling 179 million square feet, to Blackstone GroupLP for $18.7 billion, the largest private real-estate transaction ever. GLP has said it would keep a small footprint in the U.S. and is still looking to expand but didn’t provide a timeline.

Overseas investors still interested in the U.S. real-estate market are also starting to structure their acquisitions differently.

They are choosing to invest in debt rather than equity, which is seen as a safer bet, if the economy slides closer to a recession. They are also taking on more minority stakes to lower the chances of triggering a review by the Committee on Foreign Investment in the U.S., the country’s national-security panel that vets foreign investment in U.S. businesses.

Last year, Congress expanded the authority of the panel, known as Cfius, which has hindered some real-estate transactions if they include land located near a military installation or other sensitive U.S. government property.

New PropertyTax.com Platform

PropertyTax.com has been moved to a new platform. This version has a geo-location feature that allows some readers to view information that is relevant to their jurisdiction, if applicable.

State of the City Address

CHICAGO (CBS) — Facing a budget deficit of up to $1 billion, Mayor Lori Lightfoot is set to begin outlining her plan to dig out of the massive hole at her “state of the city” address Thursday night.

Experts said Lightfoot will have no choice but to use a mix of spending cuts and new taxes and fees, possibly even a property tax hike.

Los Angeles County builds cutting edge assessment software

la county

Los Angeles County Brings Tech Innovation To Property Tax Complexity

Innovation takes many forms, and would certainly include a local government leaping from ancient green screen software to cloud-based applications to manage data at the heart of its tax records. Now consider that the project is for Los Angeles County, the U.S.’s largest county with more than 10 million people, and it gets even more interesting.

L.A.'s Echo Park Lake with downtown in the background.

About 25% of California’s population lives in Los Angeles County, which spans more than 4,000 square miles.

The Los Angeles County Office of the Assessor decided to build its own cloud-based “Assessor as a Service” capability because, after much research, it felt off-the-shelf software wouldn’t accommodate California’s complicated Proposition 13 tax legislation well. And now L.A. County plans to make the software available via subscription to agencies throughout California and the U.S.

“Prop 13 actually limits the options available for modernization,” says Scott Thornberry, director of operations at the Los Angeles County Office of the Assessor. “We found several large counties had undertaken initiatives and failed because third-party vendors had built products that worked well in other states and counties around the world, but Prop 13 is radically different so the ability for any California county to buy off-the-shelf software is very limited.”

To solve the problem itself, the L.A. County Assessor’s Office initiated its Assessment Modernization Project, which involved moving more than 100 software and system portfolio assets to Oracle Cloud Infrastructure. As part of that project, the Assessor’s Office modernized its Assessor Portal, which provides search access to records, maps, and photos. The public can access the portal, which is also used by 12 departments involved in property taxation, from the treasurer and tax collector to the public health department. For example, a property owner or potential buyer can view a property’s assessment history and see how the assessments are distributed between land and improvements. An internal department could use it to determine whether property taxes have been paid.

The Impetus

About 25% of California’s population lives in L.A. County, which spans more than 4,000 square miles and includes 2.5 million property parcels. The L.A. County assessor’s office is responsible for assessing the value of those properties for taxation purposes, which means about 500,000 property appraisals a year. It’s a lot of work. Handling that volume had become unwieldy using paper documents and that 40-year-old green-screen technology.

Further complicating workflows is the Proposition 13 legislation that took effect in 1978. Among other things, Prop 13 applies different tax rules to those who have owned property since the 1975 baseline year and those who purchased property after the baseline year.  That means two properties with the same market value can have much different tax amounts. Thornberry’s team spent two years analyzing commercially available applications for tax assessment, and decided that none met the county’s requirements.

So about four years ago the LA County assessor’s office decided to modernize its own applications, and move them to a public cloud. That meant it needed a cloud infrastructure that could support software development, testing, and large-scale deployment. It picked Oracle Cloud Infrastructure, including Oracle Database, as “the most robust platform we could use,” Assistant Assessor Steven Hernandez says. “In addition to being the most responsive to our requests, the fact we’d have one company to work with was a significant draw.”

A Five-Phase Modernization

For the past four years, the assessor’s office has been working with Oracle on its Assessor Modernization Project.

Phase one involved choosing the architecture and which applications to move from a local data center to Oracle Cloud. In phase two, the initial applications—as well as software development and test environments—moved to the cloud. Phase three is in the final stages of migrating additional elements to the cloud and ensuring software performance of everything in production. Phase four involves disaster recovery and the final migration of applications and software development.  Phase five more fully integrates the modern cloud technology supporting the Assessor applications, letting the office fully retire legacy applications and systems.

As part of the effort, the assessor’s office scanned approximately 50 million pages of documentation.

“When we got into this, we knew there were three prongs to the AMP initiative: the digitization of records, getting off the green screen, and data quality,” Thornberry says. Data quality is essential since accurate assessments require accurate historical data.

Moving to the cloud also helped facilitate agile software development practices that have contributed to the success of AMP.

“Agile methodology is necessary in our department because we’re able to design and develop software in smaller, more manageable pieces and then test it immediately,” Thornberry says. “It gives us the reassurance that what we’re building is going to work at the end as opposed to building it and crossing your fingers and hoping it all works.”

Sharing the Benefits

As the largest county in California and the nation, L.A. has significantly greater human and financial resources than most other counties. So the L.A. assessor’s office reasoned that sharing its technology via a cloud app could let its investments have a statewide impact.

“We want to make it easy so all they have to do is turn it on and avail themselves of the process and workflow,” Hernandez says. “Originally, we thought our ability to share our product would be limited to the other California counties, but we’ve come in contact with other assessing agencies throughout the U.S., and they have similar needs.”

Other counties and agencies that perform assessments will soon be able to tap an Assessor Portal equivalent called “Assessor as a Service,” paying a subscription to support maintenance, plus Oracle Cloud Infrastructure resources they use.

For L.A. County, the pay-for-use model for its cloud infrastructure means cost savings over an owned data center approach. “It’s a lot cheaper for us because we’re paying for what we use rather than making a major purchase,” Hernandez says

The cloud also makes it easier to bring in new capabilities. For example, the L.A. County assessor’s office plans to test Oracle Cloud digital assistants to help the public get fast answers to property tax questions. In addition, such chatbots could help Assessor Portal users get instant help while using the application versus waiting for a help desk to respond. The chatbot functionality is attractive because it would increase departmental responsiveness while lowering the cost of answering common questions. “California property tax is a complex topic, so it’s hard to explain,” Thornberry says. “We’re constantly looking at new technologies that can help improve process efficiencies.”

Cook County TIFs to bring in nearly $1.2 Billion; Chicago TIF revenue up more than 27%

Real Estate and Tax

Tax Increment Financing (TIF) districts in Cook County will bring in nearly $1.2 billion for tax year 2018, according to a report Wednesday from Cook County Clerk Karen A. Yarbrough’s office. This is a 17.4% increase over last year. TIF revenue has increased 27.4% in the City of Chicago and decreased 1.6% in the suburbs compared to last year.

The Clerk’s full 2018 TIF Revenue Report shows Chicago TIFs will generate approximately $841 million in tax revenue from its 138 TIFs in the 2018 tax year. This is a $181 million increase over last year and includes nearly $116 million for the City’s “Transit TIF” located on the north side of the City[1]. Last year, Chicago TIF revenue saw an increase of $99 million. The 303 suburban TIFs are expected to bring in $339 million, a $5 million decrease from last year.

“As a taxpayer and property owner, as well as an elected official who has to answer to the people of Cook County, I want to know where my tax dollars are going, if I live in a TIF District, and how this affects the distribution of tax revenue,” Clerk Yarbrough said. “I am committed to ensuring that all Cook County’s taxpayers, be they Chicago or suburban property owners, have the information and tools available to see where TIFs are and how much revenue they generate.”

The graph below shows TIF Revenue and the number of TIFs in Chicago and the Suburbs for the past 33 years that TIF has been utilized in Cook County.

TIFs account for 8% of property taxes billed in Cook County

The $1.2 billion derived from TIFs in Cook County amounts to 8% of the total property tax ($14.9 billion) billed to Cook County taxpayers this year.  Last year, $1 billion in TIF revenue accounted for 7% of the $14.4 billion property tax total.  TIFs account for 13% of the total tax billed for all taxing districts in the City of Chicago and 4% of the total tax billed for all taxing districts in the suburbs this year.  These distributions are displayed on the pie charts below.

The Clerk’s role in TIF tabulation

The process of calculating property taxes begins every year with municipalities and other taxing districts approving their annual property tax levies and submitting them to the County Clerk. The Clerk’s office calculates a tax rate for each district by dividing the levy (the amount of property tax revenue requested by the taxing district) by the total taxable value or equalized assessed value (EAV) of that district.  That rate is applied to all properties within that district to generate the respective tax bills.

However, TIFs work differently and the requested TIF revenue is not required to be included in a municipality’s annual property tax levy.  Pursuant to statute, TIFs follow their own approval process.  Once a TIF is approved and an ordinance is passed, the municipality submits that documentation to the County Clerk’s office.  The Clerk determines the initial EAV within the TIF as of the date the TIF was adopted.  This initial EAV is then “frozen” for the life of the TIF (typically 23 years).  Each subsequent year, the growth in property values reflected in EAV is measured. This value growth, known as the Incremental EAV, is then multiplied by the composite tax rate of the properties inside the TIF to calculate the TIF incremental revenue.  The property taxes generated by this increase in property values within the TIF boundaries is distributed to the TIF.  Property tax generated by the value of the Frozen EAV in the TIF goes to the other taxing districts.  See the chart below for an illustration of this process.

Pursuant to statute and ordinance, TIF revenue is not requested through a tax levy and therefore is not included in a municipality’s yearly tax levy process.  Thus, once a TIF ordinance is submitted to the Clerk’s Office for the initial creation of the TIF district, the TIF district will continue to receive TIF revenue for the duration of the TIF without requiring a yearly levy or further documentaion.  A TIF district’s revenue will continue by operation of law to be calculated in the manner shown above, unless the Clerk’s Office is provided with writtten direction from a municipality to terminate the TIF or alter the boundary of a TIF.

Breakdown of taxes billed by TIF revenue and Tax Levy revenue

As illustrated by the pie charts below, Chicago TIF revenue, when added to the property tax generated by the City’s 2018 property tax levy, is 35% of the total tax that may be distributed to the City of Chicago.  The combined total of all suburban TIF revenue accounts for 20% of the property tax revenue to be collected by suburban municipalities[2].

Factors that impact TIF revenue

As shown above, TIF revenue is a combination of the composite tax rate of the taxing districts within the TIF and the increase in EAV that has occurred since the TIF’s inception at the Frozen EAV.  Of these two factors, increases in EAV have the larger impact upon TIF revenue.  This is due to the nature of the TIF and the benchmark of the Frozen EAV.  If EAVs within a TIF go up, the entirety of the revenue generated by that EAV growth is allocated to the TIF rather than to other taxing districts.

The example below shows how a 10% increase in the total EAV of a taxing district from Year A to Year B could have a larger impact on TIF.  In the example, the 10% increase of total EAV resulted in a 13.6% increase in the TIF’s revenue share, as opposed to 5% the year before.

City of Chicago TIFs

The City of Chicago was reassessed for tax year 2018, resulting in a 12.5% increase in total EAV.  This EAV increase contributed to the 27.4% increase in the City’s TIF revenues.

The highest performing TIFs in the City of Chicago this year are located primarily in or around the downtown area.  However, the Pilsen TIF on the south side of the City increased 26% and has the 10th highest revenue this year.  TIF revenue also increased for the Red Purple Modernization Phase 1 (RPM1) Transit TIF in the north side neighborhood of Lakeview, making it the largest TIF both geographically and financially this year. For more specific information on transit TIFs, see Transit TIF Fact Sheet, Chicago TIF Overview & Chicago TIF Summary

The following chart shows the 10 highest revenue TIFs in the City of Chicago this year.  Each TIF will bring in more than $20 million this year.

TIF First Year 2018 Revenue Total Revenue
Chicago – Transit RPM1 2016 $115,735,214.75 $174,105,069.79
Chicago – LaSalle Central 2006 $100,926,569.59 $361,771,088.82
Chicago – Kinzie Conservation (Industrial Area) 1998 $49,229,212.64 $367,926,939.81
Chicago – Near North 1997 $35,716,959.86 $330,800,054.76
Chicago – River South 1998 $34,448,113.13 $273,240,094.76
Chicago – Chicago / Kingsbury 2000 $33,177,660.74 $270,644,567.14
Chicago – Canal / Congress 1998 $31,399,421.84 $335,286,098.90
Chicago – Central West 2000 $30,425,107.45 $248,283,003.88
Chicago – River West 2001 $25,761,204.13 $211,968,592.60
Chicago – Pilsen 1998 $20,643,537.57 $184,639,325.34

 

The map below shows the location of these TIFs, which account for 57% of the City’s TIF revenue this year.

The RPM1 Transit TIF is a mile wide and extends from North Avenue to Devon Avenue along CTA’s Red and Purple line tracks. Now in its third year, the Transit TIF has nearly tripled its revenue compared to last year with close to $116 million in property tax generated.   Due to the unique distribution rules established by statute for Transit TIFs (65 ILCS 5/11-74.4-8), the TIF itself will net approximately $45 million of this total. The balance of the revenue brought in by this TIF this year will be distributed to CPS and the other taxing districts such as the County, the Forest Preserve, Metropolitan Water Reclamation, Chicago Parks, City Colleges, and the City of Chicago.  This Transit TIF revenue is in addition to the annual tax levies submitted by these taxing districts. See Transit TIF Fact Sheet.

Suburban TIFs

There are currently 303 active TIFs in 99 suburban municipalities. This averages to three TIFs per municipality if a municipality is using TIF.  Overall, TIF Revenue in the suburbs decreased 1.62% this year.  This is primarily attributable to slight EAV decreases in the suburbs this year. See the Clerk’s 2018 Tax Rate Report for more information.

The table below lists the seven suburban TIFs that generated over $10 million each this year. Of these, five are in the northern or northwestern suburbs and two are in the near western suburbs.

TIF First Year 2018 Revenue Total Revenue
Glenview – Naval Air Station 1999 $36,677,410.89 $453,178,785.73
Hoffman Estates – Sears 1989 $23,205,954.92 $609,432,152.19
Rosemont – River Road 1984 $17,079,928.10 $341,087,750.15
Town of Cicero 1987 $12,908,052.48 $231,092,515.05
Schaumburg – North Schaumburg 2014 $12,453,521.65 $27,817,794.21
Rosemont – South River Road (4) 1998 $12,351,020.44 $66,154,876.87
Oak Park – Greater Mall Area 1983 $11,756,171.44 $193,354,621.55

 

The map below shows the locations of these TIFs.

The northern and northwestern suburbs are currently being reassessed for tax year 2019.  Increases or decreases in taxable values (EAVs) will likely have an impact on the TIFs in those areas.

See the 2018 Suburban TIF Overview and 2018 Suburban TIF Summary.

Additional TIF Information

To view data on each TIF district, see these PDF sections of the TIF Report: Countywide summary, Chicago summary, Suburban summary, Tax Increment Agency Report, Chicago Overview, Suburban Overview, Transit TIF Fact Sheet, & TIF FAQs.

Visit TIF Viewer, a mapping application, to see TIF data at the map level and search by municipality, ward, address or PIN.

For a brief overview and refresher regarding 2018 TIFs, view our 2018 TIF Quick Fact Sheet.

Previous TIF reports, the TIF property search tool, and TIF maps can be found at cookcountyclerk.com/tifs.

[1] Under the unique formula used for Transit TIFs, approximately $71 million of the Transit TIF’s $116 million revenue this year will be distributed to CPS and other taxing districts impacted by this TIF.

[2] Suburban TIF total as compared to total property tax extension for all suburban cities, towns, and villages, with or without TIF.

 

Illinois Ranks 12th

Illinois finished 12th in a Tax Foundation ranking of states that rely the most on property taxes as a share of state and local taxes.

That percentage for property tax reliance in Illinois amounted to 37.4 percent, according to the foundation’s numbers.

Property taxes in the U.S. as a whole made up 31.5 percent of the total state and local tax revenues collected in fiscal-year 2016, according to the Tax Foundation. And property taxes made up the largest share of state tax revenues in 26 states, the study said.

States that generate lower levels of property tax revenues rely more heavily on sales taxes, business taxes, excise taxes and other levies, according to the Tax Foundation.

State Reliance on Property Tax Revenues

Rank State Property Tax as a % of State and Local Taxes
1 New Hampshire 64.7%
2 Alaska 53.7%
3 New Jersey 46.6%
4 Vermont 43.9%
5 Texas 43.8%
6 Rhode Island 43.4%
7 Wyoming 43.2%
8 Connecticut 40.5%
9 Maine 40.4%
10 Montana 39.7%
11 Nebraska 37.5%
12 Illinois 37.5%
13 Massachusetts 36.4%
14 Florida 36.3%
15 South Dakota 35.4%
16 Michigan 34.6%
17 Wisconsin 34.1%
18 Virginia 33.9%
19 South Carolina 33.9%
20 Kansas 33.1%
21 Iowa 32.4%
22 Oregon 32.0%
23 Georgia 31.7%
24 New York 31.1%
25 Colorado 30.8%
26 Arizona 29.6%
27 Pennsylvania 29.2%
28 Washington 28.4%
29 Ohio 28.3%
30 Mississippi 27.4%
31 Utah 27.2%
32 Idaho 26.9%
33 Missouri 26.4%
34 Minnesota 25.7%
35 Maryland 25.7%
36 California 25.7%
37 Tennessee 25.2%
38 Indiana 25.0%
39 North Carolina 24.9%
40 West Virginia 23.4%
41 Nevada 23.3%
42 Louisiana 22.8%
43 Kentucky 20.3%
44 Oklahoma 20.2%
45 New Mexico 19.7%
46 North Dakota 19.6%
47 Delaware 18.1%
48 Arkansas 18.0%
49 Hawaii 17.6%
50 Alabama 17.1%

Source: Tax Foundation

Recommendations

Audit Recommends Ways To Overhaul Cook County Property Tax System

A new audit finds it will take a lot of work — and a lot of money — for rookie Cook County Assessor Fritz Kaegi to overhaul a property tax assessment system that rewards the rich and hurts the poor.

“The task ahead is monumental, and the financial and resource commitment for modernization is substantial,” reads an audit from the International Association of Assessing Officers, released Thursday. “Nevertheless, the gains for Cook County deserve the investment in resources — both human and capital.”

Kaegi, a Democrat, requested the audit to improve how his office conducts assessments. The association behind the study is a nonprofit that develops assessment guidelines around the world.

The push to overhaul Cook County’s property tax system follows a 2017 Chicago Tribuneand ProPublica Illinois investigation that revealed assessments under then-Assessor Joe Berrios were inequitable and riddled with errors. Wealthier homeowners and downtown property owners paid less than their fair share of property taxes, while low-income and minority communities paid more, the investigation found.

That was partly due to more affluent homeowners successfully appealing their assessments to get lower bills. But when that happens, the property tax burden simply shifted to poorer homeowners, the news outlets’ investigation found.

Changes to the current assessment math would impact every resident of Cook County. There are nearly 2 million parcels of land in the county. The assessor decides how to divvy up the property tax burden among property owners, based on the values of their properties.

Kaegi campaigned on creating create a fairer and more transparent assessment system. In last year’s Democratic primary, he ousted Berrios, a longtime politician and former head of the Cook County Democratic Party. Kaegi went on to win handily in November’s general election.

To fix Cook County’s property tax assessments, the outside auditors recommend that Kaegi focus on four key areas:

  • Hire more people. The best way to re-appraise property is to inspect it in person, the audit says. But the assessor’s office only has a quarter of the workers it needs. Based on current staffing levels, it would take 31 years to complete a general revaluation for Cook County, the audit found. That re-inspection is supposed to happen every four to six years.
  • Upgrade technology. The old computer system used for assessments is “a roadblock to improvements,” the audit says. The system can’t produce reliable and speedy data inquiries. Kaegi already has been working to implement a new one. Tech-savvy recommendations include using software that captures street-level images of homes and office buildings to complement county employees inspecting properties on foot. The audit also suggests creating user-friendly tools so taxpayers can more easily compare their assessments to their neighbors’.
  • Get better data. The quality and quantity of the assessor’s current data on the values of properties is inadequate, the audit found. In some cases, the characteristics of properties — like the number of rooms inside a home or whether the basement is finished — haven’t been updated in decades. How to fix this? Get fresh data sources, such as acquiring sales data that real estate agents use, partner with other county government agencies to use their images of properties, and get copies of all property sales in the county.
  • Improve valuation methods. One of Kaegi’s main jobs is to determine how much a property is worth. “The better the estimates … the greater the fairness, equity, and uniformity of any reassessment,” the audit says. Still, in Cook County, there’s a culture of appeal, appeal, appeal. Property owners are encouraged to appeal their assessments year after year to lower them, and ultimately save money. To make valuations more accurate, and reduce appeals over time, the audit recommends that Kaegi hire more staff to verify property sales and map sales data. How far a house is from public transit could impact its value, for example.

In a statement, Kaegi’s office said many of the audit recommendations are areas the assessor focused on in his first 100 days on the job. The statement also highlighted how Kaegi is addressing another audit recommendation: He’s fighting for a proposed lawthat would allow his office to collect financial data from commercial properties that generate income, such as hotels and parking garages. The idea is to collect more information up front to create more accurate assessments.

It’s not clear how much the audit recommendations would cost.

A spokesman for Kaegi said his office does not have an estimated price tag. The audit did not include one, but the report did note the assessor would need more money from the Cook County Board of Commissioners.

Kristen Schorsch covers Cook County politics for WBEZ. Follow her @kschorsch.

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