The Basics
Generally, every parcel of real estate in Cook
County is reassessed every three years. Some
properties are reassessed more often depending
upon the circumstances. Factors such as new
construction, physical modifications, vacancy,
a tax division or consolidation of a parcel,
recent sale, etc. may cause the Assessor to
reassess a real estate parcel more frequently.
The current Cook County Assessor is Mr. James M. Houlihan (D). He was appointed Assessor during March
1997, when longtime Assessor Thomas C.
Hynes resigned. Mr. Houlihan was
elected to the post in November 1998,
reelected in November 2002 and in November 2006.
The current members of the Cook County Board
of Review (presented in alphabetical order) are Mr. Joseph
Berrios (D), Mr. Brendan F. Houlihan (D) and Mr.
Larry R. Rogers, Jr. (D).
Appeal Procedure:
The Cook County Assessor is the agency charged
with assessing each property at a value reflective
of fair market value while the Cook County Board
of Review is the agency charged with insuring
that assessments are fair and equal.
A notice of proposed assessed valuation
is mailed to the taxpayer of record and the
taxpayer has an opportunity to appeal the assessment.
This appeal can be initiated at either the Assessor level or Board
of Review level. Each agency has its own
procedural and substantive rules. Many of these
rules are published and some of them are not. The
Assessor level appeal can be filed by the taxpayer,
his or her representative, or his or her attorney. An appeal
at the Board of Review level may only be filed
by the taxpayer if she or he is acting as an
individual taxpayer or an attorney.
A decision by the Assessor may be appealed to
the Cook County Board of Review, which serves as the quality control component
of the assessment process. The Board of Review applies a Uniform Market Value standard to all commercial, industrial and investment grade properties before it. Board of Review decisions
that are considered adverse may be appealed
to the Illinois_Property_Tax
Appeals Board or in the Circuit
Court of Cook County.
The basic object at each level is to prove that
the assessed valuation levied against the subject
property is excessive. The type of evidence
offered as such proof varies and depends upon
the unique circumstances surrounding each property.
Below are listed specific situations and the
type of evidence likely to achieve the most
cost effective results.
|
Owner occupied property
|
MAI appraisal
|
|
Income producing property
|
3 years of income and expenses
and/or appraisal. Appraisals are no longer
required by the Assessor.
|
|
Leasehold
|
Lease analysis or appraisal.
|
|
Vacant land
|
Uniformity analysis.
|
|
Recent sale
|
Closing documents and proof
that the transaction was arms-length.
|
|
Vacancy (over 20%)
|
Affidavit and other evidence
of vacancy including a field check request.
|
|
Classification
|
Affidavit, other relevant
evidence and field check request.
|
Definitions:
Abatement:
A device to encourage certain types of property
development. Typically forgives all or a portion
of the property tax bill for a specific time period.
Appraisal:
An appraisal is an opinion of value by a qualified
individual. Appraisals over 2 years old are generally
not considered persuasive evidence. Appraisals
of properties valued at $500,000 or greater should
include the three traditional approaches to value. The difference
between the MAI appraisals Member Appraisal
Institute, CAE appraisals and non MAI or CAE
appraisals can be substantial in terms of quality,
cost and credibility.
Neither Cook County
assessing authority requires the use of an MAI
or CAE appraisal. A list of our currently approved appraisers
is located on our web
site. This list is updated continually.
A market analysis by a Realtor, although it may be very accurate, is not considered an appraisal
by assessing officials and will not be considered
as evidence of market value.
Assessed Value:
That number which is the basis of the tax
bill. It is derived by multiplying the market
value by the assessment rate.
Assessor:
The elected county official
charged with setting the assessed value for each
parcel.
Back
Tax:
A procedure invoked by the Cook County Assessor
whereby he or she levies an assessment on a parcel because
it was improperly classified as exempt or vacant.
Notices are generally sent to the taxpayer of
record during late summer and hearings are held
soon after. The tax bill is usually issued with
a 10% penalty added on for each year.
Board of Review:
The Cook County agency charged with insuring
that the assessments established by the Assessor
are fair, equitable and uniform.
Certificate of Error:
A recommendation by the Assessor to the
Circuit Court that a assessment be reduced because it was erroneous.
Upon approval by the Court, a tax refund is processed.
Exemption:
A tax subsidy to certain owners or for special
uses of property for the purpose of encouraging
publicly desired objectives. In Illinois private
schools, not-for-profit hospitals, HMO's, churches
are examples of uses which may qualify for an
exemption.
Estimate of Redemption:
A written itemized list of the cost to redeem
property taxes which have been sold at the tax
sale. May be obtained from the Cook County Clerk
4th Floor 118 N. Clark St. Chicago, IL 60602. Property owners should be advised that often, an Estimate of Redemption will become invalid when a tax buyer makes a subsequent tax payment.
Green Building Tax Incentives:
Cook County does not offer tax incentives
to buildings that are LEED Certified.
Income & Expenses:
All assessing officials require 3 years
of income and expenses in the form of IRS returns
or certified financial statements. Each agency
requires that the financial data be reflective
of the market thus, income derived from a below
market lease will not be considered as evidence.
LEED Certification:
The Leadership in Energy and Environmental Design (LEED) Green Building Rating System, developed by the U.S. Green Building Council (USGBC), provides a suite of standards for environmentally sustainable construction. Since its inception in 1998, LEED has grown to encompass more than 14,000 projects in 50 US States and 30 countries covering 1.062 billion square feet (99 km²) of development area. The hallmark of LEED is that it is an open and transparent process where the technical criteria proposed by the LEED committees are publicly reviewed for approval by the more than 10,000 membership organizations that currently constitute the USGBC.
Market
Value:
That number
derived by dividing the assessed value by the
assessment rate.
Multiplier:
A mathematical formula applied to Cook County Tax bills, which in theory satisfies the requirement that all real estate be assessed at 33% of its Fair Market Value. The multiplier is developed each year by the Illinois Department of Revenue with the assistance of sales-ratio studies.
Office Holders:
Below are listed those officeholders who play a prominent role in the Cook County taxing process.
Cook County Tax Assessor - James M. Houlihan (D)
Cook County Board of Review - Joseph Berrios (D), Brendan F. Houlihan (D), Larry R. Rogers, Jr. (D)
Cook County Clerk - David Orr (D)
Clerk of the Circuit Court of Cook County - Dorothy Brown (D)
Cook County Recorder of Deeds - Eugene Moore (D)
Cook County Treasurer - Maria Pappas (D)
Property Tax Appeals Board - Louis G. Apostol, Executive Director
Circuit Court of Cook County - Patrick E. McGann, Presiding Judge of the County Division
Payment by Legal Description:
A method of paying a tax bill for a property which has been recently developed and does not have its own PIN.
Property Tax Appeals
Board aka PTAB:
A state agency which became available to Cook
County taxpayers for the first time during tax
year 1996. Known for fast and fair decisions
until recently when its funding was cut.
Legislation was introduced in the General Assembly
which could limit standing before PTAB. The
bill passed in the Senate and was sent to the
House where it was voted down on May 21, 2003.
In anticipation that the proposed legislation
would pass, the PTAB budget for fiscal year
2004 was cut by 60%. A similar version of this
bill along with other "tax reform"
bills was introduced again during fall 2003
legislative session. Most of the "tax reform" bills died in committee.
Redemption:
A procedure whereby the owner or some other party with an equitable interest in the property, redeems the property taxes or special assessments which have been sold by the county.
Sale Price:
In Illinois there is a presumption that the
sale price of a property is arms length and
that it is indicative of market value. Since
assessing officials are required to assess a
property at its fair market value, potential
purchasers of commercial and investment grade
real estate should not be surprised if
the property is reassessed soon after the
transaction is completed and that the sale price
will be a factor used by the Assessor in determining
the new assessment. The projected tax load should
be factored into the economics of the deal before
the purchase agreement is entered into.
There are certain procedures that a lawyer can
perform for the benefit of the purchaser. The
most effective is an allocation clause; whereby
the parties to the transaction allocate a certain
amount of value to land/improvements, personal
property, intangible concepts or favorable financing
from the seller. Of course, there is an obligation
of good faith on the part of the parties and
an expectation that the purchaser be able to
back up her/his allocation with a high quality appraisal.
There are other factors to be considered such as, IRS depreciation and/or 1031 exchange requirements
including Tenant in Common investments
and the lenders requirement for collateral.
It is recommended that the attorney for the
purchaser consult with the purchasers income
tax advisors as well as property tax counsel,
prior to drafting an allocation clause.
7% Tax Cap
Legislation passed during Spring 2004, originally designed
to protect homeowners from dramatic increases
in the assessed valuation. This cap was to expire after tax year 2006 but was extended by the General Assembly on October 12, 2007.
Sidewell
A mapping service provided by the Sidewell Company. Available in book form or CD.
Specific Objection:
A lawsuit in the Circuit Court premised primarily
upon market value. In Cook County these cases are distinguished
between Small Claims, refund of $50,000 or less
and Regular Claims. The Small Claim cases move
through the system at a fairly fast rate. The
primary advantage of filing a Specific Objection
instead of before PTAB is that a taxing body
does not have the right of intervention in the
Circuit Court.
SSTRP: aka South Suburban Tax Reactivation Project
A program which was launched with great fanfare and
designed to put tax delinquent properties back
on the tax roles. Limited to 180 square miles
in Calumet, Bloom, Bremen, Rich and Thornton
Townships, the program, in its 9th year, needs
more support. As of April 2005, only six businesses
have taken advantage of this program. A dismal failure.
Tax Caps:
A legislative solution in 1994 in
response to out-of-control local government
spending. Under this legislation, local government
is permitted to increase their levy by a maximum
of 3% per year. Any increase greater than this
requires voter approval.
The 7% Tax Cap is different. It is only available to owner-occupied, single-family houses and condominiums.
Tax Increment Financing: aka TIF
A vehicle which provides for the financing of public or private projects in areas that are hard pressed to find to attract investors.
The Chicago Reader printed a critical report on the status of Chicago's 145 TIF districts August 11, 2006.
Tax Swap:
A concept whereby the state income tax is increased and a corresponding credit is given toward one's property tax bill. The object being to provide some revenue relief for school districts with a declining tax base.
Uniformity Analysis:
This parameter is used by assessing officials
to levy a value upon single family houses, condominiums
and land. When performing an analysis of land
on the basis of uniformity, it is important
to use only comparable's which are similar to
the subject property in matters of zoning, size,
frontage and location.
Theoretically, uniformity is not used for income-producing
properties and owner-occupied Class 5 properties
because they are considered "unique"
and thus not capable of being compared to other
nearby properties.
Unique Properties:
The old "Letter Property" system is
back under a new name "Unique Property"
program. Under this program, which was announced
May 29th 2003, the Cook County Assessor has
identified 300 properties they deem "unique
and difficult to assess". The Cook County
Assessor posted the assessed valuations of these
"unique properties" on their web site
on March 1, 2004.
Uniform Market Value:
That standard employed by the Cook County Board of Review when they review the assessments levied against commercial, industrial and investment grade properties. Derived by capitalizing the potential income stream and then averaging it with other nearby comparable properties.
Vacancy:
The occupancy of a property may serve as ground
for relief provided that proof of the vacancy
problem can be documented and if over 20% of
the property was vacant during the tax year.
Copies of old leases, utility bills, photographs
and other types of objective evidence will be
considered by the assessing officials. The Cook
County Assessor's office field checks the property
for the purpose of verifying the occupancy.
Our Competitors:
Most of the other attorneys that have concentrated their practice
in the field of property taxation are excellent lawyers.
They competently represent their clients' interests
with zeal and integrity. I regard most of them
as friends. If you are currently represented by one of
those attorneys, it may be in your best interest to continue being represented by them.
On the other hand, there are a few individuals and consulting firms that are constantly on the prowl for business. They woe potential clients with their tales of "experience", "dedication", "the largest", "international presence", "political connections" etc. etc. I would be very surprised if any of these solicitations result in anything other than just a slow churn. Taxpayers should be wary of anyone that talks that kind of game.
Tax Savings, Tax Reduction,
|
