Report: Cook County property tax assessment process unfair to poorer homeowners

Report: Cook County property tax assessment process unfair to poorer homeowners

A new study confirms Cook County's broken property tax assessment system causes owners of lower-value homes to bear a disproportionate share of the tax burden.

A report released Feb. 15 reveals the property tax assessment process in Cook County unfairly creates wide disparities in valuation between properties, burdening owners of lower-value properties while benefiting owners of more expensive homes.

Cook County Assessor Joseph Berrios and Cook County Board President Toni Preckwinkle commissioned the study from the Civic Consulting Alliance in the wake of a 2017 report by the Chicago Tribune that suggested the residential assessment system harms poorer homeowners.

The new study confirms the unfairness and lack of uniformity in the system. It notes: Cook County’s “residential assessment system is more variable and more regressive than agreed upon industry norms, causing a wealth transfer from owners of lower-value homes to those of higher-value homes.”

The most egregious assessment disparities occurred in the city of Chicago, where officials have raised property taxes multiple times in recent years to shore up worker pensions and pay for other spending.

Chicago’s taxing bodies, including the city of Chicago, Chicago Public Schools, the Chicago Park District, and others, levied $5.9 billion in property taxes in 2016, according to the report. As the property tax burden is apportioned according to the value of property, it is through the assessment and appeals process that each homeowner’s share of the total tax burden is established.

3 parts of Cook County system responsible for unfairness

The report pointed to three aspects of the system that unfairly distort the burden of property taxes: the assessor’s model, the assessor’s “hand review” of results and the appeals process.

The Cook County assessor’s model to assess property values produces initial values that are “outside target range for all uniformity metrics,” according to the report.

In Chicago, a key metric of whether similar properties are assessed uniformly diverged significantly from the industry standard. While a “coefficient of dispersion,” or COD, of 15 is considered a “generous target” that permits reasonable variability in the values assigned to similar properties, the COD in Chicago was 25, almost 67 percent higher than the acceptable upper limit.

Chicago also scored poorly on metrics designed to show whether a system is regressive, according to the report. Chicago’s price-related bias of -0.24 means, for example, that the owner of a $600,000 home would pay a 24 percent lower effective tax rate than the owner of a $300,000 home.

Equally disturbing, the assessor’s “hand review,” or adjustments to values produced by the model, improves initial results, but amounts to “selective reappraisal.” This introduces “systematic bias,” making assessments appear “better in quality assurance statistics” than they really are.

Finally, the study faults Cook County for relying heavily on appeals to establish value, which further exacerbates the variability and regressivity of the system. Compared with other U.S. and foreign jurisdictions, Cook County has an unusually high number of appeals – “more than 20 times higher than benchmark jurisdictions,” according to the report.

This is not surprising, as the Cook County Assessor’s Office expressly invites appeals: “We view the appeal process as an important step in the valuation process,” the office says on its website. The current system shifts the burden of producing accurate valuations to property owners, rewarding those with high dollar stakes, time and money for lawyers, and penalizing those with fewer resources.

The fact that owners of higher-value homes are more likely to appeal their assessed valuations, coupled with the fact that 34 to 64 percent of appeals result in value reductions from the assessor’s office and/or the Cook County Board of Review, creates even greater valuation disparities and regressivity of outcomes.

Next steps for Cook County

The study’s authors point to the need for “fundamental changes in modeling, review processes, data collection and a shift away from reliance on appeals” for Cook County to meet assessment industry standards. The next phases of the assessment consulting project will focus on developing and implementing solutions to the problems rife throughout the system.

Berrios responded that he “will change whatever needs to be changed,” although on prior occasions he failed to implement new models and technology that he had previously said his office would employ, according to the Tribune.

Interestingly, Cook County’s transparency in assessments has not yet been fully evaluated, although the report recommends the assessor conduct and publish sales ratio studies throughout the assessment process, which would reveal the accuracy and uniformity of the assessor’s work as it is completed. The assessor’s office came under fire in the Tribune investigation of commercial property assessments for the opaqueness of the system.

Civic Consulting Alliance’s report reveals Cook County’s property tax assessment system needs to be completely overhauled. Until that happens, homeowners are stuck with a broken and unfair assessment system in a time of rising property taxes.

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