4 things driving up Chicago property tax bills

Tax bills are landing in mailboxes across Cook County — you can also find yours online — meaning home and business owners will finally know how much of the county’s $16.7 billion bill they’ll be picking up.

That overall figure is about 4% higher than last year. In its annual analysis of all 1.8 million bills, Treasurer Maria Pappas’ office — the one that sends those bills out — sought to identify what was driving those taxes up.

The total amount billed countywide increased by $614 millionover the previous tax year. Homeowners are picking up $330 million of that rise, while businesses, industrial buildings and big apartments are paying $285 million, according to the analysis.

Bills are calculated after several steps: Local governments, including school and park districts, set their property tax levy to help pay for operations. The assessor sets the values of properties, then makes adjustments for exemptions or other incentives. The clerk then determines tax rates based on various levies and overall assessed values for each unit of government. The treasurer then sends out the bills, collects payments and distributes the money to local governments.

One fundamental at play: in Chicago, both the city and Chicago Public Schools increased their levies — CPS by $114 million and the city by $94 million. (The city’s new spending plan for 2023 has no property tax increase, but the new bills just arriving reflect the city’s 2021 budget.)

Here’s what else the treasurer’s analysis says is driving the climbing bills for Chicago taxpayers.

The county is reassessed on a triennial cycle. This is the first reassessment for Chicago homeowners under Assessor Fritz Kaegi, and the first since the COVID-19 pandemic upended real estate.

While the overall amount levied by all taxing bodies increased, not all homeowners and commercial property owners are slated to pay more. But given that residential assessments after appeals at the Board of Review rose more than commercial ones, more homeowners than not will see an increase in their bills, while more commercial owners than not will see their bills go down, the new study by the treasurer notes.

Tax bills for more than 406,000 residential properties increased, while nearly 318,000 went down. Tax bills for more than 32,000 commercial parcels went up — particularly in Lincoln Park, the Near South Side and Rogers Park — while nearly 37,000 went down, the study found.

The median commercial bill rose by $1,991 to $12,448, an increase of 19%, according to the report.

“The median property tax for a Chicago home now stands at $3,599, an increase of $261. That 7.8% median increase was the highest in Cook County, although a Chicago home’s median tax bill remained one of the lowest in the county,” the report says.

Fast-gentrifying Latino communities on the city’s North and Northwest sides saw some of the highest jumps, the analysis found, while many Black neighborhoods on the South and West sides saw bills drop dramatically. The north lakefront saw taxes rise at a faster clip than anywhere else in the city.

A bill signed by Gov. J.B. Pritzker last year gave local taxing bodies across Illinois the ability to recover refunds they issued to property owners due to property overassessments, shifting the cost onto the rest of taxpayers. Rather than taxing bodies chalking up refunds awarded to taxpayers as a loss, that amount is incorporated in future bills.

Refunds are awarded based on appeals to the county assessor or Board of Review, as well as rulings at the state’s Property Tax Appeals Board. For example, if a commercial property was overassessed by $10 million, the other property owners — who had already received their notices and thought they knew what their tax burden was going to be — would have that $10 million collectively added to their tax bills the next year.

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The bill was designed to let taxing bodies — like villages and school, park and library districts — recover money they repaid to taxpayers. Such refunds could put multimillion-dollar dents in their operating budgets, since those who fight their bill hardest are often larger commercial properties. But the treasurer says it represents an ongoing “annual burden on taxpayers.”

As a result of the recapture law, tax bills across Cook County rose by an additional $131 million, the treasurer’s analysis said. CPS is slated to recoup $32.3 million, the Metropolitan Water Reclamation District will get $7.5 million and the Chicago Park District will get $3.1 million.

The impact of tax increment financing districts, or TIFs, came into “stark relief” this year, the study found. The city of Chicago has 131 such districts. Tax revenues from increasing property values in those districts do not go to city coffers. Instead, the incremental increases are socked away in each district’s TIF piggy bank. So when commercial properties’ values go up — like Willis Tower or Google’s Chicago offices — that means millions are diverted into TIF districts where revenue is dedicated to projects located in that district.

Willis Tower has the highest tax bill in the county. Of its $50.2 million bill, $8.7 million went into the LaSalle Central TIF piggy bank, according to the report. Taxes on Google’s building at 1000 W. Fulton Market grew to $8.2 million this year, with $1.2 million going to the Kinzie Conservation TIF fund.

All told, the total billed in Chicago TIFs was $1.2 billion, an increase of nearly $141 million, according to the report.

The city does have the power to free up money from TIFs, and often does use “surplus” from flush TIF funds, sending some money back to local taxing districts.

In 2020, citing the expected impact of the pandemic, Kaegi adjusted home values downward, leading to a 9.3% drop of residential property values in last year’s bills, according to the treasurer. He also dropped values for some commercial assessments, but by just 4.4%. But housing prices generally rose during the pandemic. That fact is reflected in the Chicago reassessment, and in this year’s bills. The COVID-19 adjustment was essentially wiped out, and homeowners’ assessments rose faster than they would have, had Kaegi not made the adjustment.

A steep correction is “anticipated in the North and Northwest suburbs,” which are currently being reassessed, according to the report. Those new values will be reflected on next year’s bills. The same could happen in 2024 when the south and southwest suburbs are reassessed.