Assessor admits mistakes in Lansing, offers short- and long-term solutions
By Josh Bootsma
LANSING, Ill. (April 9, 2021) – If they weren’t before, property owners in the Village of Lansing are now on the Cook County Assessor’s radar.
Last year, businesses in Lansing received their property reassessments from the Cook County Assessor’s Office. Many of them were startled by the drastic increase in their property’s assessed value and fearful of what such an increase would mean for their tax bills.
In October of last year, Lansing Area Chamber of Commerce Director and business owner Amy Todd said, “This assessment just was such a slap in the face on top of COVID, on top of the devastation that all of these small businesses, especially, have seen. It’s devastating to people who put their blood, sweat, and tears into these small businesses. … I can’t believe that this is happening.”
Todd and her family have been “Exhibit A” of the drastic increases in reassessment values, as first reported by The Lansing Journal in December.
Since that time, the Todd family and other business owners in Lansing have shared their concerns with the Cook County Assessor’s Office, some with Assessor Fritz Kaegi himself. In some cases, the Assessor’s Office has admitted mistakes and taken steps to address them.
Taxing bodies, tax levies, and tax payers
Property taxes in Lansing provide the financial backbone for many public bodies, including the Village; school districts 215, 158, and 171; the Lan-Oak Park District; the Lansing Public Library; Thornton and Bloom Townships; and other bodies fundamental to supporting life in Lansing.
All of these public bodies need money in order to operate. Every year, each of these public bodies passes a tax levy. The tax levy is the amount of money the public body will collect from tax-paying entities (such as property owners) in a given year.
The combined total of all the tax levies from all the public bodies is the amount that must be collected from all Lansing tax payers in a given year. That overall tax burden is then divided among the residential, commercial, and property owners.
Of course, not all properties are of equal value in Lansing. A small home on Roy Street should not have to pay the same amount in property taxes as The Holiday Inn Express, for example. That’s where property assessments come in.
Assessed value determines share of tax burden
A business’s assessed value, as established every three years by the Assessor’s Office, is what determines what share of the overall property tax burden is applied to that business.
The Cook County Clerk’s Office determines what the tax rate is in a given year. In overly simple terms, the Clerk takes the total amount of tax levied in Lansing in one hand, the sum total of all the equalized assessed property values in Lansing in the other, and determines a tax rate that will make them match.
“That levy is a fixed amount of dollars that has to be collected each year. It does not change in a given year no matter how you assess,” Kaegi said. “The amount of tax you pay is determined by the total amount of levy that has to be collected in your community.”
In other words, a 100% increase in a property’s assessed value (which has not been uncommon in Lansing) does not often mean a 100% increase in property taxes. However, an increase in assessed value often does equate to some increase in taxes — as long as all the other properties in Lansing don’t have 100% increases in assessed value as well.
“We made mistakes”
Kaegi has been outspoken about his data-driven approach to assessing properties. When the data isn’t accurate or accessible, mistakes happen in the reassessment process. Kaegi said the lack of good data for Lansing resulted in some errors in property assessments last year.
“In a lot of the cases that happened in Lansing, it was because we made mistakes. We didn’t have enough data,” he said.
Kaegi explained that reassessments are not done by someone walking through Lansing with a clipboard. Rather, data such as business income, business expenses, and vacancy rates in the surrounding area typically play a large role in determining a property’s assessed value.
When it comes to data in Lansing, Kaegi said, “I think the expenses were higher and the rents lower than the data that we had, and that led to us over-valuing [some properties].”
Kaegi also said that before the 2020 assessment process started, he “knew the south suburbs would be the hardest [to reassess].”
Appealing property reassessments is a normal part of business operations for many south suburban commercial and industrial property owners. Many of them have been filing appeals for years. The appeal process is in place to help correct mistakes in property assessments. Often using the help of a lawyer, commercial and industrial property owners were required to submit their appeals within 35 days after receiving their reassessments in 2020 — this was late September for Thornton Township property owners and mid November for Bloom Township property owners.
In addition to the standard appeals process, owners also have the opportunity to submit an application for a Certificate of Error. These certificates must be approved by both the Assessor’s Office and the Board of Review, and can alter a property’s tax bill for a given year after the property’s assessment has been finalized.
Scott Smith, Chief Communications Officer for the Cook County Assessor’s Office and former Lansing resident, said that 10 Certificates of Error were issued by the Assessor’s Office for Lansing properties. Some of those were included as examples in The Lansing Journal’s December article.
Decisions from the Board of Review are expected soon on whether to approve or deny the Certificates of Error.
“We have a duty to everyone to estimate the market value right, because we’re supposed to be a mirror to the market value of everything, so that we’re splitting up the levy fairly. If we’re getting it right for only half of the system but for the other half it’s inaccurate, it has consequences for everyone,” Kaegi said.
Second tax bill
Regardless of whether Lansing commercial and industrial property owners successfully appeal their assessment or receive a Certificate of Error, they won’t fully know how the effect on their taxes until they receive their second property tax bill this summer. The first installment was mailed at the end of January, and was due on March 2, with no late fees until May 3. This first installment was a simple 55% of the total amount of tax paid last year, and did not reflect any changes in the tax rate or assessment values. According to the Illinois Department of Revenue, the second tax bill will be mailed in late June. The Cook County Treasurer’s Office has said the due date will be August 2, 2021, with no late fees until October 1.
On the border
The word that many Lansing property owners have used in describing their anticipated property tax situation is “unsustainable.” The financial pain of increasing taxes is exacerbated by Lansing’s proximity to Indiana, where taxes are often much lower.
Kaegi is aware of the unique position Lansing has as an Indiana neighbor. “When something in our system causes a cold elsewhere, Lansing gets pneumonia,” he said.
He also said the tax burden for property owners in Illinois is especially burdensome because the state does not support school districts the same way Indiana does.
“In Indiana, the state supports local school districts with revenue-sharing much more than is done in Illinois. … Two-thirds of property taxes are for schools [in Illinois]. That’s why property taxes are so high in Illinois — because Illinois is last in the United States for sharing state revenues with school districts. School districts get about 25% of their funding from the state in Illinois. In most of the country, it’s closer to 50%,” Kaegi said.
“That’s a huge difference.” he continued. “That might be half of the levy right there. Imagine if the levy were half the size. The [tax] rate would be half of what it is.”
Better data = better property assessments
Kaegi says he is committed to taking the necessary steps to getting assessments correct in Lansing and the south suburbs. “All of us, we love our precious local businesses that make places special, and we want to get it right. And we actually want to get it right for them so they’re not paying more,” he said, adding, “We do this with humility.”
In an effort to follow through on his promise to “get it right,” Kaegi and his office have supported a bill currently in the IL House of Representatives called the “Data Modernization Bill.”
The bill would mandate that commercial and industrial property owners send information regarding income and expenses to the Assessor’s Office every year to ensure the Assessor’s Office has reliable data from which to create an accurate property assessment. For 2020, Kaegi said his office had to rely on third-party sources to estimate data in Lansing and surrounding communities.
“That’s kind of like the IRS giving you your income tax bill based on what they think you make,” Kaegi said. “That’s why it’s better to have data before you determine things like assessments.”
The Data Modernization Bill was re-referred to the House Rules Committee on March 27 and has been sponsored by 24 members of the Illinois House, including Chris Welch, the new Speaker of the House.
The full bill can be accessed on ilga.gov.
For the 2020 assessments, however, the Assessor’s Office did attempt to get some of this data by inviting businesses to fill out a Real Property Income and Expense (RPIE) form. According to Kaegi, his office mailed out a notice to all Lansing business owners in early 2020 to fill out the form. He said the goal of the form was to have property owners, “tell us about what [their] rent, expenses, and occupancy are before we assess it so we can get it right the first time without having to fix these basic data problems in appeal.”
“But, it’s a new process,” he continued, “a lot of people aren’t used to that. A lot of people aren’t used to trusting the assessor.” Kaegi took office in late 2018, replacing Joe Berrios, who had manned the Assessor’s helm since 2010.
Some Lansing business owners said they did not remember receiving any notification about the RPIE form early last year. The form is required when an assessment appeal is made.
Thinking of the future
For the Assessor’s Office, an ideal future is one where property owners share as much data as possible to help achieve equity in assessments.
“I think the ultimate goal is to not have to have people go through an appeal process, have to go through a Certificate of Correction process,” Smith said. “I think, you know, sitting down and talking with business owners on an ongoing basis with our office is going to be really important so that we are continuing to get this right. … We know that on a regular basis we’ll be communicating with Lansing business owners to make sure that we’re continuing to get better data from them. This is a process that, unfortunately, was broken over a period of years, and it will take some time to fix it, but it’s one that we’re still engaged with now.”
For Lansing commercial and industrial property owners, the proof of an improved assessment system — and Cook County tax system in general — will be in the property tax pudding. As the numerical dust settles from the appeals and corrections processes in coming weeks and final tax bills are received over the summer, some Lansing businesses may be asking themselves the same question they did when they first received their reassessments last year: Is this sustainable?