5 Reasons Commercial Real Estate Pros Should Pay Attention To The Cook County Assessor's Race
The Illinois General Primary is six weeks away and one of the most-contested elections on the ballot is the race for Cook County Assessor. Incumbent Joe Berrios is being challenged by political newcomer Fritz Kaegi, a former investment manager. Mounting disapproval of Berrios' management of the Assessor's office has drawn global interest in the race, charges of dirty politics from Kaegi and counterattacks from Berrios. (A third candidate, property tax attorney Andrea Raila, was removed from the ballot late Monday.)
The Cook County Assessor's office is the largest in the U.S., and is responsible for valuations on 1.8 million parcels. How these properties are valued moving forward will impact the tax bills of residential and especially commercial owners. Here are five issues to pay attention to in this race. Bisnow interviewed Kaegi for this article; Berrios' campaign did not return an interview request.
1. Transparency In Valuating Properties
A ProPublica Illinois analysis of tens of thousands of property records revealed commercial and industrial property assessments were so filled with errors that they created a wide gulf between what commercial owners and residential owners pay in taxes. Residential property owners wound up paying more in property taxes than if they were properly assessed. Many commercial assessments remained unchanged over multiple reassessment periods.
One of Kaegi's core campaign promises is to make the Assessor's office's valuation methods transparent. This includes making all data sets used for assessing properties, from property details to sales and rent rolls, available online. Kaegi is campaigning as someone with a better understanding of how the real estate market values properties, and said he will be able to produce more accurate assessments.
But Berrios disputes his experience and expertise. Kaegi only recently obtained his Certified Illinois Assessment Officer designation. Kaegi highlighted his role building valuation models at Morningstar and said the certification gave him deeper understanding of the property tax system, and that achieving it was above and beyond the call of duty. Cook County does not require the certification, and no assessor in Cook County has ever held it.
Berrios has resisted calls to show how his office assesses properties in Cook County, even as Cook County Board President Toni Preckwinkle called for an independent study into how assessments are determined. The results of that study will not be unveiled until later this month, days after early voting opens.
Berrios has been criticized for accepting campaign contributions from powerful property tax appeal firms. Last month, the Cook County Ethics Board fined Berrios $41K for failing to return campaign contributions that exceeded legal limits. Berrios then filed a lawsuit to overturn an ordinance limiting campaign donations. That lawsuit now has Berrios clashing with Cook County State's Attorney Kim Foxx over the use of a special state's attorney to represent him.
Kaegi said Berrios' acceptance of campaign contributions from property tax firms that also file appeals with the Assessor's office is a conflict of interest, and vowed to not accept campaign contributions from property tax attorneys as a candidate, or if elected Assessor.
"The perception of political corruption hurts Chicago as an attractive investment market," Kaegi said.
Receiving donations is a normal practice and an indication he has been doing his job well, Berrios said in a press conference in June.
3. Commercial Assessments Have Remained Static During A Real Estate Boom Period
Many commercial assessments remained unchanged over multiple reassessment periods. Kaegi estimates two-thirds of commercial property assessments were static throughout Berrios' tenure. Kaegi said properties in the central business district are underassessed while commercial properties in outlying neighborhoods are high, placing a undue property tax burden on small-business owners.
Kaegi said providing transparency and more accurate assessments will lower cap rates on commercial properties throughout Cook County and spur investment in disinvested properties outside the CBD.
One of Berrios' biggest achievements in the Assessor's office has been making sure valuations are done on time.
“Our staff is 25% smaller than when I took office,” ProPublica reported Berrios as telling county commissioners. “But we still get the job done right. The assessment cycle has been completed either on time or early six years in a row, after the previous assessors were late for 34 years straight.”
Berrios has been criticized for hiring family and friends during his tenure, charges Berrios responded to by claiming patronage hire rules in county government do not apply to independently elected officials. Berrios has repeatedly said he works within the system and his office has provided educational and outreach seminars to ensure all property owners understand how to appeal their assessments.
Kaegi said Berrios' hires during his tenure as Assessor have had a deleterious effect on property owners who are immigrants or do not speak English. These property owners do not file property tax appeals because of the language barrier.
Kaegi has pledged to bring more diversity to the Assessor's office by hiring staff who speak more than one language, which will encourage property owners to file property tax appeals.
"There are biases in the office and a diverse workforce can help, including people who speak different languages," Kaegi said.