Property-tax assessments hit North Side real estate hard
By Pier Peterson in Inside (Lincoln Park)

The North Side's booming housing market has left many area homeowners with grins on their faces, as the homes they bought 20, 10 or even five years ago continue to increase in value. But some of those grins may disappear this week, when the new 2000 property tax assessments land in mailboxes across much of the North Side.

Renters, too, will be hard-hit by the new assessments, which will provide more grist for the mill of ever-rising rents as those increased tax costs are passed along to renters. The assessments also will probably encourage some landlords to convert leased apartments to condos in an increasingly squeezed North Side ho using market.

A complete list of new assessments for properties in Lake View township-which stretches from Fullerton to Devon avenues, and from Western Ave. to the lake-appears as an insert in this edition of Inside.

"We're seeing [assessment] increases from 25 percent to 100 percent," tax consultant Andrea Raila told us last week. "Those increases translate into a 25 to 100 percent increase in your property taxes, " she added. The highest increase so far, Raila said, is one of 410 percent, on a six-flat building in Rogers Park Township.

Lake View Township, too, will be hit hard by assessment increases, a result of the North Side's building and condo conversion boom. This year's median assessed value stands at $38,512, up almost 50 percent from 1997.

Some neighborhoods, however, will suffer more than others from their own success. Uptown property owners will see the largest hike, with assessments up 72 percent since 1997. Much of Andersonville and Lincoln Square will also see a steep surge in assessments of about 70 percent in each area. The Lincoln Park and Lake View lakefront neighborhoods will see the smallest increases, averaging 18 percent.

RENTERS CRUNCH: Homeowners will find that assessment increases will lead to increased housing costs when the tax bills arrive in the fall of next year. But renters, too, will feel the pinch, as landlords pass on all or part of their increased tax burden.

The North Side's rental market is already tight, according to Pam Alfonso, director of the Metropolitan Tenants Organization. The North Side's rental vacancy rate stands 2 percent (about the same as Manhattan's), Alfonso said, and rents in the areas are already increasing at an annual rate of 15 percent.

"Property-tax assessment has a huge impact on the rental market," Alfonso told Inside Tuesday. "You can just imagine what [an increase in assessments] does to the market, which is already out of whack," she added.

Property-tax increases also send good landlords, operating on low-profit margins, out of the rental market in fast-appreciating neighborhoods, Alfonso said. Landlords who choose to stay pass the tax increases along to their tenants, she added, or recoup their increased tax costs by scrimping on required maintenance.

Rising assessments are just part of the property-tax problem, according to Alfonso. Another is the country's system of assessment categories, which places more of the tax burden on owners of rental properties with more than six units.

"Who are the losers in this? It's really families, poor people and people of color," Alfonso said.

BRING IN THE CAVALRY: Though increased assessments will eventually translate into higher property-tax bills, property owners need not despair.

"First of all, don't panic," says Raila. "People need not panic. They need to challenge." Though property owners may not be able to completely erase any assessment increase, they can take plenty off the top if they file an appeal.

Appeal forms went out with every assessment notice, and appealing is easier than ever, according to Raila. "It should be easy enough for a taxpayer to appeal on their own, "she said. Even commercial property owners can make it through the appeal process without professional help, she added.

Good grounds for appeal include incorrect listing of property characteristics-if, for example, the assessment notice claims that your house is brick when it is, in fact, frame-or lack of uniformity in assessment-if, for instance, a similar house on your block received a lower assessment.

Property owners can also take advantage of several available exemptions, including the homeowner's exemption, which allows taxpayers who live in their own house, condo or multi-unit building to take up to $4,500 off the increase in assessed value.

Seniors can benefit from the homestead exemption, which permits them to subtract another $2,500 from any assessment increase. Seniors can also apply to have their property tax assessment frozen, which would prevent any further increase in their assessments.

Homeowners who have made improvements to their houses can delay taxation on up to $45,000 worth of those improvements for four years.

Raila will give property owners tips on challenging their assessments at 7 p.m. Monday, June 19, in Room 209 of Loyola University's Mundelein College building, 6363 N. Sheridan Rd. For more information, call the Edgewater Community Council at (773) 334-5609.

SOFTENING THE LANDING: Also softening this year's re-assessment blow is the likelihood that the property tax rate will actually decrease as assessments rise. That's what usually happens in assessment years, so long as government spending does not rise as quickly as property values.

If tax rates do indeed drop, property owners will see significantly smaller property tax bills than they might fear from the assessment notices. (The tax rate is multiplied by the assessment to obtain the actual amount of property tax to be paid.)

Chicago's Byzantine tax system briefly explained

Chicago's property tax system is notoriously complicated, and assessment is just the first step on the property-tax ladder. The Cook County assessor's office bases its assessment of a given property on the last sales price of similar properties nearby. The office tries to take into account as many variables as possible in assigning an assessment, from the number of fireplaces a house has to whether it has a heated or unheated attic.

The assessor's office uses that data to create an estimated value for a given property. Assessed valuation is based on the estimated value, and ranges from 16 percent of that valuation for residential buildings under six units, to 33 percent for larger residential buildings and 36 percent for industrial properties.

The state then multiplies the county's assigned assessment by an equalization factor, or "multiplier," expected to rise to 2.25 for the 1999 tax year. That multiplier brings Cook County into compliance with state law, which requires all property to be assessed at a rate of 33 1/3 percent. Taxes are then levied on that adjusted assessed valuation by several different taxing bodies, including the City of Chicago, the Chicago Park District and the Chicago Schools.

"The whole thing, frankly, needs an overhaul," according to property tax consultant Andrea Raila.