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Skyrocketing Property Taxes Are Putting Cook County Companies Out of Business

By Gary Smith
10/07/2021
Skyrocketing Property Taxes Are Putting Cook County Companies Out of Business

Cook County commercial property reclassification pushes some businesses to close rather than face mounting tax hikes.

Designations Matter in Assessment Process

When Cook County Assessor Fritz Kaegi completed the first round of assessments under his leadership in 2019, commercial property values in the northern townships rose 98 percent, according to the Cook County Board of Reviews. That dropped to 35 percent after appeals to the Board of Reviews were completed.

Part of that valuation hike was the change in some property designations. A suburban greenhouse and floral center in Palatine was forced to close its doors after the 2019 re-assessment changed its designation. The business was a farm with a small retail shop designated commercial and changed to the entire plot of land designated commercial. That raised their bill from $25,000 to $183,000 in 2019 and  up to $151,000 in 2020.

According to the assessor’s office: “Land assessed as farmland pays two and a half times less in property taxes than commercial property.” The assessor’s office is also claiming that the appeal filed didn’t provide the right documentation to support the assessment as farmland.

This incident is an example of the importance for all property owners to pay attention to assessment paperwork and keep accurate records of any changes the property undergoes.

Commercial Property Carries Burden of New Assessment Process

In August, Cook County Treasurer released an analysis of the 2020 tax bills, which showed the tax load shift to commercial and industrial property owners, with a 6.2 percent increase, or $410 million, from the previous year, while residential property taxes rose 1.3 percent, or $114 million.

Reports from the International Association of Assessing Officers stated that commercial properties were under-assessed in 2018, which is partially why the tax burn has been shifting from residential properties to commercial properties since 2019.

Commercial property owners need to be aware of information that can help with the appeals process and what documentation will be important in that process.

If a commercial property contains a storefront or retail space, the assessment process takes the income-producing capacity into account. Being able to document the expenses attached to the rent-producing space will be important in the appeals process.

In addition, commercial assessments also consider depreciation, especially when there are construction costs involved. There are other factors, which are similar to residential property assessments, such as comparable sales (and rents) in the area.