The COVID-19 pandemic hasn’t only impacted the ability of homeowners to pay property taxes. It has also trickled down to commercial real estate property owners’ ability to pay their property taxes.
Commercial Property Owners Struggle to Pay Taxes
Commercial properties, including shopping malls and hotels, have seen a drop in business because of the restrictions put into place to slow the pandemic. Reduced traffic has impacted their ability to pay property taxes.
According to the Cook County Treasurer’s office, in a normal year, there exists roughly $200 million in late payments. This year is short about $230 million, even after the two-month extension provided by Cook County.
State lawmakers have moved back the property tax sale and liens on delinquent taxes by 120 days to help with the pandemic-related delay on property tax payments.
Prior to the pandemic, Cook County Assessor Fritz Kaegi was in the process of applying a new formula to the commercial real estate assessment process, which has been increasing the value of commercial and industrial real estate by about 74%. Kaegi believed that commercial and industrial properties in Cook County were under-assessed and -valued, and had been working to correct that using a lower capitalization rate.
The Cook County Board of Review, however, disagreed with the lower cap rate. They revised the assessed values of properties that were appealed, lowering the amount of taxes owed by some commercial and industrial properties. The Board of Review is the body to which property owners can appeal assessments and is charged with correcting the Cook County Assessor’s errors.
Property Owners Still Struggled After Revisions
That reduction wasn’t enough to help commercial property owners during the pandemic, where shopping malls are seeing stores close and hotels are seeing occupancy greatly reduced. The Cook County Assessor’s office uses a mass appraisal system, which looks at a group of similar properties, the current market vacancy, rent, and expenses. Since the assessment process happened pre-COVID, the current number of vacancies is not factored into the property tax formula.
Commercial and industrial property owners can file an appeal by completing a Real Estate Valuation Appeal form, which contains information about the property, including the owner’s estimate of the current fair market value of the property and a brief description of the basis of alleged overassessment. This paperwork can be submitted through the Cook County Assessor’s website.