Commercial properties have been hard hit by the COVID-19 pandemic and are struggling to keep up with real estate taxes.
Hundred of Millions Still Owed on 2019 Taxes
Nearly $200 million remains outstanding for 2019 property taxes, or about 6% of the total owed, according to the Cook County Treasurer Maria Pappas. In addition, commercial properties, including hotels and strip malls, owe another $1.1 billion of the first payment of 2020 property taxes, which is about 1/3 the total. The deadline for payment was extended to May 3, 2021, to pay without penalty.
The Hilton Chicago Downtown owes $4.7 million, according to Crain’s Chicago Business. The W Hotel on Lake Shore Drive owes $1.3 million and the Drake owes about $1.3 million. Without tourists or conventions, these hotels have remained mostly empty throughout the past year.
Other properties, such as River Oaks Center mall in Calumet City and the now-closed Lincoln Mall in Matteson have large outstanding bills, too.
Some of those delinquent properties could end up in foreclosure, Pappas told Crain’s.
Although many counties offered extensions without penalty on both property tax bill payments in 2020, that relief didn’t help much with businesses that were closed or experiencing a drastically reduced customer base due to COVID-19 restrictions.
In addition, commercial properties were not likely to see much of a COVID adjustment because the overall dollar amount needed by taxing bodies was not going to change, and reductions in residential property taxes would be added elsewhere.
Cook County commercial properties are assessed for tax purposes at 25% of fair market value, while residential properties, which includes apartment complexes, are assessed at 10% of their fair market value. Commercial properties naturally carry more of the tax burden in this dual system.
When the north suburbs were reassessed in 2020, there was a 10% shift from residential to commercial after the assessments came out. That percentage ended up at around 2.3% after the Board of Review ruled on appeals.
Commercial property owners should appeal their assessments to the Board of Reviews to ensure the assessment amount is fair.
Unlike residential properties, the Cook County Assessor’s Office uses an income-based approach to assessing commercial properties, meaning that it takes at a group of similar properties and looks at the current market vacancy, rent, and expenses.