Gary H. Smith
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The Truth about the Upcoming Tax Rate

By Gary Smith
04/01/2020
The Truth about the Upcoming Tax Rate

Assistance in your tax planning calculations

You probably have read some of the numerous media reports regarding the drastic increases in assessed values for both residential and commercial/industrial properties in Northern Cook County.  Assessor Fritz Kaegi is seemingly unconcerned about a resulting tax increase to properties. He is relying on a sharp decrease in the tax rate to balance out many of the assessment increases in value that he placed on the Northern Cook County residential properties. Specifically, he is on record claiming that, if his proposed assessments stayed in place, Evanston would have an average 2019 tax rate of around 5%, down from 9.50% in 2018.

In this moment of heighten tensions and financial anxieties, I believe it is more important than ever to have mathematical confidence in predictions regarding future property tax burdens. Therefore, in response to Assessor Kaegi’s claims, I set out to calculate a more realistic average tax rate, one that is based on facts and reality, in order to provide my clients with the best possible advice.

Based on the currently available assessment appeal results, Assessor Kaegi’s estimated tax rate of 5% for Evanston, and an example, is far too low. In fact, a 5% average tax rate for Evanston properties was never a reasonable possibility. As indicated in the attached table [1], the average Evanston tax rate after the release of the initial reassessment figures, but before any appeals, would have been approximately 6.6743%. However, after appeals, this number increases to approximately 7.9928%. (Please note the attached table only includes representative five townships. The methodology utilized would also be applicable for all other Northern Cook County townships).

Why does this matter, and how does it impact your actual taxes? The amount you owe in taxes is calculated by multiplying the assessed value for your property, the multiplier (a uniform number for all of Cook County) and your local tax rate. As an example, take an Evanston property with an assessed value of $50,000 for the 2018 tax year. If you multiply this by the 2018 multiplier of 2.9109 and the average 9.50% tax rate for 2018, the tax amount owed is $13,827.

 Now let’s say this assessment increased by 30% for 2019 to $65,000 (a fairly low assessment increase by 2019 standards). If you multiply this by the assumed 2019 multiplier of 2.8236[2] and Assessor Kaegi’s estimated tax rate of 5%, the tax amount owed is only $9,177. However, if you substitute this 5% tax rate with the more realistic 7.9928% tax rate mentioned above, you now owe $14,670.  The actual final tax bill  is 62% higher than the way the Assessor “calculated” the impact.

As illustrated by the above example, it is crucial for taxpayers to have a realistic expectation of tax rates when preparing for future tax burdens. The 5% Evanston tax rate touted by Assessor Kaegi only misleads taxpayers as to the amount they will actually owe in 2019. It is critical, perhaps now more than ever, that I help my clients reasonably anticipate the tax liabilities for their properties.  As always, I care about your property – and your property taxes – as much as you do, and it is my hope to provide some measure of certainty in these uncertain times.


[1] When developing these calculations, all 2018 assessment value numbers and all 2019 assessment value numbers before appeals were taken from the Cook County Assessor Triad Assessment Reports as reported and published on the Assessor’s website. All estimates or assumptions required to be made to calculate a final reasonable and reliable figure are specified below:

  • Average 2018 tax rates per township (calculated based on a reasonable averaging and estimate of all tax rates in the specified township test);
  • Assumed a 4% increase across the board on 2019 spending over 2018;
  • Assumed a 2019 multiplier of 2.8236 (slightly driven by assessment changes, but mainly driven by the fact that assessment increases were applied where and when the market was actually already suffering a downward or flat trajectory of value in many areas of the county);
  • Assumed the Assessor’s numbers for total township assessed value (and residential and commercial breakdowns) are correct; and
  • The table only includes five selective reassessed North Triennial townships. As to the five that are included, the following assumptions were made after a critical review of cases filed and decisions issued in each township, as well as a prior publication vetting by selected experts:
    • Evanston – 80% of residences filed appeals and 65% of the originally proposed increases remained on those properties; 100% of the increases remained on those properties that did not appeal; 90% of commercial/industrial filed appeals and 35% of the originally proposed increases remained on those properties; 100% of the increases remained on those properties that did not appeal;
    • New Trier – 80% of residences filed appeals and 55% of the originally proposed increases remained on those properties; 100% of the increases remained on those properties that did not appeal; 90% of commercial/industrial filed appeals and 35% of the originally proposed increases remained on those properties; 100% of the increases remained on those properties that did not appeal;
    • Elk Grove – 70% of residences filed appeals and 60% of the originally proposed increases remained on those properties; 100% of the increases remained on those properties that did not appeal; 95% of commercial/industrial filed appeals and 30% of the originally proposed increases remained on those properties; 100% of the increases remained on those properties that did not appeal;
    • Northfield – 75% of residences filed appeals and 65% of the originally proposed increases remained on those properties; 100% of the increases remained on those properties that did not appeal; 90% of commercial/industrial filed appeals and 30% of the originally proposed increases remained on those properties; 100% of the increases remained on those properties that did not appeal;
    • Palatine – 70% of residences filed appeals and 65% of the originally proposed increases remained on those properties; 100% of the increases remained on those properties that did not appeal; 85% of commercial/industrial filed appeals and 35% of the originally proposed increases remained on those properties; 100% of the increases remained on those properties that did not appeal.

[2] Since initial writing, the Illinois Department of Revenue released on March 18, 2020, a tentative 2019 property tax equalization factor of 2.7523 for Cook County. When considering the ultimate effect of Board of Review reductions, the assumed 2019 multiplier utilized is confirmed.

  Evanston New Trier Elk Grove Northfield Palatine
2018 TAV                     $1,018,038,117                     $1,764,652,308                     $1,339,120,769                     $2,143,012,053                     $1,312,837,019
Average Tax Rate (for entire twsp) 9.500% 8.350% 9.550% 7.850% 10.250%
Multiplier 2.9109 2.9109 2.9109 2.9109 2.9109
2018 Total Spending (est)                         $281,523,680                         $428,916,655                         $372,263,455                         $489,690,362                         $391,707,571
2019 Spending (2018 plus 4%)                         $292,784,627                         $446,073,321                         $387,153,993                         $509,277,977                         $407,375,874
           
2018 Res TAV                         $740,112,996                     $1,650,172,194                         $619,026,802                     $1,513,984,141                     $1,046,441,299
2018 C/I TAV                         $277,925,121                         $114,478,096                         $720,093,967                         $629,027,912                         $266,395,720
           
2019 Res TAV                         $927,101,213                     $1,851,483,141                         $747,167,368                     $1,721,934,431                     $1,150,774,996
2019 C/I TAV                         $626,513,911                         $225,049,633                     $1,311,983,831                     $1,145,385,525                         $478,767,195
           
2019 Res Diff from 2018                        $186,988,217                        $201,310,947                        $128,140,566                        $207,950,290                        $104,333,697
2019 C/I Diff from 2018                        $348,588,790                        $110,571,537                        $591,889,864                        $516,357,613                        $212,371,475
           
Asmd 2019 Res Increase from 2018 After Appeals                         $134,631,516                         $128,839,006                           $92,261,208                         $153,363,339                           $78,771,941
Res % Increase (assumed) 118.19% 107.81% 114.90% 110.13% 107.53%
Assumed 2019 Res After Appeals                         $874,744,512                     $1,779,011,200                         $711,288,010                     $1,667,347,480                     $1,125,213,240
Assumed 2019 C/I After Appeals                         $422,589,469                         $160,365,284                         $918,377,071                         $820,080,229                         $352,406,167
C/I % Increase (assumed) 152.05% 140.08% 127.54% 130.37% 132.29%
Assumed 2019 Multiplier 2.8236 2.8236 2.8236 2.8236 2.8236
           
Average 2019 Est Tax Rate (before appeals) 6.6743% 7.6080% 6.6588% 6.2904% 8.8538%
Average 2019 Est Tax Rate (after appeals) 7.9928% 8.1460% 8.4137% 7.2511% 9.7641%
% Final Tax Rate is of 2018 84.13% 97.56% 88.10% 92.37% 95.26%