Berrios, Houlihan feud leads to one big property tax mess

Posted by Greg H. at 8/11/2010 11:00 AM CDT

You might call it the $500-million question.

By my swag estimate, Cook County homeowners stand to pay that much — maybe even more — in extra property taxes when second-half bills arrive shortly after Election Day in November. That’s $500 million that businesses won’t have to pay.

Both Cook County Assessor Jim Houlihan and his blood enemy, Board of Review Commissioner Joe Berrios, agree that homeowners are about to get needlessly zapped. And they blame — who else — each other.

The situation is so bad that Mr. Houlihan warns that even Mayor Richard M. Daley’s prized tax-increment financing pot may get hit with some fallout.

Here’s what’s going on:

For decades, property tax assessments in this town have been a joke, and everyone knows it. 

Just about every property — businesses and homes alike — was valued at less than its true market value. That way, everyone could think they’d pulled a fast one on the tax man. Only they hadn’t, because everyone else was underassessed, too.

About a year ago, Mr. Houlihan decided to end the charade. Rather than pretend that homes were assessed at 16% of their market value and businesses at 36% to 38%, he pushed through an ordinance allowing him to formalize the “real” rates — 10% for homes, 25% for businesses.

To even things out, Mr. Houlihan hiked the market value of a lot of businesses. But, in the end, he says it didn’t make any difference because the rate of assessment on the market value dropped, from 38% to 25%. So the final bill stayed about what it was, he says.

But Mr. Berrios and the other two members of the Board of Review, which can overturn Mr. Houlihan’s work, see it differently.

According to Mr. Berrios — who is running to succeed Mr. Houlihan as assessor — the law requires them to justify any increase in market value, even if the assessment on that market value has dropped. So they’ve been getting — and granting — lots of appeals from business-property owners.

Mr. Berrios says he didn’t have a choice and Mr. Houlihan should have known this would happen.  

Mr. Houlihan insists the board did have a choice because only the final tax bill counts, not changes in one of the factors used to compute the bill.

Either way, lots of money is involved. According to Mr. Houlihan’s office, more than $200 million in taxes could be shifted just from Loop office building owners to homeowners. Add in all the office buildings elsewhere in Chicago and the county — not to mention factories and shopping centers — and the eventual tab easily is $500 million and could be billions, according to Northwestern University management professor Don Haider, a former city of Chicago budget director.

We won’t know for sure how much until Mr. Berrios and the rest of the board complete their work this fall.  But Mr. Houlihan is warning that even the mayor’s TIFs could lose money.

Outside experts say there’s a bit of truth to what both Mr. Houlihan and Mr. Berrios are saying. 

Clearly it’s a mess. Can’t someone fix this?

Who appeals in Chicago ?

The squeaky wheels among Cook County property taxpayers will get their grease as usual.
And the silent wheels will carry an increased portion of the county tax burden, unless they take action soon.

Source: http://news.medill.northwestern.edu/chicago/news.aspx?id=109159

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