Monday, September 28, 2009

ASSESSMENT HIKES IN CHICAGO MAY SPARK 2010 PROPERTY-TAX REVOLT

Thousands of Chicago homeowners may be hit with higher property tax bills as expected in October, but property owners truly will be shocked if the double-digit 2009 reassessment hikes they received this summer and fall translate into 2010 tax bills that could double.

“If you are among the unfortunate group of city property owners who received a 2009 reassessment notice that doubles your assessed valuation, you could see a tax bill that skyrockets 50 percent in 2010,” warned Michael Griffin, a real estate tax appeal lawyer.

Cook County Assessor James Houlihan reassesses the value of each of the 1.5 million parcels of property in Cook County every three years through a “mass appraisal system,” which compares each property to similar properties in a given area.

The reassessment is done on a rotating basis among three regions of Cook County—north suburbs, south suburbs, and the city of Chicago. This year, it’s the city’s turn.

Reassessment notices have been sent to property owners in Rogers Park, Lakeview and Jefferson Townships. West Chicago notices are scheduled to be mailed in October.

Any 2009 reassessment hike issued by the assessor this year will not be reflected on the property owners tax bill until the 2010 second installment, which will be payable in August or September of 2010.

City apartment renters are likely to feel the assessment hikes in their wallets because tax increases are passed onto tenants in the form of higher rents. Double-digit tax-assessment hikes on rental apartments during one of the worst real estate recessions since the Great Depression are sparking a rebellion among North Side apartment owners and managers who are seeking tax relief from Cook County.

“Assessor Houlihan is attempting to extract higher assessment values for apartment buildings when the comparables clearly show declining values in the softest real estate market since 1929,” said Stuart Handler, chief executive officer of Chicago-based TLC Management Co.

“How can apartment assessment values rise sharply during a period when resale values dropped 20 percent or more,” asked a shocked Handler, whose TLC Management manages more than 2,200 rental units in 21 apartment buildings along Chicago’s lakefront.

According to Judy Roettig, executive director of the 300-member Chicagoland Apartment Association (CAA), several North Side rental property owners recently surveyed were hammered with assessed value increases ranging from 18.6 percent to a whopping 182 percent.

Dramatically higher apartment assessments could lead to higher rents in 2010, according to the CAA, which represents owners and managers more than 136,000 apartments the Chicago area.

“My apartment rents will have to go up $150 a month on each unit to try to cover these assessment increases,” said Sanford Kahn, a lawyer and an investor/owner of several small North Side apartment buildings.

Kahn estimated that rents on 1-bedroom apartments in Lakeview, now renting for $900 a month would have to be increased to $1,050. Two-bedroom layouts now renting for $1,100 to $1,200 would have to be boosted to $1,250 to $1,350.

Newcastle Limited, owner of 1,600 apartment units on Chicago’s North Side, noted that assessments have skyrocketed 62 percent at a group of seven walk-up buildings encompassing 162 units in the Sheridan Park section of Uptown.

“Real estate values are falling, and people are being foreclosed, but the assessor is ignoring the market making up the difference,” said Kahn, a landlord/tenant lawyer. “The only thing going up is real estate taxes. A property owner’s only chance is to hire a tax lawyer to go to the Board of Review and file an appeal this winter.”

“Financially squeezed apartment owners and managers have no recourse except paring back on building services and maintenance, and this could lead to safety and living standard problems,” Handler warned. “This not only impacts the living standards of renters. It also could spark the decline of neighborhoods in the city.”