More than 1,100 homeowners in one of the wealthiest parts of the Chicago suburbs could see a drop in their next property tax bill, a change that could shift the tax burden away from homes worth millions.
The area in question is in New Trier Township, where 1,136 properties – the majority of which are located in Winnetka - received letters from the office of Cook County Assessor Fritz Kaegi in August, informing homeowners that a certificate of correction would be filed with the Cook County Board of Review to adjust their properties' assessed values based on new modeling data.
A certificate of correction is issued only when the assessor acknowledges an error in the calculation of a property’s value. On average, Commissioner Michael Cabonargi said the Board of Review typically receives about 30 certificates of correction total from the entire county each year.
Why is this happening?
After multiple requests from NBC 5 for information on the changes in New Trier Township, the assessor's office posted an explanation online Monday noting that the values of the 1,136 homes in question changed based on the recent addition of floodplain data into its assessment model.
The assessor's office said it began including floodplain information in its residential modeling in July, taking into account the Federal Emergency Management Agency's official maps of floodplains - areas believed to have a higher chance of flooding - when assessing property values. Similar consideration is given to things like air traffic noise, proximity to major roads and other factors, according to the assessor's office.
New Trier Township was reassessed in the spring, before the models incorporated floodplain data, the assessor's office said. After re-running models including the FEMA floodplain information, the assessor's office said it found that those properties were "about 30% less valuable than those off a floodplain."
"Relative to other area effects, this is large," wrote Rob Ross, the chief data officer of the assessor's office.
What are the numbers?
Kaegi's office did not respond to multiple requests for specifics on the homes receiving the certificates of correction, or their changes in value. But a document obtained by NBC 5 listing the 1,136 properties in question shows a total decrease in assessed value of more than $31.6 million.
The values of the homes, as well as the percentages by which they decreased, varied widely. The most expensive home on the list had an original assessed value of $4.75 million, reduced to $3.03 million - a drop of about 36%. The average rate by which all 1,136 homes decreased was about 19.4%.
The largest drop in assessed value of a home was 63.4%, while 128 of the properties saw a decrease of less than 1%. Six hundred of the homes had original assessed values of more than $1 million, with the majority seeing a decrease in value between 20% and 30%, reaching as high as 58% in one case.
How does it impact market value?
Questions remain about the methodology used in the modeling, particularly when compared to sales data. Kaegi's office says floodplain data for the homes had "significant effects on the market value."
But for some homes, that remains to be seen. One of the most expensive homes on the list had an original assessed value of about $4.3 million. Its new assessed value sits at $2.5 million - even though the house sold for $4.2 million less than two years earlier.
Another home on the list had an original value of $2.3 million, dropping to less than $1.7 million based on the new model. But that property sold for $4.1 million on Aug. 26 - one week after the assessor sent the letters to the 1,136 properties in question.
These new, lower assessed values will not be official, leaving the calculations of the forthcoming tax bills in flux, until the Board of Review completes its review of each individual case.
Cabonargi said Tuesday that the Board of Review had yet to receive the certificates of correction, but that the Board was in constant communication with Kaegi's office on the issue.
Why new models now?
Properties in Cook County are reassessed every three years on a rotating schedule: the north suburbs in 2019, the south suburbs in 2020 and the city of Chicago in 2021, then all over again in that same order. This schedule makes the current reassessment of the north suburbs the first to be completed by Kaegi, who took office late last year.
Kaegi defeated longtime incumbent Assessor Joe Berrios in the 2018 Democratic primary, campaigning on a promise to bring fairness and transparency to the office after a Chicago Tribune/ProPublica Illinois investigation revealed widespread inequities in the residential property tax system under Berrios.
"We're using completely different models than the previous administration," assessor's office spokesman Scott Smith said in a phone interview Monday. The note posted online Monday said that to the knowledge of Kaegi and his staff, the office under Berrios did not account for floodplain designation in the past, and that if that data was considered, it was not done "consistently or systematically."
Smith did not offer further information or evidence indicating if Berrios' office had considered floodplain data one way or the other.
Kaegi's office said all models countywide would take floodplain data into account moving forward, though any homeowners in a floodplain outside the north suburbs will not retroactively receive certificates of correction.
"The inclusion of floodplains in our current modeling framework is an improvement to the model based on current market conditions," the assessor's office said. "The fact that previous models did not include these data in prior years is not an error, it’s an advancement in our methods. It was simply not possible to account for floodplains under the older methods."
What’s next and what does this mean for other homeowners?
Whether the drop in assessed value of these 1,136 homes will result in higher tax bills for others is not yet clear. The assessor’s office and a spokesman for the Board of Review said they could not definitively answer whether other homes’ taxes would increase as a result, citing further calculations to be considered.
Exact tax bills have not yet been determined, as Kaegi's office said local taxing districts have not yet announced their budgets.
Cabonargi said the Board's duty now is, in a sense, "re-slicing the pie," adding that taxing districts "will always receive 100% of the money they've levied."
He added that the Board and Kaegi's office were "still working out a timeline," working backwards from the July 1 deadline by which the next property tax bills must be sent.
