Latest Post | Last 10 Posts | Archives
Previous Post: Campaign fodder
Next Post: This Is Illinois
Posted in:
* Basically, Burke’s firm obtained these tax reductions by focusing on various money-losing units…
A law firm headed by Ald. Edward M. Burke, one of Chicago’s most powerful Democrats, has helped Republican presidential candidate Donald Trump and investors in his luxury downtown hotel cut their property taxes by 39 percent over seven years, saving them $11.7 million, a Chicago Sun-Times analysis has found.
Burke — one of 47 Chicago aldermen who voted to approve development of Trump International Hotel & Tower in 2002 — won reductions in six of the seven years for the hotel, retail and other commercial space in the skyscraper, records show. […]
In 2010, Burke saved Trump’s company almost $3.5 million by convincing Houlihan he’d overvalued the entire skyscraper. Houlihan lowered his $432 million estimation of the value to $122 million after Burke argued that most of the residential condos hadn’t been sold, the tower’s storefronts along the river were vacant, the hotel had largely been unoccupied and sales of hotel condos hadn’t worked out as planned. Burke’s law firm even called the concept of selling hotel rooms to investors a “failed business model.” […]
In 2011, Burke saved Trump and his growing group of hotel investors $1.7 million by convincing Houlihan’s successor, Joseph Berrios, another powerful Democratic Party leader, that Houlihan had been overvaluing the commercial space, which was now taxed separately from the residential property.
Since nobody was renting commercial space, Cook agreed to lower the tax burden. And Burke’s firm actually sued Chicago Public Schools, City Hall, Cook County and other governments for refunds. The case is still pending and Burke handed it off to another firm to avoid a direct conflict.
* But…
Of Illinois’ 10 casinos, none is as lucrative as Rivers Casino in Des Plaines. Since 2012, it’s reported revenues of more than $400 million a year after winnings — twice as much as any other casino in Illinois.
That success makes its property quite valuable, according to Cook County Assessor Joseph Berrios.
But, year after year, Rivers’ owners have argued that profits shouldn’t matter when calculating how much the casino is worth. And each year they’ve gotten an appeals panel to override Berrios, giving them more than $4 million in property-tax cuts since the casino opened nearly five years ago.
Figuring the value of the casino property should be “based upon what this property would be worth if we weren’t operating a casino there,” says Neil Bluhm, the politically active billionaire real estate developer who chairs the casino’s owner, Midwest Gaming & Entertainment.
So, on the one hand, Cook takes into account money-losing units when estimating taxes. And on the other, it discounts the vast sums of money being made at a different property.
It’s a system ripe for manipulation.
*** UPDATE *** From the assessor’s office…
Cook County Assessor Joseph Berrios was not the only assessor to lower the assessment on Trump Tower. In 2009, then-Assessor James Houlihan issued a Certificate of Error asking the Cook County Board of Review (BOR) to lower his own earlier assessment on the hotel portion of that building by 95%.
Upon taking office as Assessor (after serving on the BOR), Mr. Berrios identified other errors made by the previous administration. He thus lowered the assessment on Trump Tower’s retail space, much of which was never fully built. That area remains raw, undeveloped space. Other past errors were addressed over several years and, under Assessor Berrios, the Trump building is now properly classified and assessed.
The Cook County Assessor’s Office uses the standard procedure of income-approach-to-value when assessing industrial and commercial real estate. If, after verifiable good faith effort to rent space and otherwise generate revenue, some vacancy still exists, the resulting lower income and its effect on the property’s value is taken into consideration here. Simply put, when income is down, assessed value is likely down. When income is up, value is up.
This impartial system resulted in facts which did not appear in the Sun-Times story, including: the Assessor’s Office did not lower Trump Tower’s assessment for Tax Year 2013 and, as the market improved, we then raised the assessment on the retail space by 33% and the hotel by 32.5% for Tax Year 2015. In fact, Trump Tower’s hotel is now the third-highest assessed hotel in Chicago, ahead of the Peninsula, Waldorf and Park Hyatt. Further, CCAO’s assessed value of the condominium portion was raised by 17% for TY15.
Commercial real estate is assessed at 25% percent of its fair market value. Residential real estate is assessed at only 10% of fair market value.
Thank you.
Tom Shaer
Deputy Assessor for Communications
Cook County Assessor’s Office
posted by Rich Miller
Monday, May 9, 16 @ 11:32 am
Sorry, comments are closed at this time.
Previous Post: Campaign fodder
Next Post: This Is Illinois
WordPress Mobile Edition available at alexking.org.
powered by WordPress.
Insanity.
Comment by Formerly Known As... Monday, May 9, 16 @ 11:38 am
–And Burke’s firm actually sued Chicago Public Schools, City Hall, Cook County and other governments for refunds. The case is still pending and Burke handed it off to another firm to avoid a direct conflict.–
That’s a relief. Wouldn’t want a “direct” conflict of interest when the most powerful alderman sues the city.
Comment by wordslinger Monday, May 9, 16 @ 11:41 am
OK it is neatly noon and so far Capt Fax has “missed” tieing the BigBrain vow for a new hate speech campaign at Durkiee’s funder, the $5 million campaign cash drop and the likelihood the spirit of compromise will be flourishin’ this week.
We are sure there is an ‘xplaintion Lucy
Comment by Annonin' Monday, May 9, 16 @ 11:45 am
Manipulation or legalized thievery?
Comment by Anonymous Monday, May 9, 16 @ 11:46 am
The Suh-Times article was another example of an “apples and oranges” comparison. The value of a property is not related to the profitability of activities taking place within the property, unless those profits (or revenues) affect the rent under the lease. The real scandal is that the Assessor’s office has a very long practice of overvaluing properties so that the fraternity of assessment lawyers has to be hired in order to convince the government to do the right thing.
Comment by 39th Ward Monday, May 9, 16 @ 11:49 am
Wordslinger - kinda like how it’s a relief Speaker Madigan doesn’t get directly involved in things like cutting Mesirow’s valuation 60%, who just by coincidence hired his obviously-more-talented-than-other-candidates son. http://madisonrecord.com/stories/510722355-chicago-alderman-saved-trump-11-7-million-in-property-tax-appeal-scheme
Comment by lake county democrat Monday, May 9, 16 @ 11:57 am
Ok then, value my property as if there were no house there.
Comment by Skeptic Monday, May 9, 16 @ 12:18 pm
“Heads I win, tails you lose.” It’s the new American way.
Some years ago I heard an attorney compare the Cook Country Property Tax to Einstein’s Theory of Relativity–so complicated that only a few people really understood it. That complication is there for a reason.
Comment by Harry Monday, May 9, 16 @ 12:28 pm
For commercial properties the value is based upon the net rental value capitalized at a market capitalization rate. By law, you do not consider the revenue/income generated by the business renting or occupying the property.
A property that is vacant, thus not collecting rent, is less valuable than a property leased and collecting rent.
Comment by MOON Monday, May 9, 16 @ 12:29 pm
ripe cor manipulation by the ultra wealthy… which means middle and low class people and small businesses pay the full ride and rates jacked up to capture money lost from the discounts the wealthy get.
Comment by Ghost Monday, May 9, 16 @ 12:33 pm
It’s the Chicago Way
Comment by Empty Suit Monday, May 9, 16 @ 12:50 pm
The top Gaming Tax Rate of 50% does not kick in until $200 million. So the only Casino to kick in some dough at the top tax rate into the Common School fund is this Casino. More crime, less job creation, the much promised money for schools fail to appear. Casinos is just another name for Taxpayer Rip-off.
Comment by Beaner Monday, May 9, 16 @ 12:51 pm
A property’s worth should be stable (barring a prolonged recession) and a reflection of its long-term worth through a present value discount of its likely future income earnings, not merely its start-up year.
I’m more sympathetic to the Casino’s argument than Trump because its not the property that’s driving its worth, but rather a monopoly license issued by the state of Illinois.
Comment by Chicago Taxpayer Monday, May 9, 16 @ 12:52 pm
“Manipulation”? C’mon. Call it what it is: Corruption. Which is a word synonymous with Chicago politics.
Comment by Anonymous Monday, May 9, 16 @ 1:10 pm
You can go to the Cook County Assessor’s website and enter the addresses of various buildings in Streeterville, Old Town, Lincoln Park, Gold Coast, etc..
Check out the “appeal history” and you can get an accurate view of the proposed valuation and the final valuation. Sometimes the difference is shocking. I know a $2.5M penthouse at the Hancock that is being valued by the assessor at $699k.
I wouldn’t be surprised if the value of the school/city’s budget woes equals the difference between the correct fair market value of all the property in the City minus the amount that is discounted based on tax appeals.
Comment by PurpleHaze Monday, May 9, 16 @ 1:20 pm
The board of review needs a complete overhaul that’s were a majority of these insane decisions are being made. Just look at the D2 of those 3 and that tells the story
Comment by Anonymous Monday, May 9, 16 @ 1:21 pm
Could it be that the property tax system is rife with corruption and is hurting middle class families at the expense of the political bosses. I think I heard that before and it was dismissed as a low blow unrelated to the budget
Comment by Lucky Pierre Monday, May 9, 16 @ 2:09 pm
==Commercial real estate is assessed at 25% percent of its fair market value. Residential real estate is assessed at only 10% of fair market value.== Wow!
Comment by SAP Monday, May 9, 16 @ 3:55 pm
We are assessed at 34% here in Sangamon Co for residential, right? Or am I recalling this incorrectly?
Comment by Beaner Monday, May 9, 16 @ 4:16 pm
I think it is like comparing apples to oranges. The casino is profitable because of its license to operate a gambling facility, not because the facility itself. The empty retail stores are designed to generate income through retail, and that design is flawed by evidence that the stores are empty.
Comment by Not It Monday, May 9, 16 @ 4:45 pm
The lawsuit refers to the Certificate of Error practice which requires the Cook County States Attorney to present the Assessor’s mistake to a County judge to approve if the reduction in value is more than 50,000 of equalized assessed value. ALL taxing bodies are notified of the legal procedure in order to have the opportunity to contest the proposed reduction of value.
Comment by qualified somebody nobody sent Monday, May 9, 16 @ 5:12 pm
Too bad about Tom Shaer
Comment by DuPage Dave Monday, May 9, 16 @ 6:30 pm
Fire all these people . Rivers needs to pay regardless of their lawyer. Sad but this is Cook County and it is Illinois.
Side bar - the liberal progressive Burke does not care who he earns a fee from,
Comment by cannon649 Monday, May 9, 16 @ 7:13 pm
–Side bar - the liberal progressive Burke does not care who he earns a fee from,–
Are “liberal progessive” double curse words?
The reasons guys like him can run circles around guys like you is that you’re hung up on childish, shallow labels.
Comment by wordslinger Monday, May 9, 16 @ 8:31 pm
The Sun-Times “Watchdogs” consistently disregard the truth by omitting pertinent facts that disrupt their already-written storyline. it’s a shame.
Comment by Juvenal Tuesday, May 10, 16 @ 7:50 am