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A make-work program for property tax appeals lawyers?

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Illinois

* From ProPublica Illinois’ explanation of how it did its deep-dive into Cook County’s property tax appeals process…

The analysis shows a large percentage of first-pass reassessments under Berrios remained the same over multiple reassessment periods. For example, 51 percent of the approximately 40,000 PINs in the analysis had the same first-pass value for the 2012 reassessment as the 2009 reassessment. For the 2015 reassessment, 39 percent of first-pass values were identical to the 2012 reassessment. Twenty-three percent of first-pass values were the same for all three reassessment periods.

By comparison, just 1 percent of first-pass values for the 2003, 2006 and 2009 reassessments conducted under Houlihan stayed the same from one reassessment to the next.

In cases when the first-pass values didn’t change, many of the property owners filed appeals and won reductions that lowered their tax bill – only to see the value snap right back to the same first-pass value during the next reassessment. [Emphasis added.]

* I asked ProPublica for the numbers behind its “many of the property owners filed appeals and won reductions” line and here’s what they sent..

Of the parcels that saw no change in assessment, 77 percent had appeals filed on them. Of the ones that had appeals filed on them, 74 percent won a reduction, only to have the value snap back to the same number.

Why would so many of those property values snap right back to the previous values? Could this be some sort of deliberate make-work scheme for tax appeals attorneys, who often make money based on the amount they successfully reduce assessments on appeal and who then contribute to Assessor Berrios’ campaign committee?

In other words: Lawyer gets client’s property value reduced on appeal, lawyer gets cut from client, lawyer makes Berrios contribution; assessor’s office assigns pre-appeal value during the next round of assessments, lawyer again gets client’s value reduced on appeal, lawyer again gets cut from client, lawyer again makes Berrios contribution; assessor’s office again assigns pre-appeal value during the next round, and etc. ad infinitum.

* The assessor’s office sent me a long reply that pointed out what it claimed were some real problems with the ProPublica/Tribune story. The reply (click here) did not fully answer my question, however, so I sent them this…

OK, but I don’t see anything in your response that addresses why a property that was assessed at a certain level and then had the value lowered on appeal would then have the valuation snap back to the old level again at the reassessment.

I’ll also point out this statement from the Trib story: - “There is no rationale for having no change in these initial valuations,” said Richard Almy, former executive director of the International Association of Assessing Officers. “Especially if the assessor later agreed to a reduction, there’s no earthly reason for them to go back to the same value.”

* The assessor’s reply…

That is incorrect. Among the “earthly” reasons would be if the reduction-on-appeal were based on new data about revenue of an income-generating commercial building. Again, valuation of income-generating commercial buildings is done based on numerous factors, and revenue is tremendously important in the income-approach-to-value method of assessment used in for commercial buildings in Cook County.

We should never assume the revenue figures are the same for the next triennial, sometimes not even for the next single-year period. Therefore, a reduction-on-appeal may not be the fairest figure the next time around. In many of those cases, we consider the original (pre-appeal) number to once again be a reasonable starting point.

Still other reasons for returning to the former number as a reasonable starting point are:

· Turnover of previously below-market leases, resulting in increases built into the new leases (more revenue)
· Past reduction was based on the loss of a major tenant and revenue. That loss has since been made up and revenue is higher than in the period which had resulted in the return to the former Assessor First-Pass number.
· Improving market conditions
· New triennial change in the underlying land value
· Prior damage now repaired
· New construction/added square feet making up for the reduction in value that was granted on appeal, thus raising the former lower-by-appeal number back to the original Assessor First-Pass figure

posted by Rich Miller
Friday, Dec 15, 17 @ 11:43 am

Comments

Anyone want to make the case that Berrios is actually a good assessor? Anyone?

Comment by Ebenezer Friday, Dec 15, 17 @ 11:48 am
It’s nice of Rich to lay out how the whole thing works for everyone. (Think parts of that will make it into some mailers?) This could be a general explanation for the Madigan machine as a whole, just swap in Chicago building permits and “consultants” instead of property tax rates and attorneys, etc..

Comment by m Friday, Dec 15, 17 @ 11:52 am
Apologies, I meant to quote this-> =In other words: Lawyer gets client’s property value reduced on appeal, lawyer gets cut from client, lawyer makes Berrios contribution; assessor’s office assigns pre-appeal value during the next round of assessments, lawyer again gets client’s value reduced on appeal, lawyer again gets cut from client, lawyer again makes Berrios contribution; assessor’s office again assigns pre-appeal value during the next round, and etc. ad infinitum.=

Comment by m Friday, Dec 15, 17 @ 11:53 am
I’m going to with Occam’s Razor here. The simplest explanation is, bar none, what Rich just laid out. And it makes sense - everyone benefits (except folks who can’t hire property tax appeals lawyers, but who cares about the poor?)

Especially since the assessor’s reply is just obfuscation by jargon. Those bullet points don’t seem to justify an automatic return to the prior value; they just explain why it’s possible that the value *could* return to prior levels.

Comment by PJ Friday, Dec 15, 17 @ 11:58 am
Speaker Madigan and the assessor he controls

Comment by Just Visiting Friday, Dec 15, 17 @ 12:02 pm
Berrios is truly a New Dealer

Comment by Precinct Captain Friday, Dec 15, 17 @ 12:02 pm
What operationally changed, in the initial assessment process, between Houlihan and Berrios?

Comment by walker Friday, Dec 15, 17 @ 12:24 pm
“of the ones that had appeals filed on them, 74 percent won a reduction, only to have the value snap back to the same number”

So we are supposed to buy this sales pitch —
that each and every one of that 74% had the exact mixology,
including precisely the exact “income-approach-to-value” variable and all the other variables in Berrios’ fancy assessment cocktail,
to hit the exact same evaluation number at the triennial assessment.

Wow, that guy’s really good. /s

Comment by cdog Friday, Dec 15, 17 @ 12:25 pm
$1,000,000 dollar home in Chi town property taxes = around $12K, In average western suburbs $500-700K pay about the same $12K.Almost every one of my wealthier friends on Northwest side have challenged thier assessment in the past 3-4 years most got reduction or freeze that used lasers . Try that in the burbs doubt you’ll win.

Comment by NorthsideNoMore Friday, Dec 15, 17 @ 12:29 pm
“What operationally changed”

I am trying to understand if the growth economy before 2009 and the steady state economy after that has some influence here.

Comment by Bigtwich Friday, Dec 15, 17 @ 12:32 pm
Mark,

What operationally changed is that they just started resetting the value to former assessment. There was a chart in the story that compared the rate of identical valuations under Berrios and Houlihan. This is an issue specific to Berrios.

Comment by LilLebowskiUrbanAchiever Friday, Dec 15, 17 @ 12:37 pm
== Why would so many of those property values snap right back to the previous values? Could this be some sort of deliberate make-work scheme … ==

It could be institutional, but for a different reason. Appeals boards are often your neighbors / friends / acquaintances. Sometimes it is just easier to grant a partial reduction and then claw it back the next year or two instead.

Comment by RNUG Friday, Dec 15, 17 @ 12:39 pm
Used Lawyers spell correct got me…although there are some lawyers i’d like to use a laser on.

Comment by NorthsideNoMore Friday, Dec 15, 17 @ 12:39 pm
While it is correct to say that Berrios collects lots of money from tax appeal lawyers, what the summaries often omit is that Berrios actively solicits the campaign contributions from the lawyers. If a lawyer appeared at the Board of Review (while Berrios was a commissioner on the Board) or the Assessor, his or her name would soon appear on the mailing list for upcoming Berrios fund raisers. At the BOR, filings were often initialed to indicate whether or not the lawyer was a donor and what pol received the money.

Comment by Say What? Friday, Dec 15, 17 @ 12:42 pm
Sorry, meant to say:

What operationally changed is that they just starting resetting to the prior assessment under Berrios. This wasn’t done under Houlihan. It was a clear policy shift under Berrios. And to pretend that there is some rationale justification for it is insulting.

Rich, keep pushing them on their non-answers. This whole thing is outrageous.

Comment by LilLebowskiUrbanAchiever Friday, Dec 15, 17 @ 12:46 pm
I wish someone would look at the Board of Review also

Comment by James the Intolerant Friday, Dec 15, 17 @ 1:07 pm
Of course it’s a make work program. The law firms that specialize in churning out these appeals can probably file them in their sleep.

Comment by Chicagonk Friday, Dec 15, 17 @ 1:09 pm
Say What? That doesn’t sound legal. Kind of rings of a cog in a pay-to-play wheel.

Comment by cdog Friday, Dec 15, 17 @ 1:11 pm
@Say What - Now that is some juicy information. Is that something you saw first hand?

Comment by Chicagonk Friday, Dec 15, 17 @ 1:17 pm
Yes, had property value jump up every year after successful appeal. Used five different law firms for this Cook County property. The lowest decrease in property value was when a DuPage firm was used.

Comment by Barrington Friday, Dec 15, 17 @ 1:19 pm
Since the problem of the same assessment over and over was negligible under Houlihan, that means Berrios did not inherit the policy. Consequently, he owns it.

Comment by anon2 Friday, Dec 15, 17 @ 1:21 pm
“…there is no rationale…..no earthly reason”….for not having a criminal investigation. Preferably federal. Get those search warrants going. W a scheme this obvious, once illuminated, gotta be some wonderful email.

Where is the outrage?

Comment by Langhorne Friday, Dec 15, 17 @ 1:21 pm
Filing a appeal on residential property is pretty simple. Not filing an appeal is financial malpractice.

Comment by The Way I See It Friday, Dec 15, 17 @ 1:53 pm
==In other words: Lawyer gets client’s property value reduced on appeal, lawyer gets cut from client, lawyer makes Berrios contribution==

Or, Lawyer gets client’s taxes reduced, gets cut from client, and gives Berrios or members of his family lobbying business. Just depends on who’s the lawyer.

Comment by Cook County Dem Friday, Dec 15, 17 @ 1:56 pm
It seems mathematically impossible that so many properties would snap back to the exact amount of assessment, even given that every possibility Berrios’ office offered up happened to some of the properties.

Comment by Michael Westen Friday, Dec 15, 17 @ 2:08 pm
Law firms on commercial/industrial are paid on annual or hourly basis not % propublica and Trilbies both know this and refused to admit.
ercial

Comment by Annonin' Friday, Dec 15, 17 @ 2:38 pm
I have read the Pro Publica article a few times and I keep walking away with more questions than answers. They looked at 40,000 PINS, but there are more than a 800,000 commercial PINS in Cook County. That’s not exactly a big sample and they never disclose how they chose those PINS. Commercial properties are not assessed based on sales, but rather based on income, information an Assessor would not have when they prepare a first pass assessment. This very important fact is glanced over in the story.

Comment by Recessed Friday, Dec 15, 17 @ 3:06 pm
Down here in So Ill, we call it a ’scam’. What do you folks from Chicago call it?

Comment by Blue dog dem Friday, Dec 15, 17 @ 3:18 pm