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A money-making machine for tax appeals attorneys

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* This ProPublica-Illinois deep dive into the Cook County Assessor’s office is definitely worth a read, but this is what stood out to me the most

The assessor’s office encourages property owners to file an appeal if they are dissatisfied with an assessment. In cases where officials did not change a property’s initial estimate from one reassessment to the next, the vast majority of the owners appealed, government records show.

Seventy-four percent of those owners won reductions from the assessor — only to see the values snap right back to the same number in the next reassessment.

“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 repetitive process feeds a property tax appeal industry that provides the bulk of Berrios’ campaign contributions. Inaccurate assessments also help drive business to political allies who are property tax attorneys, including Illinois House Speaker Michael Madigan, the longest-serving state house speaker in U.S. history, and Alderman Edward Burke, the longtime chair of the Chicago City Council’s finance committee.

The office’s deputy assessor for communications, Tom Shaer, did not explain why thousands of first-pass values were identical over multiple reassessments under Berrios. The other findings from ProPublica Illinois and the Tribune are misleading, he said, and do not “do justice to the complexity” of Cook County’s assessment system.

“The study includes five years of the real estate crash,” Shaer wrote in an emailed response. “The crash played havoc with figures in certain industry measures used for this story, making them unreliable when evaluating the assessor’s work.”

* And

A ProPublica Illinois-Chicago Tribune analysis of appeals data from the Cook County assessor’s office found that the firm of Madigan & Getzendanner dominates the market for commercial and industrial appeals in Cook County. Between 2011 and 2016, the firm filed appeals on properties that were initially assessed at nearly $8.6 billion. That is nearly $1 billion more than the second-place firm, Crane and Norcross.

* And

A ProPublica Illinois-Chicago Tribune analysis of appeals data found that Berrios granted appeals for more than 34,000 commercial and industrial parcels in the 2012 Chicago reassessment and for about the same number again in 2015.

By contrast, former Assessor Houlihan approved only 17,596 appeals in 2009 — and that was the largest number since at least 2003.

Under Berrios, the analysis found, more than 70 percent of all commercial and industrial appeals filed with the assessor’s office resulted in reductions between 2011 and 2015, compared with 48 percent during the previous five-year period.

Every property tax assessment system requires an appeal process to ensure fairness and accuracy, and many jurisdictions across the country saw an uptick in appeals following the financial crisis, experts said. But the number of appeals in Cook County is extraordinarily high, far exceeding the total in New York, for example.

These appeals support an industry that provides more than half of Berrios’ campaign funds.

* And

The most common test of accuracy is the coefficient of dispersion, or COD. It is, essentially, an error rate. For income-producing properties, the International Association of Assessing Officers sets the acceptable level of COD at 20. That means assessments are off by an average of 20 percent.

Under Berrios, the scores for commercial and industrial first-pass valuations have been as high as 133, ProPublica Illinois and the Tribune found. Though experts often allow complex jurisdictions like Cook County some leeway, they said those results are unacceptable.

The errors also have a bias. With lower-priced commercial and industrial properties, the assessor’s estimates tend to come in too high. At higher price points, assessments are often too low.

Known as regressivity, this pattern means the property tax system is unfair to people who own lower-value properties. Those taxpayers end up paying more, relative to the value of their property, than others do.

…Adding… ILGOP…

“The corruption from Joe Berrios and Mike Madigan is absolutely disgusting. For years, they have taken money from middle class families and small businesses to help line their own pockets, all the while propping up their political careers. If you want to know why Illinois has serious problems, look no further than Joe Berrios and Mike Madigan and their shameful practices of robbing hard-working Illinoisans to make themselves richer.” - Illinois Republican Party Spokesman Aaron DeGroot

…Adding… Press release…

Following is a statement from Fritz Kaegi, the progressive Democrat challenging incumbent Cook County Assessor Joe Berrios in the March 2018 primary election, in response to today’s Chicago Tribune/ProPublica investigative report on the corrupt practices of the current Assessor’s Office.

“The Chicago Tribune and ProPublica report again proves beyond a shadow of a doubt that Assessor Joe Berrios has systematically and intentionally used his office to benefit the rich, powerful and politically connected, and has forced the Cook County residents who can least afford it to pay for the web of corruption in the form of massively inflated property tax bills.

“His brazen violation of the public trust is a disgrace, and the residents of Cook County are rightfully outraged.”

“As Assessor, I’ll get valuations right the first time. I’ll implement valuation models that are more uniform and that reflect current market conditions. I’ll be transparent in how valuations are reached. I’ll make available data and valuation standards to third parties, and hire a qualified, diverse workforce free from nepotism and favoritism. I will not accept donations from property tax appeals lawyers as a candidate or as assessor, and I am committed to the immediate separation of political influence from the assessment process.”

…Adding… Another press release…

Earlier this week, J.B. Pritzker was challenged on reporting relatively little income despite his $3.4 billion net worth. Given the Pritzker family history of avoiding taxes in offshore trusts, Pritzker’s multiple responses were vague at best.

Today, two of Pritzker’s chief backers, Speaker Mike Madigan and Cook County Assessor Joe Berrios, are the subject of a Chicago Tribune story investigating the corrupt racket surrounding property tax assessments.

From the Tribune report:

“The repetitive process feeds a property tax appeal industry that provides the bulk of Berrios’ campaign contributions. Inaccurate assessments also help drive business to political allies who are property tax attorneys, including Illinois House Speaker Michael Madigan.”

Pritzker has been intimately involved with this racket, securing a $230,000 tax break from Berrios on his Gold Coast mansion after having the toilets disconnected from a neighboring property so that it would be declared uninhabitable.

Between Pritzker’s history of gaming the tax system, his undisclosed offshore interests, and now today’s revelations surrounding Berrios and Madigan, how can Illinoisans trust another corrupt insider?

posted by Rich Miller
Thursday, Dec 7, 17 @ 10:18 am

Comments

  1. There is no reason for Cook County to have a different property tax system than the other 101 counties.

    Comment by Not It Thursday, Dec 7, 17 @ 10:22 am

  2. Must be nice to be able to deflect any criticism from the press and the public by repeating “the system is too complex to understand and you’re too stupid to understand it” like a mantra.

    Comment by Ron Burgundy Thursday, Dec 7, 17 @ 10:26 am

  3. Criminal. Absolutely criminal. It is a rigged system that is the most advanced racketeering and extortion scheme ever implemented. Does it really surprise anyone that the three ringleaders of this corrupt system are Berrios, Madigan and Eddie Burke?

    Comment by Just Visiting Thursday, Dec 7, 17 @ 10:32 am

  4. I am a landlord. Here are a few thoughts for Cook County:

    1. Large increase in tax delinquencies and people abandoning their properties for taxes.

    2. These abandonments happen in the lower income communities, especially Harvey and Engelwood. But also lots of commercial properties in Southern Cook County.

    3. A lot of properties in Cook County are taxed too much already. Can’t get anymore revenues without more properties being abandoned.

    4. Tax appeals definitely benefit the sophisticated and connected investors. If you don’t protest your taxes, they will eat you alive.

    Comment by Anonymous Thursday, Dec 7, 17 @ 10:33 am

  5. Fix the system, Berrios.

    Comment by Juvenal Thursday, Dec 7, 17 @ 10:37 am

  6. Interesting tidbit - the Berrios wing of the Cook County Dems appears to be backing Carlos Rosa for Congress - they’re no fans of Chuy after he endorsed Fritz and they’ve always hated Proco Moreno.

    Comment by Fax Machine Thursday, Dec 7, 17 @ 10:38 am

  7. History lesson: The office of the Cook County Assessor was created as a “reform” measure to replace the three member board of assessors during the Great Depression. LOL.

    Comment by Anonymous Thursday, Dec 7, 17 @ 10:40 am

  8. One of the things that I’ve found particularly annoying this election cycle in Cook County is that the answer to complaints about high taxes by all county officials, but especially those involved in the assessment process (Assessor and BOR) is advice to appeal your assessment.

    It seems to me that a well run Assessor’s office should not be saying that you should appeal your assessment. The assessment should be correct to begin with.

    Moreover, I’m not too crazy about a system that gives benefits only if you appeal. I’m especially not crazy about it because for every property whose assessment is reduced, the taxes for those who do not appeal goes up. It’s just not a fair system and saying “appeal your assessment” is not a good answer.

    Comment by You could say that, I couldn't comment Thursday, Dec 7, 17 @ 10:43 am

  9. “Fix the system, Berrios.”
    are you serious? he helped create and currently presides over the system. it’s exactly the way he and the pirates who profit from it want it.
    It’s a massive probably unprosecutable criminal conspiracy masquerading as a legitimate government function.

    Comment by jim Thursday, Dec 7, 17 @ 10:44 am

  10. no reason for him to reelected …period…

    Comment by pskila Thursday, Dec 7, 17 @ 10:47 am

  11. –Fix the system, Berrios.–

    I think the system is “fixed” already just the way he likes it. Someone else is gonna have to come in to truly fix it.

    Comment by Ron Burgundy Thursday, Dec 7, 17 @ 10:49 am

  12. Urging property owners to appeal, appeal, appeal doesn’t just benefit appeal lawyers, it benefits the Assessor and the Board of Review Commissioners that win political points by going around the country, holding outreach sessions, and lowering people’s assessed values.

    Comment by Just Observing Thursday, Dec 7, 17 @ 10:52 am

  13. Well ain’t that a kick. Stats like that are hard to explain with anything but a rigged system. I was going to vote for Berrios because I didn’t know anything about Kaegi, but guess I’ll be voting for Kaegi after all.

    Comment by Chicago_Downstater Thursday, Dec 7, 17 @ 11:05 am

  14. This report is a devastating indictment of the basic competence of the office.

    From the report, an assessment expert says, “If your models are working correctly, the chances of values staying exactly the same are virtually impossible.”

    But the report finds that out of 40,000 parcels, more than two-thirds had their initial pass assessments unchanged in at least two consecutive reassessments. By contrast, the number was 1 percent under Assessor Houlihan.

    Comment by anon2 Thursday, Dec 7, 17 @ 11:15 am

  15. I look forward to Kaegi trying to cut off the Madigan/Burke gravy train. Who’s bringing popcorn?

    Comment by JB13 Thursday, Dec 7, 17 @ 11:31 am

  16. DuPage county and the other collar counties give new meaning to the term “high taxes”. I wish my house in DuPage county was taxed at the lower Cook county rate.

    Comment by DuPage Thursday, Dec 7, 17 @ 11:47 am

  17. Nothing to see here folks the Head of the Illinois Democratic party makes a 7 figure income in his other part time job by appealing assessments to the Head of the Cook County Democratic party.

    Alderman Burke, head of the finance committee in the City Council, has not gotten the memo from Cook County Democrats to resist Trump.

    He is his property tax lawyer, and he has saved him millions of dollars in taxes on Trump Tower.

    No wonder we haven’t seen him with his french cuffs and Rolex watch at a resist Trump rally.

    Comment by Lucky Pierre Bot Thursday, Dec 7, 17 @ 11:55 am

  18. Once again, If someone was actually in charge of state government, that someone could direct the Department of Revenue, who oversee all county assessors, to enforce assessment uniformity in Cook County. But I guess Mr. Madigan also controls all the Department Directors appointed to their agencies. And yes, Revenue does have this power as they must “certify” assessment rolls in each county.

    Comment by awdu;vm Thursday, Dec 7, 17 @ 11:55 am

  19. If the State Dept. of Revenue could force reform, then the Governor is lax in not doing so.

    Comment by anon2 Thursday, Dec 7, 17 @ 12:09 pm

  20. anon2 - the Governor isn’t in charge, remember?

    Comment by Just Me Thursday, Dec 7, 17 @ 12:14 pm

  21. GA could hold hearings too if they wanted.

    Comment by Ron Burgundy Thursday, Dec 7, 17 @ 12:47 pm

  22. It’s a splendid Darwinian system. This issues of corruption, patronage and nepotism are out there, but I suspect Mr. Berrios will beat them back via voter apathy, ignorance and a very reliable voter base relying on local, county and state gov jobs and retirement benefits.
    And those of us who appeal regularly can shunt more and more taxes onto those who do not as their assessed valuations skyrocket.
    A surprising or not so surprising development in my neck of the woods are contractors building up detached garages for apartments. More people living on a lot increases numbers paying all taxes and increases economic activity in the area.
    Another boon is seniors on non-government retirements are forced out. Who needs them.

    Comment by Cook County Commoner Thursday, Dec 7, 17 @ 1:01 pm

  23. If the House can hold three consecutive hearings over three weeks on the McKinsey Contract, then I would hope that the House can find time to hold at least one hearing on this scandal.

    I won’t hold my breath…

    Comment by Phenomynous Thursday, Dec 7, 17 @ 1:36 pm

  24. The system is perfect for the appeals process and those work that system. Oddly many of them of elected to government offices - repeatedly.

    Barrios is “just” another long time machine guy who knows the system - He not leaving easily

    Comment by cannonn649 Thursday, Dec 7, 17 @ 1:58 pm

  25. There is one thing being left out of this story. I have appealed my assessment with help from my township assessor every 3 years for the third time, and I always get a big reduction. I could do it on my own, but I get the free help. It is not necessary to pay these attorneys to do this work.

    Comment by Molly Maguire Thursday, Dec 7, 17 @ 2:15 pm

  26. I should add that the appeals granted by the Assessor’s office for my property were quite small. And 3 years later they usually jacked it up next time to where it was or higher before the appeal. The big reductions I won on appeal occurred at the next level, the Board of Review.

    Comment by Molly Maguire Thursday, Dec 7, 17 @ 3:10 pm

  27. The fundamental problem in Cook County is that the Assessor’s office has a political incentive to make errors. Errors can best be corrected by forcing the property owner to hire private counsel with the right abilities to achieve reductions. Essentially, the assessment function of government is outsourced to private parties, who than make contributions to government officials to keep the broken system in place.

    Comment by Anonymous Thursday, Dec 7, 17 @ 5:02 pm

  28. As if all of the waste noted here from Berrios, MJM and Co. isn’t enough…

    “It is impossible to know exactly why the duplicate estimates occurred. In January 2016, the assessor’s office denied the Tribune’s open-records request for the market rents and expenses, vacancy rates and other variables it used to calculate the value of commercial and industrial properties.
    The newspaper sued the office in Cook County Circuit Court, and last December a judge ordered the assessor to turn over the records. But Berrios appealed the ruling — at taxpayer expense — so the values the office used remain secret for now.”

    Not only do they stick it to people with assessments, legal fees and added costs - when the information on how it’s calculated is asked for, we get to foot the bill to keep it under lock and key.

    Comment by Amazed and Not Confused Thursday, Dec 7, 17 @ 7:15 pm

  29. It’s a disgrace that Berrios refuses to turn over the data his staff purportedly used to calculate assessments. That should not be a state secret. His resistance suggests there is something embarrassing there.

    Comment by anon2 Friday, Dec 8, 17 @ 9:32 am

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