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 		 [Under Cook County Assessor Joseph Berrios, assessment system
shaved $1 billion from Chicago’s most expensive homes, while owners
of lower-valued homes picked up the tab.] [https://portside.org/] 

 FLAWED ASSESSMENTS CAUSED $2 BILLION SHIFT IN PROPERTY TAXES  
[https://portside.org/node/16779] 

 

 Jason Grotto 
 March 15, 2018
Pro Publica - Illinois
[https://www.propublica.org/article/cook-county-property-tax-shift-regressive-assessments]


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 _ Under Cook County Assessor Joseph Berrios, assessment system shaved
$1 billion from Chicago’s most expensive homes, while owners of
lower-valued homes picked up the tab. _ 

 University of Chicago public policy professor Christopher Berry
before the Cook County Board on July 18, 2017. Cook County Assessor
Joseph Berrios, seated at left, faced questioning by the County Board
about the fairness of property assessments., Antonio Perez/Chicago
Tribune 

 

In the first effort to measure the cost of Cook County’s
error-ridden assessment system under Assessor Joseph Berrios, a new
study estimates that at least $2.2 billion in property taxes was
shifted from undervalued Chicago homes onto overvalued ones between
2011 and 2015.

Because the county’s assessment system is skewed in favor of
high-priced homes, the errors amount to a staggering transfer of
wealth that benefited Chicago’s most affluent homeowners at the
expense of people who own lower-priced homes.

The study, released Thursday by the Municipal Finance Center at the
University of Chicago’s Harris School of Public Policy, was
conducted by Professor Christopher Berry, a critic of the assessor’s
office who testified at a County Board hearing in July about flaws in
the county’s assessment system.

The analysis involved calculating a citywide fair tax rate using the
tax bills of homes that sold, then seeing how those tax bills differed
from the amount that would be expected if the assessor valued property
fairly.

Under Berrios, the study found, flawed assessments caused as much as
$1 billion to be shaved off the tax bills of Chicago’s most
expensive residential properties — those in the top 10 percent of
value, or single-family homes and condos worth more than $1 million on
average.

Because the amount of property taxes collected each year is fixed,
that means hundreds of thousands of other taxpayers made up the
difference, with the lowest-valued homes shouldering a
disproportionate amount of the tax shift.

“Everyone — even the assessor — now agrees that the system is
regressive,” Berry said. “But I wanted to know how much money is
at stake. The answer is easily in the billions. These dollars are
being taken from some of our citizens who can least afford it and used
to pay the taxes of the wealthy. It’s unconscionable.”

The assessor’s office dismissed the U. of C. study as a political
ploy aimed at influencing the March 20 primary election. Officials
also accused Berry of having an ax to grind because the office did not
adopt a new residential valuation model he helped design in 2010 with
a grant from the MacArthur Foundation.

“Clearly, Professor Berry is upset that his model was exposed to
have flaws and deficiencies,” the assessor’s office said in a
statement. “We are saddened by Professor Berry’s lack of
professionalism in releasing this report four days before the election
and not giving us the opportunity to review it.”

Berrios, who doubles as chairman of the Cook County Democratic Party,
is fighting for re-election against two opponents: Fritz Kaegi, a
money manager from Oak Park, and Andrea Raila, a property tax
consultant who was put back on the ballot Wednesday after being
disqualified weeks earlier.

The U. of C. study comes a month after the Civic Consulting Alliance,
a nonprofit organization that provides pro bono technical expertise to
local government, confirmed the county’s residential property tax
assessments are riddled with errors that cause “a wealth transfer
from owners of lower-value homes to those of higher-value homes.”
That study did not put a dollar figure on the wealth transfer.

Cook County Board President Toni Preckwinkle commissioned the CCA
study in July following publication of the Chicago Tribune’s series
“The Tax Divide,”
[http://www.chicagotribune.com/news/watchdog/taxdivide/] which found
deep inequities in the county’s residential assessment system.

Berrios’ office, which denied for months that a problem existed, now
is vowing to fix the issues with residential assessments before
reassessing Chicago’s roughly 730,000 homes this year.

The Tribune’s investigation, which continued in partnership with
ProPublica Illinois, also revealed severely regressive and inaccurate
assessments of commercial and industrial properties, but Preckwinkle
has said the county currently has no plans to study or address that
problem.

“We’re focused on residential — one thing at a time,” she said
at a news conference last month.

“The Tax Divide” series
[https://www.propublica.org/series/the-tax-divide] found that
residential assessments produced under Berrios were highly regressive,
meaning the assessor’s office tended to undervalue higher-priced
homes and overvalue less expensive properties.

Most assessors conduct statistical analyses to ensure that tendency
falls within acceptable limits, but Berrios’ office said it did not
follow that practice.

To estimate the cost of the problem on Chicago taxpayers, Berry
compiled data on single-family homes and condos that sold in
arm’s-length transactions — sales that involve unrelated,
nondistressed parties.

About 2.5 percent of all homes in Chicago were sold in such
transactions during the study period, and the analysis assumes they
are representative of other, similar residential properties in the
same neighborhood.

Berry then calculated a “fair” tax rate by adding up the total
property taxes billed on the sold homes and dividing that number by
the total sales price of the same homes. Applying this rate to all of
the sold homes produced an estimated “fair” tax bill for each one.

To calculate the tax shift, Berry summed the differences between the
estimated fair bills and the actual bills that owners of undervalued
homes received. That shift was then extrapolated out to cover the
entire city, using four different statistical methods. For example,
one method involved calculating the tax shift for each neighborhood
before arriving at a citywide number.

Each method produced a similar answer: a total tax shift in excess of
$2.2 billion over the study period.

Cook County Assessor Joseph Berrios(Nancy Stone/Chicago Tribune)

“I start with homes that sold, since we have good information about
their market value and their taxes,” Berry said. “Then I make some
pretty standard assumptions to extrapolate the number to the whole
city in a representative way.”

Experts said the approach he used is fair and reasonable.

“Berry is definitely on solid ground,” said Richard Almy, a former
executive director of the International Association of Assessing
Officers, an organization that set standards used by assessment
officials around the world. “These types of analyses are usually
done to evaluate proposed changes to assessment systems.”

Experts also said the U. of C. analysis may understate the amount of
the property tax burden shouldered by low- and middle-income
homeowners because the analysis does not take into account
inaccuracies in commercial and industrial property assessments.

The total tax shift from flawed assessments also would be far larger
if the entire county were included in the analysis. The study focuses
on Chicago because it is the largest taxing district. Other districts
have different tax rates.

Berry, the academic director of the Center for Municipal Finance and
faculty director of the U. of C.’s Master of Science Program in
Computational Analysis and Public Policy, appeared in “The Tax
Divide” series because of his involvement with a grant-funded effort
to develop a computer model that would reduce regressivity in the
county’s residential assessments.

Berry also co-taught a graduate-level class with a Tribune reporter in
2016 that examined the county’s robust appeals process, finding that
it added to the system’s problems with regressivity.

The project to improve residential valuations dated to the era of
former Assessor James Houlihan and was inherited by Berrios when he
took office in late 2010.

Berry said technical limitations prevented officials from using the
most accurate models the team created. But eventually the assessor’s
office settled on a compromise that balanced improvements to the
system with the office’s capabilities.

In July 2015, Berrios’ office issued a news release saying it had
implemented “a new state-of-the-art residential assessment modeling
technique that assesses the value of homes in different price ranges
to improve accuracy.” Berry was quoted in the release.

But the Tribune eventually determined the assessor’s office never
fully implemented the new model, which Berry said came as a surprise.

When questioned by Tribune reporters, officials offered a series of
changing responses but ultimately said that the model was flawed and
that Berry and others involved had a vested interest in the county
using it.

Robert Weissbourd, president of the economic development consulting
firm RW Ventures, led the team that retained Berry’s services and
said both assertions are false. The assessor’s criticism distracts
from the office’s ongoing failure to fix the assessment system, he
added.

“Our models are beside the point,” Weissbourd said. “It is clear
that the systematic overassessment can and must urgently be fixed, and
that the public needs full transparency and independent monitoring to
ensure the fix is implemented this time.”

Read More

How the Cook County Assessor Failed Taxpayers
[https://features.propublica.org/the-tax-divide/cook-county-commercial-and-industrial-property-tax-assessments/]

Joseph Berrios' error-ridden commercial and industrial assessments
punish property owners, benefit lawyers.

Cook County’s Residential Property Tax Assessments Deeply Unfair,
Independent Study Confirms
[https://www.propublica.org/article/cook-county-residential-property-assessment-study-results]

Findings that assessments were error-ridden and burdened the poor
undermine Assessor Joseph Berrios’ claims that he properly valued
residential property.

_Jason Grotto covers issues related to municipal finance, including
pensions, debt and taxation._

_Born and raised in Chicago, ProPublica Illinois reporter Jason Grotto
specializes in quantitative analysis, using databases, statistics and
mapping to ferret out corruption, negligence and bad public policy.
Previously, he worked as an investigative reporter for the Chicago
Tribune and the Miami Herald. His most recent project exposed
widespread inaccuracies and disparities in Cook County’s property
tax assessment system and sparked proposed legislative changes, an
investigation by the inspector general and a hearing at the County
Board. He has also reported on the pension crisis in Chicago and
Illinois and led a Gerald Loeb Award-winning investigation on Chicago
Public Schools’ disastrous use of auction-rate securities, uncovered
fraud in federal poverty programs, problems in Iraq war contracting
and flaws in the Chicago Housing Authority's Plan for Transformation._

_He was a 2015 Nieman Fellow at Harvard University, where he studied
municipal finance. Other honors include a Chicago/Midwest Emmy Award,
an Investigative Reporters and Editors Award and the Society of
Environmental Journalists Award. He earned a master's degree in
journalism from the University of Missouri in 2000 and a bachelor's in
U.S. history from the University of Oregon in 1995._

_People-powered journalism_

_ProPublica Illinois is an independent, nonprofit newsroom that
produces investigative journalism with moral force. _

_Headquartered in Chicago, we are the first regional publishing
operation of ProPublica, dedicated to stories about big issues that
affect people living and working in the state of Illinois._

Support local, investigative journalism by making your tax-deductible
gift to ProPublica Illinois today
[https://donate.propublica.org/give/142344/#!/donation/checkout].
Thank you! 

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