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Pilsen, Little Village, West Loop

‘Anger And Panic’ As Pilsen Landlords Scramble To Appeal Skyrocketing Tax Assessments

About 58 percent of homeowners in the 25th Ward, which includes Pilsen, saw higher property tax bills this year compared to 2020. But more than 93 percent of commercial owners in the ward were hit with tax hikes.

Cook County Assessor Fritz Kaegi speaking during a property tax forum in Pilsen on Monday.

PILSEN — Local leaders and community groups in Pilsen are rushing to help small landlords dispute a fresh round of property valuations they fear could set off a wave of tax hikes and displacement as a crucial deadline nears.

Fear set in among property owners in the neighborhood last month, when Cook County Assessor Fritz Kaegi sent reassessment notices for the 2021 tax year to property owners in West Chicago Township, which encompasses the city’s West, Near Northwest and Near Southwest sides. Some landlords saw their building’s valuations double or triple, mirroring the whiplash Kaegi’s office induced when they reassessed Chicago’s north suburbs in 2019 and southern Cook County last year. Assessments are one factor used to help property tax bills, alongside rates and levies charged by local governments.

Related: North-suburban assessments could mean for break homeowners, ‘straight-up terror’ for commercial owners

In an attempt to allay neighbors’ concerns, Ald. Byron Sigcho-Lopez (25) and Cook County Comm. Alma Anaya (D-7) invited Kaegi to lead an in-person property tax appeal workshop at Benito Juarez High School on Monday. Kaegi plans to co-host a similar workshop with local elected officials in Little Village Thursday evening.

More than 100 Pilsen property owners packed into the high school on Monday as Kaegi walked through the real estate data his office used to assign new property values. But many in the audience were left dissatisfied, according to Moises Moreno, executive director of the Pilsen Alliance, who attended the meeting.

“I heard a lot of anger and panic,” Moreno told The Daily Line. “We’ve been hearing from a lot of longtime homeowners who have been able to hold the tide on gentrification all these years, and this time around, folks are really concerned.”

Moreno said his group is trying to help property owners file appeals to the assessor’s office to dispute their assessments before next Monday, the deadline for the West Chicago Township. Homeowners and landlords will also be able to file separate appeals to the Cook County Board of Review later this year.

Higher assessments do not directly translate to higher taxes — instead, they help determine how big a share of the overall tax burden each property will shoulder. 

But as business assessments outpace residential valuations across the county, and Pilsen’s real estate boom pushes its values up faster than surrounding communities, landlords in the neighborhood are staring down the possibility of seismic tax hikes next year that could force them to raise rents, displacing longtime tenants, residents said.

Kaegi’s math pegs the total value of houses and small apartment buildings in West Chicago Township at $4 billion this year, up from $3.2 billion in 2018, the last time the city underwent reassessment. But the total value of business, industrial and apartment buildings in the area more than doubled during the same period, from $2.7 billion to $5.9 billion, according to data from the assessor’s office

That change sets up a leap in the relative share of taxes that will be owed by commercial property owners next year. Without factoring in appeals, non-residential property owners in West Chicago would be on the hook for 60 percent of the area’s property taxes, up from just 46 percent in 2018, lightening the burden on single-family homeowners.

Kaegi defends valuations

Kaegi has steadfastly defended his years-long campaign to put more of the burden on businesses, saying his methods are aimed at bringing accuracy back to a system that benefited politically connected business owners at the expense of homeowners under former Assessor Joseph Berrios.

“Chicago has been a steady, vibrant place for local, national, and international commercial real estate investors,” assessor’s office officials wrote in a 12-page report on commercial assessments in West Chicago. “Commercial real estate sale prices and rents—therefore, estimated market values and assessed values—have grown overall from 2018 to 2021 for most property types.”

Kaegi on Monday walked Pilsen residents through the factors his office uses to determine values, including market trends, vacancy rates and estimated sales prices — all numbers he says were overlooked by Berrios and meet the standards of international assessing officials. The assessor’s office report also shows higher valuations for “institutional” or corporate property owners, with lower values plugged in for neighborhood-based owners.

But the technical explanations did not assuage many of the attendees who were looking for answers to why their assessments spiked despite not changing their buildings, Moreno said. Some walked out of the meeting in frustration, he said.

During the meeting, some homeowners expressed frustrations that the latest round of assessment would push them out of their homes. “You are going to displace us,” one resident called out during the presentation. 

“It seems like the assessor has good intentions…but it’s hard for technocrats to explain that to folks who might not understand that up front,” Moreno said. “But they do understand common sense, that property assessments went up, and therefore taxes are going to go up.”

But Scott Smith, a spokesperson for Kaegi’s office, wrote in a statement Wednesday that the “most important thing people should know is that an assessment increase does not mean a tax increase.” He noted that Cook County homeowners and owners of apartment buildings with six or fewer units overall only saw their property taxes grow by 1.1 percent and 1.3 percent respectively each of the past two years, despite far more dramatic assessment hikes.

By contrast, commercial property owners this year saw their overall tax burden grow by $410 million, or 6.2 percent, according to county data.

“The difference between assessment and taxes is because commercial assessments have gone up much more as Assessor Kaegi has fulfilled a promise to ensure assessments match market data,” Smith wrote. “Therefore, the tax burden has shifted more toward commercial property owners whose bills have gone up 15% in the north suburbs and 7-8% in the South and West suburbs.”

Commercial property owners in West Chicago are already reeling from hikes in the tax bills sent to property owners last week, which were drawn up based on last year’s assessments. The median commercial property owner in the area saw their annual bill grow by $925 since last year, according to a report released Monday by Cook County Treasurer Maria Pappas. At the same time, most homeowners in the township saw their tax bills slightly decline. 

Related: South-suburban businesses slammed by property tax hikes as some homeowners’ bills sag: report

About 58 percent of homeowners in the 25th Ward, which includes Pilsen, saw higher property tax bills this year compared to 2020, according to the report. But more than 93 percent of commercial owners in the ward were hit with tax hikes — some steeper than others. Almost half of the ward’s commercial property owners were hit with annual tax hikes of more than $1,000 compared to last year. Of those, 141 property owners saw their annual bills jump by $10,000 or more.

‘It’s difficult to absorb the costs’

Longtime Pilsen resident Brigida Franco saw the assessment of her apartment building jump by more than $165,000 in the latest assessment, from $264,350 in 2020 to $430,000 in 2021.

Franco, 63, who has lived and owned the building for decades, was shocked by the assessment. She hasn’t rehabbed the building, and there hasn’t been any new construction nearby.

“It’s difficult to absorb the costs associated with these taxes,” said Franco, who doesn’t want to pass the burden to her renters with a rent hike. “I don’t want to nickel-and-dime my tenants.”

Currently, Franco rents out a one and-two bedroom apartments in her building, both under a thousand dollars a month. A basement unit needs renovations before she can rent that, too, she said.

“For some people having to pay an extra thousand dollars might not be a hardship, but there are other people who are on fixed income or retired,” she said.

Under these new assessments, property owners are going to be forced to make a tough decision to raise rents or leave their neighborhood altogether. Without changes to the assessment process, the property tax increases will drive more working class families out of the neighborhood, Franco said.

“If we aren’t able to stop the rising cost of property taxes, it’s very likely in about five years, the changes will be very visible. In 10 years, this won’t be a working class Hispanic neighborhood anymore,” she said.

Franco said elected officials needed to be proactive in the way properties are assessed so longtime property owners aren’t forced out of their neighborhoods. 

“It’s frustrating for property owners, you feel like no one is really listening to you,” Franco said.

“This [inflated value] is going to affect everyone from the property owners, tenants and businesses in the community,” she said.

No matter Kaegi’s methods or intentions, his valuations are likely to squeeze Chicago businesses so hard that some may not survive, according to Brad Tietz, Vice President of Government Relations for the Chicagoland Chamber of Commerce.

Pappas’ report showed that “the cost of government has simply outpaced what taxpayers can afford,” Tietz said — a crisis that only stands to widen with Kaegi’s latest reassessments.

“When non-residential assessments go up by 115 percent in West Chicago and businesses in Pilsen and North Lawndale see an 80 percent increase on their property, I don’t know how a taco stand can continue to sell tacos,” Tietz said.

He added that the Chicagoland Chamber is lobbying county and state leaders to reform the tax system, starting with “real property tax reform” that de-emphasizes the role of local taxes in propping up school budgets.

Kaegi has also advocated for school funding reform as a long-term solution to skyrocketing property taxes, and Moreno said he hopes to mobilize the Pilsen Alliance for a larger “community conversation” about reform. He said it’s not enough to simply direct residents to the appeals process, which he called a “band-aid.”   

Moreno and some other Pilsen neighbors have called on Kaegi to extend the appeals deadline for West Chicago beyond Aug. 23, but Smith said Wednesday that the office has “no plans to extend the deadline.” 

Javier Yañez, chief of staff to Sigcho-Lopez, told The Daily Line on Tuesday that the alderman is “committed to working with the assessor” to make sure residents understand the assessment process and can file appeals if needed.

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