I will be appealing my assessment next year because I cannot afford the alternative.
Like many of you, I opened up my tax bill in the spring and gasped. I thought I was headed for a Redd Foxx “Sanford & Son” grabber – the BIG one! An $800 bump on a modest house in unincorporated McHenry County – without the added whammy of a library, park district or municipal taxes – can make the healthiest among us clutch their chests.
The Property Tax Extension Limitation Law, or PTELL, is the culprit. Adopted in 1991 as a way to reign in out-of-control property tax bills in the collar counties, the law limits the annual increase that taxing bodies can receive to the lesser of two things – the rate of inflation or 5 percent. But nobody foresaw the cataclysmic drop in property values. Under that scenario, the tax cap works against property owners by guaranteeing that taxing bodies can collect the inflationary increase – 1.5 percent on the bills due this year. Considering there are 150,000 parcels in McHenry County, we’re talking some serious coin.
County Supervisor of Assessments Robert Ross said taxing bodies get all of the property taxes they levy – even though assessments fell 9 percent countywide in 2011. The pie simply gets redistributed and the burden shifted on someone else.
The county fielded 8,893 assessment appeals from taxpayers, up 51 percent from 5,885 appeals in 2010. Ten years ago there were 677 appeals. And there were 2,896 Board of Review hearings in 2011 – up from 244 hearings in 2001.
I’ve had informal conversations with my assessor before, but launching a formal appeal would be something new for me. Not so for many other property owners. For many, especially large corporations, appealing taxes is an annual cost of doing business – like paying for waste disposal, utilities and new equipment. Still, a review of McHenry County tax records proved enlightening.
The county granted 111 assessment deductions of $100,000 or more – equivalent to a yearly drop of $300,000 in market value. And many of them were more than three times that amount. NiMed Corp, which aids in the management of Centegra Health System facilities, secured a nearly $2 million assessment drop for its headquarters at 385 Millenium Drive in Crystal Lake. The owner of the Crystal Lake Holiday Inn, dubbed W2005 New Century Hotel Portfolio, secured a $1.8 million reduction in Algonquin Township and General Kinematics Corp in Crystal Lake was able to roll back its assessment by $286,500.
Then there are the cumulative requests. Virginia Park Investments LLC of Island Lake secured a combined $183,405 assessment reduction on 21 of the 27 commercial condos it owns off of Virginia Road. Plote Homes in East Dundee and Darlington Property LLC in Chicago also received mult-parcel reductions that –combined – start adding up to real money. And, as you might expect, retail developments received relief because of vacancies and other factors. The assessment at Woodstock Farm & Fleet fell by nearly $730,000. The 103,822-square-foot JC Penney store at 2940 Commerce Drive in McHenry benefited from a red-tag sale of its own: a $427,562 assessment drop.
None of this would bother me if it did not mean another ox was getting gored. But that is how our property tax system works. Someone in Dunham Township gets a reduction and I feel the effects. It’s like water ... and I’m standing at the bottom of the well.
“The ability of the taxing body to command revenue is completely independent of the economy,” said Algonquin Township Assessor Robert Kunz Jr. In essence, Ross noted, assessments do not affect how much taxing districts receive. They control your share.
So what can you do about it? Look for “black-box” ads in the newspaper. Levy hearings, which set how in property taxes school districts and other governmental entities will get, typically begin in late summer or early fall. Will the county board actually make good on hints that it will leave some potential dollars on the table and give taxpayers a break? Stay tuned. Remember, pay attention or pay up.
You also can do your homework and appeal your assessment. Find comparable properties, cite statistics showing falling property values and then make your case. We all know it’s a crazy, disconnected system with no connection to income and a person’s ability to pay. We know that the state multiplier, which is supposed to level the playing field and assure that everyone is assessed at a third of market value, frequently does more harm than good. And we know that distrust between Springfield and local politicians means that the system most likely will remain this way indefinitely.
It is to our advantage if we learn how to operate under it. Even though my property’s value has held steady, it is no longer good enough. I simply cannot continue to pay more and more.
“It’s easier to make your case if you have an old farmhouse in the middle of nowhere, but that is not always the case,” Ross said. “By 2013 or 2014 I hope to start matching fair and equitable assessments with the market value, and then the pressure will swing and revert back to the taxing districts.”
• Kurt Begalka is editor of the McHenry County Business Journal. He may be reached at firstname.lastname@example.org.