Last month, Fritz Kaegi — Cook County’s assessor and an Oak Parker — spoke to a group of newspaper publishers during a Zoom chat. One particular exchange stood out.
Dan Haley, our intrepid publisher, asked Kaegi about historic racial inequities in housing and property tax assessments (or the process of determining the value of real estate for the purpose of taxing it). Do they intersect?
“Quite dramatically,” Kaegi said.
“Our assessment system, if it’s working perfectly, is reflecting market prices for property,” Kaegi added. “We should always remember that all these structural determinates that create segregation and disparity in values are embedded in them.”
We get racial bias in property assessments, Kaegi said, “if we have a system that depends on appeals and who works the system best? People with money, people with power, people who have the most access. They whittle down their share when it comes to the expense of everyone else.”
You can also get racial bias when you don’t factor foreclosure sales into the assessment process, he said.
“In the past, our office oftentimes excluded foreclosure transactions, because they weren’t considered arm’s length transactions,” Kaegi said.
Foreclosures are rampant in Black and Brown communities, but Kaegi’s predecessor, Joe Berrios, wasn’t taking them into consideration in the assessment process.
What that looks like is Anthony Travis, a south suburban homeowner who was profiled by the ABC 7 I-Team in 2018, just as Berrios was preparing to leave office after his loss to Kaegi.
“When Travis was going through foreclosure, his home was being auctioned for $24,000,” the I-Team reported back then. His tax attorney put the market value at $39,000. But the 2017 reassessment of his home’s value (done solely to determine how much he should pay in property taxes) was $78,000.
In other words, Travis was expected to pay taxes on his $39,000 house as if it were worth $78,000.
“Makes me want to cry,” Travis told the I-Team. “Cause I keep trying to figure out where do they get these prices from? When I look at other folks properties in this area — how do they reach that conclusion?”
“He eventually got the value down to $61,000, but Andrea Raila, the president of the Training Research Advocacy and Education Network (TRAEN) told the I-Team that $61,000 was still too high.
“Qualified sales show the market value should be $39,000 not $70,000 not $65,000 but $39,000,” Raila said.
When the I-Team asked Berrios’ office about the disparity, it told him that foreclosures and short sales aren’t considered “fair-market … transactions.” But out of the other side of its mouth, the office said it takes into account “foreclosures in high-volume foreclosure areas.”
The law, the I-Team explains, requires assessors to “look at these foreclosure sales, when they rank 25 percent of the neighborhood or greater.” At that point, they “need to incorporate them in [their] new modeling of assessments so they have fair, more accurate assessments and fair or more accurate property taxes.”
That gaslighting by the former assessor’s office and the smelliness of a law intended to help homeowners but that somehow misses the second-most populous county in the country (home, maybe, to the highest population of tax attorneys in the universe, including Michael Madigan) is a major reason why people don’t think their votes matter.
It’s a big reason why the Democratic establishment, such an ostensible proponent of diversity and inclusion, appears to the public as not much better than a Republican establishment that is effectively a white grievance cult at this point.
But I digress.
I thought of that conversation with Kaegi after coming across a Washington Post article highlighting a new working paper by economists Troup Howard of the University of Utah and Carlos Avenancio-Leon of Indiana University.
The paper, entitled “The Assessment Gap: Racial Inequalities in Property Taxation,” is worth downloading and giving it the old college try. I tried and got through the first dozen pages or so.
The study supports much of what Kaegi spoke about last month. According to the paper, which analyzed 118 million homes in the U.S., and specifically analyzed appeals in Cook County, Black and Brown homeowners face a 10 to 13 percent “higher tax burden for the same public services.” That burden translates into, on average, between $300 and $390 in undue property taxes a year.
The authors point to some interesting solutions to the gap, including “an alternate approach for constructing assessments based on small-geography home price indexes” that might reduce inequity “by at least 55-70 percent”. I don’t quite know what that means, yet. I’ll have to do some more reading.
I suspect it aligns with Kaegi’s solution, which was much easier to understand.
“Fixing that racial disparity,” Kaegi said, “requires getting [the assessment] right the first time.”