County Board amends real property classification ordinance
Friday, March 27, 2009
Chicago Daily Law Bulletin
by Leonard F. Amari and Vesna Marusic
In these difficult economic
times, the Cook County Board, at the encouragement of Assessor James M.
Houlihan and other interested entities, recently amended the county
ordinance lowering the level of assessment for single-family
residential properties (Class 2), as well as levels of assessment on
other use properties.
Homes, for example, will now have an assessment level of 10 percent of the full market value, down from 16 percent.
In order for the reader to better understand this significant revision
in the assessment of homes and other real property in Cook County, a
basic understanding of the classification system, as found in the Cook
County Real Property Classification Ordinance, is needed.
Under the Illinois Constitution, counties with 200,000 or more
inhabitants are authorized to classify property according to its use.
With the intention of shifting the property tax burden away from the
residential class and toward other classes, particularly the commercial
and industrial classes, the Cook County Board of Commissioners passed
the Real Property Assessment Classification Ordinance in 1973. The
classification system specifically assesses residential property at a
lower level than other properties to show its designed intent to shift
the tax burden away from homeowners.
The different property classes are assessed at varying percentages of
market value under the ordinance, which was applicable for 1973 and
subsequent tax years, and is the only ordinance of its kind in
Illinois. Prior to the adoption of the ordinance, all real property in
Cook County was assessed at 33.33 percent of its market value, which
was the same assessment formula utilized by the rest of the State of
Illinois. In fact, at present, all counties outside of Cook County
continue to assess all real property at 33.33 percent of market value.
The Illinois Constitution requires that the rate of tax of the highest
class may not exceed 2½ times the rate of tax of the lowest class and
that real property used in farming may not be assessed at a rate higher
than residential property.
Since the ordinance's original adoption, it has been amended more than
20 times. A majority of the amendments, as here, dealt with real estate
taxes on single-family residential properties, while others dealt with
different classes of property.
In 1973, pursuant to the original ordinance, Class 2 residential
property was assessed at 22 percent of market value, Class 3 (apartment
buildings with seven or more units) were assessed at 33 percent of
market value, while Class 5 (commercial and industrial) were assessed
at 40 percent of market value. Residential properties seemed to receive
the most tax breaks in subsequent years. In 1976, Class 2 residential
properties were assessed at 17 percent, as opposed to 22 percent. In
1977, that percentage was reduced even further, to 16 percent, where it
remained until Ordinance No. 08-0-51 was passed just last year.
Over the years, the levels of assessment for commercial and industrial
properties were reduced from their highest levels, 40 percent, to their
present levels, 25 percent, with the motivation being to make Cook
County real estate taxes competitive with other Illinois counties,
especially the collar counties.
The current ordinance divides real estate into nine classes and three
sub-classes assessed at varying percentages of market value. There are
also three additional classes identified by the letters C, L and S. The
classes are currently organized in the following manner:
• Class 1 (vacant land)
• Class 2 (residential)
• Class 3 (apartment buildings with more than six units)
• Class 4 (nonprofit)
• Class 5a (industrial) and 5b (commercial)
• Class 6b (industrial)
• Class 7a (commercial, under $2 million of development costs) and 7b (commercial, over $2 million of development costs)
• Class 8 (commercial and industrial development in areas of severe economic stagnation)
• Class 9 (low income multi-family)
• Class C (contaminated commercial and industrial)
• Class L (landmark properties, commercial and industrial)
• Class S (multi-family, Section 8 Housing)
Class 6 was adopted later in 1978, and has since undergone many
changes. During the last economic down turn in 1984, Class 6, for
example, was discontinued and replaced with Classes 6a and 6b, whereby
for Class 6a, the property was assessed at 30 percent of market value
for eight years, while Class 6b property was assessed at 16 percent for
eight years. In 1990, Classes 6a and 6b were rolled into one incentive
classification, Class 6b, to be further explained below, where it
remains to the present.
Another assessment classification change was instituted in 1995 for
Class 6b, whereby the property was assessed for eight years at 16
percent of market value; the ninth year would bring an assessment at 30
percent of market value. In the 10th year, the property is assessed at
16 percent of market value for up to three years.
At present, for 2009 taxes payable in 2010, the assessment for a Class
6b property is quite different, 10 percent for the first 10 years and
for any subsequent 10-year renewal periods; if the incentive is not
renewed, 15 percent in year 11, 20 percent in year 12 and 25 percent
Obviously, after the thoughtful analysis of then-Assessor Thomas C. Hynes, the County Board recognized the importance of these incentives to spur economic development in Cook County.
For example, the purpose of a Class 6b incentive is to encourage
industrial development throughout Cook County by offering a real estate
tax incentive for the development of new industrial facilities, the
rehabilitation of existing industrial structures and the industrial
reutilization of abandoned buildings.
Obtaining a Class 6b designation furthers the incentive's goal of
attracting new industry, stimulating expansion, retaining existing
industry and increasing employment opportunities. A number of
requirements have to be met by any applicant prior to obtaining Class
6b status. When all requirements are met, the applicant obtains a
resolution, from the municipality in which the real estate is located,
that expressly states that the municipality has determined that the
incentive provided by Class 6b is necessary for development to occur on
that specific real estate, and that the municipality consents to the
Class 6b application to the assessor.
The purpose of a Class 7b designation is to encourage, in areas
determined to be ''in need of commercial development,'' commercial
projects with total development costs, exclusive of land, over $2
million, that would not be economically feasible without the incentive.
As with the Class 6b incentive, an applicant seeking 7b status needs to
meet a number of requirements, and ultimately obtain a resolution from
the municipality in which the real estate is located.
In 2002, the County Board unanimously amended the ordinance again,
decreasing the level of assessment on apartment buildings of seven or
more units beginning in the 2004 tax year from 33 percent on a
graduating scale. The level of assessment changes were as follows:
• 2004: 30 percent
• 2005: 26 percent
• 2006: 24 percent
• 2007: 22 percent
• 2008: 20 percent
In 2008, Cook County passed Ordinance No. 08-0-51, which amended the
real property classification system with new percentages for all
classes of real property. Beginning in 2009, for taxes payable in 2010,
all Cook County real property will be classified and assessed at the
following percentages of market value:
• Class 1 (10 percent — formerly 22 percent)
• Class 2 (10 percent — formerly 16 percent)
• Class 3 (16 percent in tax year 2009, 13 percent in tax year 2010, 10
percent in tax year 2011 and subsequent years — formerly 20 percent for
• Class 4 (25 percent — formerly 30 percent)
• Class 5a (25 percent — formerly 36 percent)
• Class 5b (25 percent — formerly 38 percent)
• Class 6b (10 percent for first 10 years and for any subsequent
10-year renewal periods; if the incentive is not renewed, 15 percent in
year 11, 20 percent in year 12 and 25 percent thereafter)
• Classes 7a and 7b (10 percent for first 10 years, 15 percent in year 11, 20 percent in year 12 and 25 percent thereafter)
• Class 8 (10 percent for first 10 years, 15 percent in year 11, 20 percent in year 12 and 25 percent thereafter)
• Class 9 (10 percent for an initial 10-year period, renewable upon application for additional 10 year periods)
• Class C (10 percent for first 10 years, 15 percent in year 11, 20 percent in year 12 and 25 percent thereafter)
• Class L (10 percent for first 10 years and for any subsequent 10-year
renewal periods; if the incentive is not renewed, 15 percent in year
11, 20 percent in year 12 and 25 percent thereafter)
• Class S (10 percent for the term of the section 8 contract renewal).
In the recent changing of these levels of assessment, Houlihan has gone
on record as saying, ''The current turbulence in the real estate and
financial markets makes these measures especially urgent. People are
angry and confused about their property taxes.''
The changes with the newly adopted ordinance, the enactors hope, would
reduce for homeowners the significant burden of the cost of government,
but, arguably, real estate taxes will still result in property owners
experiencing property tax increases.
It is imperative to closely follow real property values and file annual
assessment challenges to ensure reasonable taxation. Taxpayers have a
host of remedies available in their attempt to reduce the assessment on
their real property. To view the very informative Web site of the cook
county assessor visit: www.cookcountyassessor.com.
Leonard F. Amari, Vesna Marusic and Katherine A. Amari are attorneys at Amari and Locallo.