Newly released court documents show that analysts working for Cook County Assessor Joseph Berrios often changed home values produced by the office’s computer model, a sign of shortcomings in the system that made the property tax system unfair to less-affluent homeowners.
More than a fifth of home values were adjusted during “hand reviews,” with assessment analysts sometimes relying on websites such as Zillow or Trulia to determine a home’s characteristics, Berrios’ director of residential valuations said under oath.
In addition, aides sometimes switched the values of similar homes in entire neighborhoods “depending on where our level of assessment is or where we want to be,” in the words of one analyst. And Berrios workers removed so-called outliers — homes that fall outside neighborhood patterns — from an initial computer analysis without a set of specific guidelines to determine which should be taken out of the equation.
The revelations are contained in court documents stemming from a lawsuit the Chicago Tribune filed as it was reporting on “The Tax Divide.” The investigation found that the assessor’s home values in affluent neighborhoods often were too low, and those in economically struggling areas often were too high — resulting in an unfair shift of the tax burden from the wealthy to the less affluent.
Berrios’ office denied an open records request for documents and spreadsheets related to hand reviews and commercial assessments. The Tribune went to court, saying the office had no right to withhold the documents under Illinois law. Last month, an Illinois appeals court upheld a lower court ruling ordering the documents released.
As Berrios now mulls whether to take the issue to the Illinois Supreme Court, the appeals court unsealed previously unavailable files associated with the case.
Among them is an August 2016 deposition by Alfonso Sarro, Berrios’ director of residential valuations. Sarro testified that “the function of the assessor’s office is to value all property uniformly and fairly for ... real estate tax purposes.” But he went on to describe a process that sometimes veered from industry standards.
Sarro testified that “between 20 and 25 percent (of) values are actually changed by hand,” with analysts determining that the computer model used to value the properties in the first place got it wrong.
Expert Christopher Berry called that “an incredibly high number.” A rule of thumb in the assessment industry is that hand reviews should change only 1 to 2 percent of the property values calculated by the computer and only in cases where there is “a really good and explicit reason,” he said.
Other revelations in Sarro’s deposition include:
— Assessor’s analysts followed no “fixed set of guidelines” in determining so-called outliers — homes with values that skew the model because they’re inconsistent with neighborhood patterns, like a large mansion built amid a block full of bungalows.
“There are usually standards involved,” and entire sections of assessment textbooks lay them out, said Berry, a University of Chicago professor who helped design a new model for Berrios’ office that was never fully implemented.
— When doing the hand-check process, analysts sometimes relied on data from internet sites like Zillow or Trulia “for insight into home characteristics” — such as square footage and number of rooms — that can affect values. Berry said that’s problematic. “If they are doing that for one set of homes and not others, that’s going to introduce nonuniformity into the process,” he said.
— After the hand reviews were done, supervisors in the assessor’s office then looked at the resulting values for entire neighborhoods and determined whether they might be too low or too high for a particular type of property, such as townhouses. If that was so, they made a percentage adjustment to all townhouses in that neighborhood. Berry said that showed a lack of faith in the model used to value the properties in the first place.
All those steps leave the impression of a “seat-of-the-pants approach, because they haven’t shown us how they conduct this process,” Berry said. And making so many changes after running the data through the computer system could introduce a lack of uniformity that makes the system less fair, he said.
“The equation exists for a reason, and that reason is to ensure fairness,” said Berry, who added that Berrios should release all the formulas, data, documents and results involved in the assessment process.
Berrios’ office did not respond to multiple requests for comment this week. Berrios lost the March Democratic primary to asset manager Fritz Kaegi, who pledged to make assessment models and data public and also address flaws the series identified. Kaegi faces Republican Joseph Paglia, who has yet to report formation of a campaign committee, in the November general election.
Also included in the recently released lawsuit documents is a deposition of Mark Dwyer, the former director of commercial valuations in the assessor’s office, who also explained a process that could result in some properties being treated differently from others.
Dwyer testified that “capitalization rates” — figures used to determine a commercial property’s income potential that in turn sets its value — “are purely a matter of opinion by the analyst” but must fall within a range determined by Thomas Jaconetty, a top aide to Berrios.
In some cases, analysts turned to Zillow to determine potential rents for commercial properties, Dwyer said. In others they relied on newspapers or business magazines to discover some commercial sales data, he added.
As part of the series, the Tribune later collaborated with ProPublica Illinois and found that commercial and industrial properties were underassessed, which pushed more of the tax burden onto the backs of homeowners. The series also found that the assessor’s estimates were deeply unfair, punishing small businesses and giving breaks to the owners of more expensive properties.
For a long time, the assessor was dismissive of “The Tax Divide” and its findings. After the series documented problems with residential assessments, County Board President Toni Preckwinkle commissioned an independent study. The Civic Consulting Alliance was tasked with looking at residential assessments and confirmed the series’ work.
That study identified hand reviews as one of the reasons the system unfairly shifted the tax burden, saying they introduced “systematic bias” to the process. More than 92 percent of initial assessments were changed as a result of hand reviews and other adjustments, the study found.
When the study came out, Berrios vowed to fix the problem, working with the Consulting Alliance and Tyler Technologies, the firm the county has hired to update its property taxation computer systems. An assessor’s news release issued last month stated that a new model is in place that resulted in “a significant reduction in the number of necessary hand checks.” But Berrios has not released the model or data fed into it, making the claim difficult to assess.
Jaconetty, the deputy assessor, previously defended the assessment model that was used, saying homeowners would be relieved to know that the assessor is not relying solely on the “purity of mathematics.”
“Would they be as concerned about their assessments being based purely on math and driven by equations?” he asked. “Or would they feel better knowing there was a human being involved?”
Berry, however, said the human aspect might not inspire confidence in a system that many people already mistrust.
“Given this office and its long history of corruption and troubles, I don’t think people will be reassured that they are going in there and having someone change those numbers,” he added.