Tax Appeal Up in Parts of Chicago, Reductions Down: Study

UIC Podcast
UIC Podcast
Tax Appeal Up in Parts of Chicago, Reductions Down: Study

News Release


[Writer] This is research news from U-I-C – the University of Illinois at Chicago.

Today Rachel Weber, associate professor of urban planning and policy talks about a study that she and University of Illinois at Urbana-Champaign economics professor Daniel McMillen conducted of Chicago-area property tax assessment appeals to see who were most likely to succeed.

Here’s Professor Weber:

[Weber] No one likes to pay their property taxes. Most of us feel that ours’ are too high, thanks in party to the way that we pay it. We get a bill for a lump sum either once or twice a year, unlike other taxes, like a sales tax that is distributed throughout whatever you’re buying that particular year. But not all of us appeal our property taxes.

So why do some people challenge their assessments while others do not?

Our study found out that you have a higher probability of appealing your property tax bill if you are living in an area that is experiencing a lot of development, which means an increase in property values. We found that people who live in areas that have a higher percentage of home owners, of white residents, of people who live in larger houses, that these are places – and people who live in these places – are more likely to appeal their property tax bill.

Now there’s a difference between the perception of having a high property tax bill and the reality of the assessor making some sort of mistake or error that they need to correct by giving you a reduction. So a second part of our study looked at not just who appeals their property tax, but who successfully appeals their property tax. And we found that, thankfully, there’s a difference between the populations who appeals their property tax bill and those who are granted a reduction. And I say “thankfully” because you don’t want your reviewing agencies to just capitulate to just the squeakiest wheels. You’d like them to have some kinds of independent standards for deciding who is granted an appeal and who is not. So in contrast to the population that is most likely to appeal their property tax bill, we found out that those who are more likely to be successful – the
people who are granted a reduction – tend to live in more smaller hoses, in more stable communities so they’re experiencing less rapid increases in assessed value, and that they tend to live in places where there are fewer sales. So when there’s a lot of sales activity – where what we call a “thick market” – the assessor has a lot of really good data on what the market value of your property is. They’re less likely to make a mistake or error. It’s also true that if there are a lot of sales, the individual residents of the neighborhood are less likely to even file an appeal in the first place. So that was one of the things we were interested in exploring — whether or not the relative “thickness” of the market, the degree of sales activity in an area affected both whether or not someone appeals and then whether or not you are successful.

A surprising finding from our study is that by hiring legal consul – by hiring a lawyer to help you with the appeals process, that did not guarantee success. In fact, that if you had a lawyer, your probability of filing a successful appeal actually decreased. Now why would that be the case? It’s possible that lawyers go fishing for cases so that they take on a lot of less success-prone cases, or it’s possible that lawyers are associated with cases that are very complex, so they may be turned down by the two reviewing boards whose decisions we looked at – the Cook County Assessor and the Board of Review – but that they would pursue the next step of appeals, which would be the state’s property tax appeals board.

Even though our study looked at the period from 2000 to 2006 – and we’re experiencing a very different market right now; in fact, property values are declining – I think our study has important findings for the future of property tax assessments, and that is that if there are a declining number of sales in a community that it makes it harder for the assessor to do a good job in estimating what the market value is. If there are fewer sales, they have less information upon which to base their assessment of what the value of your home is. So it does suggest that during these periods where sales sort of freeze up, the assessor may need to adopt alternative strategies for appraising and assessing property

[Writer] Rachel Weber is associate professor of urban planning and policy, and associate director for research and program development at the Great Cities Institute.

For more information about this research, go to … click on “news releases.” … and look for the release dated March 22, 2010.

This has been research news from U-I-C – the University of Illinois at Chicago.

Print Friendly, PDF & Email