Assessor hopes to get rid of ‘vacancy reductions’
by BRIAN NADIG
Cook County Assessor Fritz Kaegi hopes to change the longstanding practice of allowing commercial property owners to receive "vacancy reductions" of up to 90 percent on their property tax assessments in the county.
"We think the net effect of that is to encourage vacancy," Kaegi said of the policy last month at a meeting of the Jefferson Park Chamber of Commerce. He said that some commercial property owners annually file for the reductions as part of an investment strategy and that it can result in a building staying empty or land remaining undeveloped for years.
For decades the Milwaukee-Lawrence commercial area has been plagued with vacant storefronts and in several instances those owners have received assessment reductions which lower their tax bills.
Kaegi said that his office plans to release an application in which users will be able to see which properties have received vacancy reductions on their assessments.
"The North Side lights up like a Christmas tree on this," he said.
The practice of allowing the vacancy reductions was based in policy and not law, and a new policy is being formulated to help address the problem, Kaegi said.
He added that vacant storefronts hurt neighboring businesses and result in less sales tax revenue, forcing municipalities to rely more heavily on property tax revenue.
Kaegi said that his office is working on a plan in which commercial properties in a particular neighborhood would be treated equally in terms of assessing the impact of the area’s vacancy rate. In essence, he said, two similar commercial buildings in the same area should have similar assessments, even if one is vacant and the other is fully occupied.
Under the plan, landlords of vacant buildings would have more incentive to find tenants given that their tax bill would now be similar to those occupied buildings, Kaegi said.
In order to properly implement the plan, accurate data is needed at the start of the assessment process, and proposed state legislation would help accomplish that, Kaegi said.
House Bill 4947 would require owners of income-producing buildings to submit information on rental income, expenses and vacancies, – information which Kaegi’s office said is typically not submitted until the appeals process.
Kaegi said that the data would help his office to determine "neighborhood vacancy rates" and that without those figures, it would be "harder to put this (reform) in place."