War of words could cause costly lawsuit

April 2, 2010

BY PHIL KADNER

A dispute among politicians seems to make Cook County vulnerable to one of the largest class-action lawsuits in its history. All a lawyer would have to do is point to a letter signed by every member of the Cook County Board of Review that states property tax bills appear to be misleading.

The letter provoked county Assessor James Houlihan on Wednesday to publicly charge that the leader of the county Democratic Party, Joseph Berrios, and Illinois Democratic chairman Michael Madigan are deliberately trying to delay property tax bills from being issued before the Nov. 2 election.

Houlihan contends that property tax increases, particularly for Chicago residents, will be so high they could affect the election. Berrios, in addition to being the county Democratic chairman, decided to run for assessor after Houlihan announced he would not seek re-election. Berrios is also one of three members of the county review board, which makes decisions on property tax appeals.

The letter that he and the two other review board members signed accuses Houlihan of dragging his feet in assessing townships, thereby delaying the tax bills. But the part of the letter that didn't draw much attention has to do with a new way of assessing property in Cook County.

For reasons I still don't fully understand, the county recently changed the assessment process. Homes, once assessed at 16 percent of market value, are now assessed at 10 percent. Commercial property, previously assessed at 36 or 38 percent of market value, is now assessed at 25 percent.

The letter was sent to Commissioner John Daley (D-Chicago), the chairman of the county board's finance committee, and was signed by the board of review members. Here's what it has to say about the new assessment practice:  "Unfortunately, there are also significant legal contentions before our agency regarding the constitutionality and legality of the notice provided by the Assessor to taxpayers in conjunction with the 10/25 (percent assessment) Ordinance.

"Nearly all triennial assessment notices indicate that the assessment has been lowered from the previous year or has stayed the same with no increase. "None of the notices of assessment disclose what the prior level of assessment was compared to the new 2009 level of assessment.

"None of the notices of assessment identify that the market value has increased in 2009. All of the assessment notices to homeowners include a press release indicating, 'Due to the first-ever downward market adjustment, residential properties in each suburban township will receive adjustments of their assessed values.'

"These market reductions come as the Assessor's Office is implementing the 10/25 Ordinance. In sum, the legal challenges before us boil down to whether a reasonable person reading their notice of assessment in conjunction with the press release would notice that their market values have increased substantially.

"We are concerned because the terms 'downward market adjustment' and 'market reductions' used by the Assessor certainly would appear to lead a homeowner to the conclusion that their property's market value has decreased ...

"There is a valid argument that most taxpayers will not realize that market values have increased until after there is a shift in tax burden and it is too late for them to exercise their right to appeal." Well, I'm no lawyer, but if that doesn't form a basis for a class-action lawsuit on behalf of all property taxpayers, I don't know what would.

At least two government officials I spoke with Thursday expressed the same concern but refused to go on the record with their comments. And their fear is that any court challenge would delay property tax bills for months - undermining the financial health of school districts, municipalities, library districts and others that depend on that revenue.

Houlihan did not support Berrios in the Democratic primary election and actively sought someone else to run against him. He is rumored to be encouraging county Commissioner Forest Claypool (D-Chicago) to run as an independent against Berrios this fall. The Cook County property tax system is a mess and has been for decades. The average homeowner can't figure out how the county manufactures the numbers for his tax bill.

And that's the way politicians like it. It has been a political tool for years, used in all manner of ways to boost the careers of Cook County officials. Filing appeals of tax bills has generated millions in wealth for certain law firms, including one in which House Speaker Madigan is a partner.

Houlihan and Madigan have been at odds over making permanent a 7 percent cap on equalized assessed value in Cook County. It will be interesting to see if the 10/25 issue even comes up

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