Tax hikes are on the horizon for landlords of some of Chicago’s most prominent downtown buildings after Cook County Assessor Fritz Kaegi boosted their value.
Kaegi valued Willis Tower, the city’s tallest building, at $1.25 billion, 78 percent higher than last year, Crain’s reported. His assessment of Aon Center more than doubled to $886 million and jumped 30 percent to $95.4 million for apartments at Aqua Tower.
The move is part of Kaegi’s campaign pledge to revamp property tax assessments. Since taking office three years ago, Kaegi made sweeping changes that agitated commercial property owners. This year, he moved to assessing properties in downtown Chicago from the suburbs, infuriating landlords.
“It makes no sense,” Farzin Parang, executive director of the Building Owners and Managers Association of Chicago, told Crain’s. “It’s very political to us. He’s constantly pitting business versus residents.”
Critics say that Kaegi is raising assessments even though the pandemic has prevented people from returning to offices. The business district vacancy rate rose to 17.9 percent in the third quarter from 17.3 percent in the prior three months.
Kaegi previously told The Real Deal that “assessments are out of date and there are huge inequities.” He said, “I don’t know the alternative that is being proposed instead of market value.”
Kaegi’s office says the focus is on accuracy. His predecessor, Joseph Berrios, is under investigation by a federal grand jury probing property value estimations his office made on a number of central business districts and high-end neighborhoods.
“The days of favoritism in the assessor’s office are over,” Scott Smith, a spokesman for the assessor, told Crain’s.
While downtown landlords will file appeals, it may be an uphill battle.
Willis Tower, for example, was assessed by Berrios at $697 million in 2018, even though Blackstone paid $1.3 billion for it in 2015 and invested an additional $500 million two years later. That suggests Kaegi’s assessment may not be that far off the mark.
Ares Management bought the 82-story Aqua Tower for $191 million in 2019, when it was assessed at $254 million, well below its most recent valuation of $95.4 million.
Aon Center, however, was valued at $824 million when it was refinanced three years ago by a venture led by 601W, well below Kaegi’s assessment.
If landlords aren’t satisfied after filing appeals to the assessor’s office, they can turn to the county Board of Review or the Illinois Property Tax Appeal Board. Kaegi doesn’t have a final say on the value of the properties.