How Tax Breaks in Chicago Area Hit Minorities

When the value of real estate in Chicago’s Loop dropped by more than $129 million this year, it wasn’t just landlords who felt it — it was every homeowner across the city.

The latest report by Cook County Treasurer Maria Pappas — who recently announced she’s running for Chicago mayor — confirmed what insiders already knew: commercial property tax breaks ricochet straight into residential mailboxes, helping push the median city homeowner’s bill up 16.7 percent to a record $4,457.

This isn’t a bug in the system. It is the system — and it’s built to shift the load from the connected to the common. As commercial property owners leveraged appeals tied to legitimate net income losses and skyrocketing vacancies, residential owners, especially in neighborhoods with little to no commercial tax base, absorbed the blow. South and West Side communities, already under pressure, saw median bills climb more than 80 percent in places like Englewood and North Lawndale.

“The steepest increases show up on the South and Southwest sides because those neighborhoods simply do not have enough commercial property to absorb the shift,” said Justin McClelland, a property tax appeals analyst who studies Cook County and offers a software platform called AppealZoo. “When the central business district loses hundreds of millions in taxable value, the places with thin commercial footprints feel it the most.”

That’s not to say the cuts to assessed values on offices in the Loop and across Cook County granted through appeals to the Board of Review aren’t based on the evidence. They largely are, said McClelland.

“Some major owners still lead with optimistic underwriting instead of actual results. That worked a few years ago, but today the difference between pro forma and reality is too wide,” he said. “If the numbers do not line up with market conditions, the appeal will not hold.”

But it’s not just the boardroom towers that skew the system. Look at the North Shore’s lakefront. In Winnetka, Jeffrey and Ashley Quicksilver recently sold their home at 609 Sheridan Road for a record-setting $32.5 million — even as the property’s assessed value sat below $15 million. Still, the power couple appealed the valuation to the Cook County Board of Review in the most recent tax cycles and, to the board’s credit, lost, records show.

Yet the Quicksilvers have also taken the extra step of trying their case with the Illinois Property Tax Appeal Board, even drawing public opposition from the New Trier High School district before withdrawing their appeal, records show.

That’s not nothing. Though many homeowners wouldn’t consider a PTAB appeal, Mr. Quicksilver isn’t most homeowners — he’s a commercial real estate executive at Walton Street Capital with the kind of institutional fluency and leverage that can make a difference in how the government responds to requests.

While it looks like tax authorities held firm on this lakefront mansion’s share of the pie, it’s easy to see how deep-pocketed insiders can test every angle of the system, even when they’re already paying taxes on less than half their sale price.

Meanwhile, average homeowners are still grappling with delayed tax bills and reopened appeals windows across northern Cook County — fallout from sticker shock and the sluggish reassessment process.

Despite rhetoric about reform, the county’s valuation tug-of-war between Assessor Fritz Kaegi’s modeling and the Board of Review’s case-by-case corrections leaves room for well-positioned players to exploit gray areas. And state lawmakers, content to fund schools and services by loading up real estate with taxes, continue to rely on a system that feeds on inequity.

“A lot of people jump straight to the racial framing, but I do not think the system is sitting around trying to target anyone,” McClelland said. “What is really happening is that the neighborhoods hit the hardest tend to be places with fewer businesses, more disinvestment and weaker commercial corridors. Those areas also happen to be predominantly Black and Latino. The outcome has a racial pattern, but the mechanism is really about commercial density.”

Add insider access and luxury property blind spots to that, and it’s no wonder the math keeps crushing those without a lobbyist or diverse portfolio.

Editor’s note: The spelling of McClelland’s surname was corrected in this story.