Fritz Kaegi’s Case for Third Term as Cook County Assessor

Editor’s note: this article is part of a series of election coverage for Illinois’ March 17 primary contests. A separate Q&A with candidate Patrick Hynes was published here.

Seeking his third term, Cook County Tax Assessor Fritz Kaegi is intent on defending his record, and doubling-down on his residential affordability initiatives.

But under his tenure, fluctuations in property tax bills contributed to a slowdown in outside investment. According to Kaegi, the problem lies in massive cuts to values made by the Board of Review, a three-person entity elected separately from the assessor.

In his pitch for re-election, Kaegi says work to identify gaps in valuations and get both the assessor and the Board of Review on the same page are crucial for improving the system for everyone and bringing lender confidence back to Chicagoland.

And if his opponent, Lyons Township Assessor Patrick Hynes, is elected, Kaegi claims his work to eliminate a pay-to-play environment in the assessor’s office will be undone.

TRD: Tell me about your background prior to becoming the assessor and how that prepared you for this role.

Kaegi: I went to business school at Stanford and then for basically 20 years, I was an investor. … I approach real estate from a capital markets background. … Growing up on the South Side, a lot of my classmates from high school started becoming homeowners in the late 90s and early 2000s, and people really got hit hard by the housing crisis. … Their home values went down, 30, 40 or 50 percent, and people were underwater on their mortgages and asking, ‘Why are my taxes going up?’ … What I saw was that there were values being assigned to commercial buildings that I knew from companies that I followed that were way off. … Then I made the connection that the people I grew up with in the neighborhoods they live in are carrying too much of the burden because these other big buildings are being undervalued by the system. … I ran to fix the system for average homeowners.

TRD: There have been some studies from Cook County Treasurer Maria Pappas’ office that note that the South and West Sides as well as the southern suburbs have seen pretty steep increases in tax bills. Can you speak to that disconnect in the vision you’re talking about and some of the results for homeowners in those areas?

Kaegi: Bills in 2022 went down on the South and West Sides. What’s happened in the last few years is there has been more and more burden heaped onto homeowners through cuts on commercial properties downtown that were not done at my level but were done after my assessments were done. You don’t have to take my word for it. Chris Berry at The University of Chicago did a landmark study of the first six years of our work covering two whole reassessment cycles. It found that for the bottom 70 percent of homeowners, we’ve taken about $2 billion of burden off of them by having fairer assessments.

TRD: If re-elected, do you have ideas or plans to address that disconnect between your office and the Board of Review, or to try to bring those assessments closer together in some way?

Kaegi: The [Cook] County Property Tax Reform Group hired a panel of national experts to do a sales ratio study. … It showed that our property assessments, on average, were in line with the market and within industry standards. At the Board of Review, values were taken about 25 percent too low. So they came up with more than a dozen recommendations. … What’s in that roadmap is changes to methodology for both offices: sharing more data, working off of a common IT platform, passing a law that we’ve been pushing for years to collect more commercial data to build it into our system, and for staffing changes so that we have more people to go before the Board of Review to bring the evidence that we have to defend our assessments. … We meet with the Board of Review weekly on driving these through and we’re really glad that we’ve come to an agreement on some of the first methodology changes, which we think are some of the most impactful.

TRD: An Illinois Answers Project and Chicago Tribune investigation found that you missed $444 million in values from renovations and new construction in 2023. How do you plan to address that moving forward and how do you think that problem came about in the first place?

Kaegi: This is a perennial problem for all assessors across the country. … I’m working with our top 15 peers in the United States … and we’re pushing for access to federal mortgage appraisal data to help us combat that problem. … There is data showing that we have more than doubled the annual rate of discovering properties that are off the rolls than either the previous two administrations. … We caught just about all those properties and did add them to the rolls. Now, did taxpayers see much of a visible impact from that? Not really. It’s a $750 billion market value system. If we discover something on the order of hundreds of millions of dollars of properties, it’s good. We’re always going to be vigilant, but it represents about $1 or $2 on someone’s tax bill. … The reduction on just one, two or three big commercial properties is probably greater than the amount that you add through discovering all the undiscovered properties.

TRD: Unpredictability from the Board of Review has been a longstanding problem. So why do you think that investment in megadevelopment projects and in multifamily production has stalled out more recently?

Kaegi: We had a giant structural change in office building demand. It’s hard to argue for anyone to build more office space, not only in Chicago, but anywhere. … Ten or 15 years ago, people could ignore these elements of unpredictability because they thought there’d be demand there anyway. When it comes to apartments, we have a decent number of cranes turning now building apartment buildings. … We’re at record low-vacancy rates now and rents are holding up. People are making money on transactions and lenders are lending to apartment transactions. There’s no slowdown in the amount of lending that will happen for apartment deals. And it’s the same for industrial. I think in the United States these days with higher interest rates, the uncertainty that comes in is from the cost of materials. … Copper and steel are affected by all these tariffs and all this unpredictability coming out of Washington. It makes a lot of people reluctant to invest.

TRD: What I’m hearing from the real estate community is that it’s very difficult to get shovels in the ground, and that this seems to be more of a unique issue to Chicago and Cook County because of a lack of lender confidence in the future predictability of property taxes. When we’re talking about the pipeline of new multifamily supply, specifically, do you see a role in your office in improving that or a role in how it’s gotten to this point?

Kaegi: If you own an apartment building or you are working on an apartment project, you’ve never had more visibility into how it’ll be assessed than you have in our administration. Because you can go and look at apartment buildings anywhere in Cook County and see how we arrived at our value. … But if that’s changed radically on appeal, then it makes it unpredictable for that project. … This is why we want to reduce the amount of changes that are happening on appeal. … Capital is ready to flow. … Let’s remember that we have a lot of other issues in Chicago with permitting and zoning, and I think there’s too much of a tax on people’s time just to get anything done. This is a discussion that’s happening across America. … It shouldn’t take five years to get a project to completion.

TRD: There was a four-month delay in getting the tax bills out this year. Why do you think that happened and what you can do to assure taxpayers that it won’t happen again in the future?

Kaegi: This is a software package that the county signed onto four years before I came into office. They selected the vendor. They created the contract terms. I don’t think anyone would agree to those contract terms today. … They were paid upfront, almost all of the money, and there was no accountability for when they had to deliver, no accountability for the amount of resources the vendor had to provide, and very few penalties if they built a product that wasn’t functioning. We wrestled with this in 2020 and 2021 and we went live on the system in 2021. It is the other county offices that were wrestling with that in the last few years. … We didn’t play any part in the tax bills being late last year.

TRD: You’ve mentioned your affordable housing incentive program, tell me more about it.

Kaegi: It was created as part of the omnibus affordable housing bill passed in 2021, and we worked in the trenches with housing advocates, with builders and with other legislators to get that bill drafted. It passed in 2021 and we’ve had steady, strong growth in that program since it went into effect in 2022. Someone who owns a building with more than seven units and either does a qualifying renovation or improvement or builds new and commits to having a certain percentage of units be tied to local incomes rather than market rates, it gets an assessment reduction to reflect the lower rates that they’re charging for that layer of their rents. It’s stimulating a lot of affordable housing investment that’s happening.

TRD: You’ve secured some key endorsements, but the Cook County Democrats did not endorse you. Why do you think that may have been the case, and how does it affect your campaign?

Kaegi: We have endorsements from the biggest Democratic names in Illinois politics, our two U.S. senators, eight of our members of Congress. No other members of Congress have endorsed my opponent. So these are the people that voters know best. … We eliminated a lot of the favoritism that was there before and we have become transparent. For a lot of people, that’s not good, that’s bad. I think if you look at some of the folks who are supporting my opponent, they want to take it back to the old way. They want a pay-to-play culture.

TRD: Anything you want to add?
Kaegi: This election is going to be about what kind of assessor the public needs and wants. We’re not only talking about homeowners, but we’re also talking about the needs of the larger system. I’ve gone to bat for average, small homeowners and business owners since I’ve been in this office. Thinking about the cost of a pay-to-play system and the damage that it creates, we can’t afford to have that anymore. … My opponent’s being funded by the property tax appeals industry. … We’ve built the largest donor base in the history of the assessor’s office without taking a dime from property tax appeals lawyers. … It’s a stark choice … It has real consequences for people, and if we want to make our commercial market more predictable, we can’t afford to lean into that.