Chicago’s real estate industry is celebrating key wins in the Illinois primaries this week, including challenger Patrick Hynes’ ousting of Cook County Tax Assessor Fritz Kaegi.
Industry pros watched the race closely because many believe Hynes will play a critical role in attracting investment back to Cook County amid a lending dryspell
“When commercial assessments are not accurate and unbiased, then ultimately it becomes much harder to recruit investment to the city and the county, and that ultimately means that everybody pays more property tax on the residential side” said Farzin Parang, executive director of Building Owners and Managers Association of Chicago.
Hynes won the Democratic primary with 53 percent of the vote and is strongly favored to win the November general election in heavily democratic Cook County against the only other opponent in the race, Libertarian candidate Nico Tsatsoulis.
The primaries were a test of local lobbying groups’ centrist push after a wave of progressive candidates swept key offices in City Hall in 2023.
“You had one faction out there who was really trying to make this about national issues and make this either about the President or about foreign affairs, but what our polling was showing, and what all the conversations we had with voters was showing … is that affordability and pocketbook issues are what drove voters the most in this election,” said Illinois Realtors CEO Jeff Baker.
Though no city races are on the ballot during this election cycle, candidates running for other local government bodies like the Cook County Board of Review and Board of Commissioners proved important for the industry to rally around.
Voters test out a new Assessor
Real estate players seemed ready to move on from Kaegi, and voters agreed. But how much he can be blamed for broader property tax issues in the county remains up for debate.
Kaegi, who was first elected in 2018, was tasked with re-evaluating Chicago’s commercial real estate landscape after the pandemic wreaked havoc on the office market. Since then, property values have gone haywire with homeowners and commercial landlords alike decrying their unpredictable tax bills.
Fred Latsko, a Chicago developer with a strong presence in Fulton Market and the Gold Coast, said he is excited about Hynes’ win, but acknowledged that Kaegi faced an uphill battle from the start.
“A steadfast reformer at heart, [Kaegi] couldn’t overcome the negative effects Covid had on commercial real estate and the unanticipated increase in residential real estate valuations,” he said, adding that he respected Kaegi’s commitment to data science and affordable housing incentives.
While Kaegi should be recognized for his reform efforts, Latsko said that “Hynes will get the assessments correct that Kaegi was never able to.”
According to Kaegi, the problem was massive cuts to values made by the Board of Review, a three-person entity elected separately from the assessor tasked with checking his work.
“We need to really think about how ethics are going to be working in this system,” Kaegi said after his concession speech. “If we are going to retreat to an appeals-driven system and taking donations from property tax attorneys, it is a retreat to a model that does not exist in the rest of the United States.”
But Hynes, who currently serves as Lyons Township Tax Assessor, claimed that Kaegi’s methodology was creating inaccurate property values that necessitated the appeals to the Board of Review.
“I think the days of elected officials standing outside of each other’s door to point fingers and labeling each other should be gone,” Hynes said of working with other local officials. “It’s time to be a little more collaborative and a little less kindergarten. It’s time for grown-ups to take ownership of their part of the assessment, own their own failings, and work together.”
He also campaigned on a promise to establish an Office of Economic Development to attract more development to Cook County, and thus spread the tax burden among more property owners.
That’s why Industry professionals are hoping Hynes will kickstart Chicago’s lagging development pipeline.
David Doig, developer and founder of Chicago Neighborhood Initiatives, said he was encouraged by the idea.
“Obviously there’s got to be a balance between being objective, making fair assessments and promoting growth, but I think you can do both,” Doig said. “A lot of this is about creating systems that make it more predictable and more transparent.”
But Hynes’ relationships sparked criticism from Kaegi, who said he could reestablish a corrupt pay-to-play environment prevalent under prior regimes.
Residential realtor Kim Kerbis, who donated to Kaegi’s campaign, said she’s wary about that possibility.
“It is sort of a zero sum game,” she said. “If somebody benefits, it means somebody may be paying for it. And I just feel like the people who can least afford it end up paying for it,”
Establishment wins at the Board of Review
The Cook County Board of Review was shaken up after challenger Elizabeth “Liz” Nicholson decisively unseated incumbent Samantha Steele in District 2 for the consequential three-seat property tax body. The District 2 representative reviews property tax appeals for much of the Northern end of Cook County.
Two of three district representatives on the Cook County Board of Review were up for election, and both incumbents faced strong primary challengers.
Nicholson claimed over 60 percent of the vote in her bid to unseat incumbent Steele, who was bogged down by a series of controversies during her first term, including an arrest for alleged drunken driving and other potential ethics concerns.
The real estate industry was tuned into these races because the Board of Review is responsible for making the final call on property value disputes with the tax assessor’s office, and the less the two bodies agree, the more assessments fluctuate.
Progressive candidates for both the assessor’s office and for positions on the Board of Review have been campaigning on the rising commercial-versus-residential real estate tension brewing in the county since the pandemic.
But that messaging appeared to fall flat among local voters.
“I think what we need to do to level off the playing field is not only work together but not allow ideology to seep into this process,” Nicholson said.
In the District 1 race, which covers much of central Cook County, incumbent and real estate favorite George Cardenas defeated progressive challenger Juanita Irizarry.
The Building Owners and Managers Association of Chicago’s PAC, which represents downtown office landlords, donated to both Nicholson’s and Cardenas’ respective campaigns.
Real estate-backed candidate falls flat in Cook County Board president’s race
A flood of donations from high-profile real estate industry figures did little to help Chicago Alderman Brendan Reilly in his bid to unset Cook County Board President Toni Preckwinkle.
Preckwinkle commanded 68 percent of the vote in one of the earliest called races on election night.
“I was slightly shocked to see the results there … but Tony Preckwinkle has had an amazing career, and if she’s winning a fifth term, there’s a reason for it,” said Joey Letchinger of JDL Development.
From the start, the industry showed less of a united front than they did in the assessor’s race, campaign finance data showed.
While Preckwinkle has courted fewer industry bigwigs than Reilly, she still secured some donations from prominent real estate names and broad support from construction companies and trade unions.
One of Preckwinkle’s marquee initiatives in her recent term was commissioning a study of Chicago’s property tax system, with a goal of making the billing process more predictable for investors and homeowners alike.
Hynes said he spoke with Preckwinkle at length about unifying their efforts and creating more standardized processes with the Board of Review.
Looking ahead
A few more real-estate related candidates failed to make waves in races for higher offices, but it hasn’t deterred the industry.
Real estate scion Jason Friedman emerged as a favorite among industry players to fill Rep. Danny Davis’ soon-to-be-vacated seat in the U.S. of Representatives, but he finished the night with 7 percent of the vote.
The race for Illinois’ 7th Congressional District includes perhaps the highest concentration of real estate value in the state, stretching from downtown Chicago to Oak Park.
State Rep. La Shawn Ford won the primary after securing Davis’ endorsement.
Similarly, commercial real estate and video gambling mogul, Rick Heidner, finished last in the gubernatorial Republican primary.
As industry pros take stock of local wins, they’re setting their sights on City Hall. Should a real estate-backed candidate unseat progressive incumbent Mayor Brandon Johnson in 2027, it could get lenders and investors off the sidelines, said Interra Realty broker Joe Smazal.
“I think it would really be a situation where the floodgates could open,” he said.