One of the primary ways that local governments get revenue is through property taxes. The amount of each property tax bill is determined by what various government entities need and the value of each home or business to be taxed. In this week’s Friday Forum, we look at how that value is determined and what you can do if you think they’re asking for too much.
Property taxes are a significant economic expenditure for homeowners and business owners alike. The money goes toward government administration, public services and – often -- to many sorts of special districts such as schools and libraries. But how the amount is determined is a question that puzzles many – if not most – taxpayers.
When real estate is sold, it’s evaluated through a direct appraisal. That is not the case for property taxes. Instead, localities use a process called assessment. Sycamore Township Assessor Kevin Schnetzler said that’s why the process can seem obtuse to the uninitiated.
“Back then, before I started doing this, I would get the notice every year, and I would look at it and I wouldn’t understand it,” he said. “I would read the back. What’s this third of market value? I would just look at last year’s and this year’s assessment, figure it was going up, file it in a drawer, and just wait for the tax bill.”
Assessors like Schnetzler are the first line in determining a property’s “equalized assessed value.” They take down specific property details, such as the number of rooms and type of home (such as whether it’s a ranch house or apartment), and compare the property’s past sales with similar plots and other homes nearby.
However, the actual assessment usually is done through computer models instead of site visits, which appraisers do. Rockford Township Assessor Ken Crowley said this is due to scope.
“We’re responsible for 70,000 parcels, plus or minus a few, or about 113 square miles,” he said.
Every Illinois county (except Cook County) does assessment by township, and Rockford is the single largest such area in the state. Crowley said computer-assisted mass assessment, or CAMA, allows a small team to cover such a large area. It also allows assessors to focus on more specific details.
“So what we yearly monitor are properties that have condition issues,” he said, “but also we’re yearly looking at the sales data of a specific area -- maybe a specific geographical neighborhood.”
Finally, assessors compare current sales data with much older numbers than an appraiser uses. This means that low housing prices caused by the Great Recession didn’t hit property-tax assessments until 2011.
Officials like Tom Walsh, supervisor of assessments for Winnebago County, compile numbers from individual assessors and make any final tweaks.
Assessors can include adjustments like a market factor, which takes into account the change in home prices over the past several years, a similar factor for neighborhoods, and adjustments to an individual property if it’s in poor condition. This delayed change in prices is what Walsh calls a “lagging indicator.”
Once the assessors have made their adjustments, Walsh and other supervisors of assessments then can add “equalization factors,” which ensure each township is taxed at a similar level. At the end of all this accounting, you are left with “equalized assessed value.” Your property taxes are based on a percentage of this number.
As with any levy, you may feel that your home was valued too highly compared to your neighbor. DeKalb County Chief Assessment Officer Robin Brunschon said first you should consider if your neighbor’s property falls under an exemption.
“If, let’s say, somebody put a new deck on, there’s an exemption called the homestead improvement exemption,” she said. “So for four years, you’re exempt from paying whatever the increase on that assessed value. So that’s why we don’t look at taxes, because there could be these other things that subtract from your total.”
If that’s not the case, Brunschon recommends you first go to your local assessor to see if they can straighten out any discrepancies. In some cases, it could be something as simple as the assessor having out-of-date records. But, regardless of grievance, Schnetzler said you need to do your homework.
“If you’re just going to come in and just say, ‘Hey, I don’t think this is correct,’” Schnetzler said, “we need evidence.”
That evidence comes in two forms. Either you show assessments of similar homes to demonstrate that your property was overvalued, or neighborhood sales to show a difference in market forces.
Tom Ewing, head of the Board of Review for Winnebago County’s supervisor of assessments, explains.
“Basically, what we look for is the same style of property, hopefully similar size,” he said. “If it’s a sale, we prefer to have it in the last year to give us a better indication. The burden of proof is on them to show the assessment is not correct.”
If you can’t work out your dispute with your individual township assessor, you can take it up with boards of review. The process is outlined in a document available on the supervisor's website.
Winnebago County residents have 25 days to assemble evidence, and comparable sales can come from public records. Once residents have their evidence, Ewing says they and the township assessor can present their cases before the board of review.
“That’s all recorded, and then the hearing officer -- we’ve got three -- will make a recommendation to the board,” Ewing said. “We deliberate those on Friday and make a final decision at that time.”
Most of the time, complaints center on overvalued properties, but Ewing said there have been a few cases where residents have argued for more taxes. However, he says the number of people who’ve done so over the past two years can be counted on one hand.
“I’m wondering if they’re thinking of selling a property down the road and they feel if their assessment’s high, they’ll get more money,” he said. “Albeit I don’t think that’s the case, but if they want an increase, who are we to argue?”
Normally, the assessment appeals process works smoothly and at least gives people greater insight on how their property was assessed. But obtaining the necessary evidence depends on easy access to assessment records.
Winnebago County has an online database and paper materials outlining the assessment process at its supervisor office. DeKalb County also has a searchable online database. However, Supervisor of Assessments Brunschon said that’s not the case with township assessor data.
“We only have one township assessor -- that’s Genoa Township -- that submits it electronically,” she said. “The rest we all have to do by hand.”
This can make it more difficult for residents to get the evidence they need to appeal their assessment. Ryan Cardinali is head of DeKalb County Taxpayers, a group he founded in response to frustration at his property-tax assessment.
“You go, ‘Wait, I have to come to your office from this time to get a paper card that has all the facts and the background data and the living, breathing document that basically says what I owe. I have to come get that from you to appeal my taxes and I have to get comparable property cards as well to appeal my taxes and there’s no digital formatting of that?’” Cardinali said.
He says this lack of formatting makes it far more difficult to access the information to gather evidence.
“He (the assessor) has all year to gather his data and get his evidence against you,” Cardinali said. “He has the database, he has everything in front of him, in front of he or she’s office, and you’ve got less than 30 days.”
Schnetzler, the Sycamore Township Assessor, says there have been difficulties at the township level making information available online.
“I did have an agreement with the previous supervisor of assessments that, if we went out to their program or their software, then we would put it on their website, and it has yet to come through.”
Brunschon counters that townships need to budget more money for the assessors to implement these systems.
“The people in their townships should be going to their township meetings and saying ‘Hey, if he or she needs the money, give it to them to get this up and going,’” she said, “because then it’s a valuable asset for everybody.”
Ultimately, the assessment process comes down to understanding what your property is worth while having easy-to-access public records in case you dispute the assessor’s numbers. If those two elements are in place, residents at least can know more about their property values and, if they make their case well enough, save some money from the taxman.