Amid Loop Vacancies, Chicago’s Property Tax Burden Shifts
Chicago Property Taxes Shift: Residential Owners Bear More Burden
Table of Contents
- Chicago Property Taxes Shift: Residential Owners Bear More Burden
- Chicago’s Shifting Property Tax Landscape
- Chicago’s Shifting Property Tax Landscape: Key Buildings and Trends
- Chicago’s Shifting Property Tax Burden: A Look at Key Buildings
- Chicago Property taxes: Understanding the Shift and What It Means for You
A recent analysis reveals a meaningful shift in Chicago’s property tax landscape, with residential property owners increasingly shouldering a larger portion of the tax burden. This change comes as downtown commercial properties face vacancies and declining values,impacting the city’s financial structure.
Rising Taxes Hit residential Areas
While individual property tax changes may vary across the city, collectively, residential property owners are experiencing a greater financial strain. Areas such as the near West Side, Logan Square, and Bronzeville are particularly affected by rising taxes, largely due to new commercial and residential developments.
These shifts are expected to have a lasting impact on Chicago’s future, according to a extensive analysis of tax bills sent to 830,000 property owners over the past five years.
Commercial Properties’ Declining Contribution
former Gov. Pat Quinn, a property tax attorney with decades of experiance, notes the changing dynamics. “Downtown used to be the most valuable property between the Atlantic and Pacific oceans,” he states. He emphasizes that “Residential is bearing more of the burden,” as “They’re getting enormous property tax increases as the commercial owners are paying less, or they moved away.”
The pandemic significantly impacted the Loop, leaving offices and stores vacant as remote work became more prevalent. Consequently, owners of these vacant properties secured considerable tax breaks, further shifting the burden to residential owners.
The total amount of property taxes required to fund government services and salaries remained constant, necessitating that other property owners compensate for the shortfall.
Adding to this shift, overall property taxes in Chicago have risen from $6.8 billion five years ago to $8.3 billion last year, marking a 22% increase citywide.
Loop Vacancies’ Big Impact
Tax billings have surged by as much as 65% in ZIP codes including the Near West Side.In contrast, one ZIP code in the heart of the Loop saw an increase of less then 2%, while an adjacent ZIP code experienced a $600,000 decrease in total tax bills compared to five years ago.
depaul University professor Joseph Schwieterman, an expert on urban planning, explains, “The fallout of the office vacancies is reverberating everywhere. There’s simply no way to have office building owners pay the same property taxes when building values fall in such a draconian fashion.”
Schwieterman stresses the importance of a thriving downtown for a global city like Chicago. “We’re a prominent global city. So a thriving downtown is essential for many reasons. Everything from our tax base to our tourism draws on the energy of the downtown. It’s the engine that drives the city, and it makes this scary.”
He adds, “The office market might potentially be bouncing back a little bit, but we need a lot more.The return-to-work trend bodes well. The professional service segment is showing signs of life, law firms, chase and google.”
Google’s plan to move hundreds of workers into the Thompson Center next year offers a glimmer of hope.The expectation is that this move will stimulate the downtown area, attracting more businesses and residents, and ultimately contributing to a rise in property taxes.
Chicago’s Shifting Property Tax Landscape
Chicago is grappling with significant shifts in it’s property tax landscape, largely influenced by the pandemic and evolving business trends. The central business district is experiencing growing vacancies, prompting concerns about the impact on homeowners and the city’s financial stability.
Loop Vacancies and Residential Conversions
The Loop area, particularly within the 60603 and 60604 ZIP codes, has seen a rise in vacant commercial properties. In response, a plan to convert some of these buildings into apartments has been embraced, though building permits are still pending.
The impact on Property Taxes
Christopher Berry, a professor at the University of Chicago Harris School of Public Policy, notes that this phenomenon is not unique to Chicago. ”This is a phenomenon in a lot of cities,” Berry says. “The question is: How do we get more people downtown? It was work that was the catalyst. Most people are not going downtown five days a week.”
Residential property owners, who shoulder approximately 58% of Cook County’s property taxes, are feeling the pinch. Since the pandemic’s onset, most of Chicago’s ZIP codes have seen increases in property tax billings.
Notably, the West Loop ZIP code of 60606 has experienced a significant surge in property tax billings, climbing 31% due to new constructions like the Bank of America Tower at 110 N. Wacker Dr. The skyscraper’s tax bill totaled $25.8 million last year, up from $406,765 five years ago, when it was still under construction.
Conversely, the former Bank of America building at 135 S. LaSalle St. saw its property tax bill plummet from $11 million to $5.7 million, further eroding the property tax base in 60603.
The city plans to redevelop five Loop buildings, including the former Bank of America location, into 386 apartments, a $241 million project.
Office Conversions and Tax Implications
Farzin Parang, executive director of the Building Owners and Managers Association of Chicago, acknowledges the potential of office-to-apartment conversions but believes it’s a viable solution for only about 10% of the buildings. “You’re starting to see some of these buildings getting sold, and they’re being sold at huge discounts,” Parang says. “are they reinvesting in these buildings? Or are they trying to go into a new classification,” such as residential?”
Converting commercial spaces to residential could further shift the property tax burden, as residences in Cook County are taxed on only 10% of their value, compared to 25% for commercial properties.
Five years ago, the west Loop ZIP 60606 code bore 5.6% of Chicago’s total property tax burden but rose to 6% last year, trailing only ZIP code 60611, which includes Streeterville and North Michigan Avenue. Taxpayers in that high-end 60611 ZIP code paid 7.9% of Chicago’s total property taxes five years ago. That dropped to 7.1% last year as tax bills have fallen on more than 11,000 commercial and residential properties, led by the $9.1 million drop at Water Tower Place.
Factors Contributing to Declining Real Estate Values
The pandemic and the civil unrest following the killing of George Floyd in May 2020 have been widely blamed for declining real estate values.
Case Studies
Water Tower Place
Water Tower Place, 835 N. Michigan Ave.
- 2023 property taxes: $6,791,658
- 2019 property taxes: $15,961,655
The closure of Macy’s in 2021 and a 40% vacancy rate have significantly impacted Water Tower Place, leading to assessment reductions and a drastic drop in property taxes.
30 N. LaSalle St.
30 N. LaSalle St.
- 2023 property taxes: $2,447,937
- 2019 property taxes: $3,444,832
The departure of tenants like the FDIC has contributed to a decline in property taxes at 30 N.LaSalle St., reflecting broader challenges in the Loop’s commercial real estate market.
Chicago’s Shifting Property Tax Landscape: Key Buildings and Trends
Chicago’s real estate market is constantly evolving, and with it, the landscape of property taxes. Examining some of the city’s most prominent buildings reveals interesting trends and challenges.
30 North lasalle: A Case Study in Vacancy and Re-evaluation
The 30 North LaSalle skyscraper sits kitty-corner from City Hall and the Cook County Building.
The 43-story skyscraper at 30 North LaSalle presents a compelling exmaple. Once a bustling hub, it now faces significant vacancy, nearing 60%, after the departure of key tenants like the Chicago Police Board and the city’s law department. despite still housing several law firms, including one founded by former Illinois House Speaker Michael Madigan, the building’s financial situation deteriorated.
Property tax figures tell a story of change:
- 2023 property taxes: $5,097,827
- 2019 property taxes: $8,529,610
The building eventually went into foreclosure and was sold in September for $14 million – a fraction of its appraised value just two years prior.Mayor Brandon Johnson has identified it as a potential candidate for partial conversion into apartments, signaling a possible shift in its future.
The Old Post office: A Story of Revival and Increased Tax Revenue
Contrastingly, the Old Post Office at 433 W. Van Buren St. showcases a remarkable turnaround.
The Old Post Office, 433 W.Van Buren St.
After decades of vacancy, the building, with its stunning Art Deco lobby, has become a sought-after location. It has successfully attracted major tenants, including walgreens, Ferrara Candy Company, the Chicago Board of Options Exchange, Pepsico, and Uber.
This revitalization has significantly impacted property tax collections:
- 2023 property taxes: $16,944,985
- 2019 property taxes: $6,317,568
The Old Post Office’s resurgence has contributed to a 65% increase in property tax collections in the Near West Side’s 60607 ZIP code over the past five years.
Willis Tower: A Downtown Chicago Icon
The Willis Tower, located at 233 S. Wacker Dr., remains a significant landmark in Chicago’s skyline and a major contributor to the city’s property tax base.
The Willis Tower, 233 S. Wacker Dr.
Property tax trends for the Willis Tower are as follows:
- 2023 property taxes: $72,457,874
- 2019 property taxes: $66,447,973
despite challenges faced by other buildings,the Willis Tower has seen a notable increase in its property tax burden,reflecting its continued importance to Chicago’s economy.
Conclusion
These examples illustrate the dynamic nature of Chicago’s property tax landscape. Factors such as vacancy rates, prosperous revitalization projects, and overall economic conditions all play a role in shaping the tax burden for individual buildings and the city as a whole.The future of buildings like 30 North LaSalle will be closely watched as Chicago navigates these changes.
Chicago’s Shifting Property Tax Burden: A Look at Key Buildings
The landscape of Chicago property taxes is constantly evolving, with significant implications for building owners and the city’s financial health.This article examines the property tax situations of several key buildings, highlighting the changes observed in recent years.
Willis Tower: A Soaring Valuation
The Willis Tower, Chicago’s tallest building, presents a compelling case study. its 2023 property taxes amounted to a staggering $53,338,290.This marks a significant increase from its 2019 property taxes of $35,008,985.
Despite facing challenges such as tenant losses, including cutbacks from United Airlines, which “reduced its space by 150,000 square feet in 2021,” and even a flood from the Chicago River, the skyscraper’s value has “soared.” This surge has resulted in its property taxes “rising by more than 50% over the past five years,” contributing to a “30% increase in tax billings in the West Loop ZIP code of 60606,” making it the area with “the city’s second-highest property tax burden.”
Former BMO Harris Bank Building: A Shift to Tax Exemption
The building located at 115 S. La Salle st., formerly occupied by BMO Harris Bank, has experienced a dramatic change in its property tax status. Its 2023 property taxes are recorded as zero, a stark contrast to the 2019 property taxes of $5,098,223.
Former Thompson Center: From Tax-Exempt to Taxable
Located at 184 W. Lake St., the former thompson Center presents another interesting case. Its 2023 property taxes are $5,538,492, a significant change from its 2019 property taxes of zero.
This shift is due to the state’s purchase of the BMO Harris Bank building in July 2022 to house state offices previously located in the Thompson Center. The state then “sold the Thompson Center for $105 million to developers rehabbing the Loop building for Google,” receiving “$30 million cash and the deed to the bank building.” Consequently, as “a state-owned building, the former bank is exempt from property taxes,” while “the Thompson Center has been sold to developers, that building started paying property taxes for the first time last year.”
These examples illustrate the dynamic nature of Chicago’s property tax system and the various factors that can influence a building’s tax burden, including economic conditions, ownership changes, and strategic real estate transactions.
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Chicago Property taxes: Understanding the Shift and What It Means for You
Chicago’s property tax landscape is changing. Downtown vacancies are impacting the city’s financial structure,and residential property owners are feeling the effects. This article breaks down what’s happening, why it’s happening, and what it means for Chicago residents.
Q: What’s the big picture in Chicago’s property tax situation?
A: Chicago is experiencing a shift in its property tax burden. Residential property owners are increasingly paying a larger share of the city’s overall property taxes. this is largely due to declining values and increased vacancies in downtown commercial properties, especially in the Loop, as remote work becomes more common.the total amount of property taxes required to fund city services has increased from $6.8 billion five years ago to $8.3 billion last year, marking a 22% increase citywide, further exacerbating the shift.
Q: why are downtown commercial properties contributing less to property taxes?
A: the pandemic significantly impacted downtown Chicago, notably the Loop. Many offices and stores became vacant as remote work gained popularity. Owners of these vacant properties were able to secure tax breaks due to the decreased value of their buildings. With the total tax revenue remaining constant, this tax break for commercial properties led to a shift in the share of the tax burden, impacting the percentage of contribution by each sector, leading to a larger share of the duty of residential owners.
Q: Which residential areas are being most affected by rising property taxes?
A: While property tax changes vary across the city,areas like the Near West Side,Logan Square,and Bronzeville are particularly affected by rising residential taxes. This is ofen due to new commercial and residential developments driving up property values in those areas.
Q: What did Former Gov. Pat Quinn have to say about this shift?
A: Former Gov. pat Quinn, a property tax attorney, emphasized that “Residential is bearing more of the burden.” He pointed out the disparity: “They’re getting enormous property tax increases as the commercial owners are paying less, or they moved away.”
Q: How are Loop vacancies impacting overall tax bills?
A: Dramatically. Some ZIP codes, including the Near West Side, have seen tax billings surge by as much as 65%. In contrast, one ZIP code in the heart of the Loop saw an increase of less than 2%, while another decreased by $600,000 in total tax bills compared to five years ago. This stark difference highlights the financial strain caused by downtown vacancies.
Q: What does Urban Planning expert Joseph schwieterman say about the Loop’s impact?
A: Schwieterman states, “The fallout of the office vacancies is reverberating everywhere. There’s simply no way to have office building owners pay the same property taxes when building values fall in such a draconian fashion.” He stresses the importance of a thriving downtown: “It’s the engine that drives the city, and it makes this scary.”
Q: Is there any hope for a downtown recovery?
A: Yes,there are glimmers of hope. The return-to-work trend and activity in the professional services segment (law firms, etc.) are positive signs. Notably, Google’s plan to move hundreds of workers into the renovated Thompson Center is expected to stimulate the downtown area, attracting more businesses and residents and contributing to a rise in property taxes. The city also plans to redevelop five Loop buildings, including the former Bank of America location, into apartments.
Q: What’s being done about the vacant office spaces?
A: A solution that’s being discussed is that many vacant commercial properties are being considering for residential conversion into apartments. In fact, a recent plan to convert some of these buildings into apartments has been embraced by the city.
Q: How are residential properties taxed compared to commercial properties?
A: Residential properties in Cook County are taxed on only 10% of their value, compared to 25% for commercial properties. Farzin Parang, executive director of the Building Owners and Managers Association of Chicago estimates that office-to-apartment conversions could be a viable solution for about 10% of the buildings.
Q: What happened to Water Tower Place?
A: Water Tower Place has seen a drop in property taxes from $15,961,655 in 2019 to $6,791,658 in 2023 due to the closure of Macy’s in 2021 and a 40% vacancy rate.
Q: What happened to 30 N. lasalle St.?
A: The building located at 30 N. LaSalle St. has seen a drop in property taxes from $3,444,832 in 2019 to $2,447,937 in 2023 due to the departure of tenants like the FDIC.
Q: What’s unique about the Willis Tower’s tax valuations?
A: Despite challenges such as tenant losses, including United Airlines, which “reduced its space by 150,000 square feet in 2021,” and even a flood from the Chicago River, The Willis Tower’s valuations are soaring.The Willis Tower had its 2023 property taxes amount to a staggering $53,338,290, a increase form its 2019 property taxes of $35,008,985. It’s propery taxes “rising by more than 50% over the past five years.”
Q: How is the state getting involved?
A: Purchasing BMO Harris bank to place it’s own state offices. The state then sold the Thompson Center for $105 million to developers rehabbing the Loop building for Google,receiving “$30 million cash and the deed to the bank building.” Consequently, as “a state-owned building, the former bank is exempt from property taxes,” while “the Thompson Center has been sold to developers, that building started paying property taxes for the first time last year.” The building formerly occupied by BMO Harris Bank is also experiencing a shift in property tax status. Its 2023 property taxes are recorded as zero, as a contrast, to the 2019 property taxes of $5,098,223.
Q: what’s does this all meen for Chicago homeowners?
A: Homeowners need to be aware of these shifting dynamics. Understanding the factors driving property tax increases and potential avenues for appeal are crucial. Staying informed about city progress plans, assessing your home’s value appropriately, and engaging with local government can help you manage the impact of these changes.
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