New law would require landlords in Cook County, possibly elsewhere in IL, to give financial data to tax assessors

By Dan Churney | Mar 14, 2019

If a Democrat-sponsored bill passes in Springfield, owners of countless rental properties in Cook County and potentially elsewhere in Illinois will have to turn over the property's financial records every year to their county assessor's office for tax calculation.

Cook County Assessor Fritz Kaegi said the measure would streamline the assessment process, but business groups are worried sensitive financial data could get into the wrong hands.

"Enacting this legislation will allow for richer data, unprecedented transparency, and more predictability for everyone. Developers could require less of a margin of error when deciding whether to invest. Lenders could lend more against a property’s value. Potential buyers could have more confidence in the future path of assessments, and current owners could generate more resale value for their buildings," Kaegi contended.

Mark Denzler, President and CEO of the Illinois Manufacturers' Association, voiced concern about confidentiality.

Cook County Assessor Fritz Kaegi   Cook County

"We all want fair assessments and we applaud the assessor for going in this direction, but the bill needs to ensure strong penalties for improper release of information," Denzler said.

Bills were introduced in early February in Springfield by Chicago-area Democrats, led by State Rep. William Davis, of East Hazel Crest, and State Sen. Toi Hutchinson, of Chicago Heights.

The proposal would require owners of rental properties in Cook County, which the owners do not occupy, to submit revenue and expense data by July 1 of every year to the county's assessment office. In all other Illinois counties, the law would allow county boards to decide whether to institute the same requirement. Properties in question would include apartment complexes, motels, parking garages, self-storage facilities, gas stations and senior care centers.

Data would include such information as federal income tax returns and rent rolls. If a property is owned for money-making purposes, but doesn't generate any money, the owner must still furnish figures.

Properties assessed at $100,000 or less and residential properties of six or fewer units would be exempt from the requirement, as would farmland.

Under the proposed measure, assessors may consider the financial information in determining a property's value, along with other specifics, such as appraisals, sales history and construction costs.

If a taxpayer does not provide information within 60 days, they are subject to pay a penalty, or "fee" as the bill refers to it, equal to 2 percent of the property's assessment the prior year. After 120 days, the fee rises to 2.5 percent. Further, a taxpayer is barred from appealing their assessment when they fail to hand over the income and expense data.

The state's attorney would be empowered to subpoena records from an uncooperative proprietor.

An amendment to the bill could assuage fears sensitive information would be compromised. The amendment calls for a fine up to $1,000 and termination of any assessor's office employee who improperly divulges data. In addition, the bill prohibits release of fiscal records through Freedom of Information Act requests.

"All of this data will be anonymized and delivered in bulk. We will have significant security protections in place. We are already tasked with securing valuable personal information about people’s homes and business interests," Kaegi said.

Kaegi added that a property owner already has to provide private financial figures when appealing real estate taxes, with the material then becoming public.

"The Board of Review takes in this data and uses it to determine a property’s value, one appeal at a time. But the Assessor’s Office is in the business of mass appraisal. If we were equipped to require this data up front, at the start of the assessment process, we would be able to determine market-level rents for every part of the county," Kaegi said.

Kaegi said the same financial material is required in Georgia, Massachusetts, Tennessee, Virginia and Washington, D.C.

John Barrington, who is Ela Township Assessor in suburban Lake County, backs the proposed law on behalf of the Illinois Assessors Association. He echoed Kaegi, saying: "Creating assessments can be difficult in some jurisdictions. This would allow a property's true, up-to-date value to show through."

Others questioned the law's purported benefits.

Kevin Semlow, director of state legislation for the Illinois Farm Bureau, called the legislation "an overreach of information."

"We see this as a huge impediment to our folks," Semlow said.

Semlow said the proposed change would burden small farmers, placing another layer of paperwork and expense on them, which large corporations can much more easily afford. He added that grain elevators, livestock facilities and similar agricultural operations could be especially affected.

Randall Witter, President of Cook-Witter, a Springfield lobbying firm, representing the Illinois Manufactured Housing Association, is also questioning how the law would define income and expense. Witter noted details need to be ironed out, but the proposed law "could be a good thing in the end."

Denzler finds the category of income-producing property too broad, wanting it narrowed to exclude manufacturing.

Nonetheless, in Kaegi's view, the increased transparency would "bring down the cost of doing business."

"We’ve talked to market participants big and small. This includes some of the biggest real estate investors in the world and CEOs of banks, but also small business groups and financial watchdog groups," Kaegi said."We hear the same tune over and over. Transparency means predictability. It reduces uncertainty."

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Organizations in this Story

Cook County Cook County Assessor Cook-Witter Illinois Farm Bureau Illinois General Assembly Illinois Manufacturing Association.

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