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Property tax bills rising while home values falling, Civic Federation says: Greg Hinz

By: Greg Hinz September 19, 2011

(Crain’s) — If it seems like property taxes on your house have been rising while its value has been dropping, they have.

A new report being issued on Monday by the Civic Federation says that the "effective property-tax rate" on residential property — the percentage of a home's real value that must be paid in taxes — rose in every corner of the metropolitan area in 2009, the latest for which data is available.

The new study has a bunch of other news, too — like the fact that the city of Chicago now is much more property tax-competitive with its suburbs than it was a decade ago.

But the eye-popping finding is that the combination of falling land values and increasing tax levies by area governments means that millions of homeowners effectively are paying more than they were.

In Cook County, for instance, the effective property-tax rate on residential property rose 8.3% in Oak Park and 10.7% in Chicago between '08 and '09. Bad as that sounds, the numbers were far worse in the other 11 towns surveyed by the Civic Federation, ranging from 11.1% higher in Arlington Heights to 12.1% in Evanston, 17.1% in Glenview, 27.8% in Schaumburg and 28.5% in Chicago Heights.

Owners of commercial property — stores, offices and the like — fared a little better in 2009 from 2008, with the effective tax rate dropping a bit in Oak Park and Chicago Heights, rising a little more than 3% in both Chicago and Evanston, and jumping 19.7% in Schaumburg.

In the collar counties, where residential and commercial property is taxed at the same rate, the story is the same: The effective rate is up.

The increases ranged from 11.1% in Wheaton and Geneva to 13.2% in Naperville, 15.4% in Aurora, 12.3% in Joliet and 28.3% in Barrington Hills. A few communities that were studied, including Harvard and Waukegan, got truly zapped: The effective rate rose 34.4% and 39%, respectively.

Comparable data is not available for industrial property, because too little of it changed hands in Cook County to calculate values accurately.

The federation says it does not know whether these trends continued in 2010. But I'd be willing to bet my mortgage that they did.

In the longer run, the figures reported by the federation generally show the same increase in effective tax rates just about everywhere.

Except in Chicago, that is, where between 2000 and 2009 the effective tax rates on commercial property dropped 37.3%; on residential property, they dropped 1.4%, according to the federation.

As a result, "Chicago's effective tax rates are competitive compared to most of the other municipalities that were analyzed in Cook County and the collar counties," federation President Laurence Msall says.

But that's more true on residential than commercial property, with, for instance, office-building owners paying half as much relatively in Oak Brook compared with Chicago, but substantially more in Evanston, Aurora and Joliet.

The new study may give a push to a proposal I wrote about last week from state Rep. Jack Franks.

The McHenry County Democrat recently introduced a bill that would ban any increase in a government's tax levy in any year in which the gross value of its property fell. The only exception would be if taxpayers approved a hike in a referendum.

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