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First: a brief civics lesson on tax assessments. (Sorry, I know this is boring, but the tax system is incredibly important—affecting everything from those property tax bills that homeowners get twice a year to the number of cops on the corners and teachers in the schools.)
In Cook County, the assessor’s office sets the valuation for tax purposes for all parcels of land in the county—roughly 1.8 million units. One-third of the county is reassessed each year. Basically, property values are determined by comparing similar properties in the same neighborhood and recent sales prices. If taxpayers think the assessor has overvalued their property, they can either ask the assessor’s office to reconsider or appeal the matter to the Board of Review. (Property owners who still aren’t satisfied can further appeal to either the circuit court or the Illinois Property Tax Appeal Board.)
The process at the Board of Review works something like this: The three commissioners act, in effect, like judges. But because of the enormous volume of work—typically 200,000-plus appeals are filed every year—each commissioner has a staff, including a deputy commissioner and a crew of analysts, clerks, and hearing officers, to assist in making rulings. At least two commissioners—or authorized members of their staffs—must sign off on every board decision.
Berrios often cites the board’s administrative checks and balances as a shield against charges of favoritism. “I’m one voice out of three at the board,” he told me in a recent interview. “Everything is set up so that no one commissioner can make a decision on any case whatsoever.”
In practice, however, because of the heavy workload, the second approval is somewhat perfunctory—commissioners and their staffers often do little more than rubber-stamp the first evaluation. (Public hearings are held in only about 20 percent of the cases; the rest are handled internally.)
What’s more, the commissioners and their subordinates have a lot of discretion. Assessing properties is as much an art as a science, and a slight tweak in the numbers can save a property owner thousands, sometimes millions, in tax dollars. “I’ve seen Joe Berrios just lop $100,000 off here, another $100,000 there, no rhyme or reason to it,” says a current board insider. “He’s learned over the years here that, as long as he can make the math work in some crazy, random way, he can do whatever he wants.”
One last important point: Anytime the Board of Review lowers one property’s assessed valuation, the tax burden gets shifted from that property to all the others. In other words, when a downtown office building gets its assessment dropped, lowering its tax by $1 million a year, that lost money must be made up by other property owners. The reductions quickly add up. In the 2008 tax year—the last year for which figures are available—the board granted more than $2 billion in assessment cuts, about 2.8 percent of Cook County’s total assessment of $72 billion. The assessor’s office granted another $2 billion in cuts, bringing the total to more than $4 billion, which was ultimately shifted among taxpayers. That burden seems to fall heavily on homeowners: A few years back, the Chicago Tribune found that commercial and industrial properties received $7.75 in breaks for every $1 homeowners received.
“The firepower that’s produced by the big-money interests and the commercial property owners—it’s just completely unbalanced,” says Don Haider, a property finance expert and professor at Northwestern University. “In the last couple of years, for sure, we’ve seen the impact: a steady shift from income-producing and commercial properties to single-family homeowners.”
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The workings of the board of review have recently come under heavy fire from Victor Santana, Berrios’s former political right-hand man. Santana worked for Berrios at the board for ten years until he resigned in 2002 and currently works as a political consultant. In August 2009, he filed a federal lawsuit against his former boss, Berrios, and the other board of review commissioners, and their top board staffers after the commissioners banned him from the board offices because of his ties to the Froehlich scandal. (Santana had been helping Froehlich with the controversial appeals.)
More recently, on July 29th, Santana added federal racketeering charges to his existing lawsuit, accusing all three Board of Review commissioners of engaging in “institutional bribery and pay for play” through the collection of campaign contributions from property tax lawyers. The charges fall under the Racketeer Influenced and Corrupt Organizations Act, or RICO. According to allegations in Santana’s complaint, the commissioners have committed bribery, money laundering, and extortion.
Santana’s suit is currently proceeding in federal court, and U.S. District Judge Milton Shadur is scheduled to rule September 21st on whether the RICO counts have merit. Steven Puiszis, an attorney who is representing Berrios and Berrios’s chief deputy, Thomas Jaconetty, in the case, says that Shadur has already twice dismissed Santana’s RICO charges against the board principals and he expects the judge will do the same on the latest charges. “Our plan is to file a motion to dismiss or an objection,” he says. The new RICO complaint, filed by Santana’s lawyer, R. Tamara de Silva, says there is new evidence that will prove that the Board of Review is indeed a “racketeering enterprise.”
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