Mass Appraisal Madness: The Good, the Bad & the Cook County

The City of Chicago has one of the most dynamic economies in the world. Our robust financial environment fuels property values to fluctuate, making it challenging to correctly assess true market values. But how do these ever-changing valuations affect Cook County?

Property tax is an essential source of revenue for Cook County that is set by Illinois taxing bodies. These taxing bodies include schools, fire/police protection, road repair, and additional government entities within Cook County. This budget determines how much funding needs to be secured in advance, which is reflected in the assessment of each property ultimately determining the owner’s share and obligation.

Cook County contains over 1.9 million parcels of property contained within 38 townships that are reassessed on a three-year triennial cycle. It would be impossible for the Cook County Assessor’s Office (CCAO) to visit each site and specifically assess each property in a timely manner.

To ascertain the initial assessment, the CCAO uses the mass appraisal method which is powered by a Computer Assisted Mass Appraisal (CAMA) system. According to the International Association of Assessing Officers, “Mass appraisal is the process of valuing a group of properties using common data, standardized methods, and statistical testing.” This methodology relies heavily on market data, valuation equations, and tables. Unlike a real estate appraisal which is specific to a single property, mass appraisal is necessary when numerous parcels need to be valued. Thus, using mass appraisal is a data-driven way to assess copious amounts of properties in a much shorter time frame. The goal is to provide a transparent and uniform way to estimate property values applying statistical modeling based on a series of property characteristics.

Residential

According to the CCAO’s open data platform on GitLab, the code collects residential sales data and residential property attributes in each township and similar townships throughout the last five years. Then an analyst checks and removes any outlier sales. Next, the code analyzes the data to ascertain if there are any consistent relationships or patterns. Then, a mathematical estimated dollar amount for each attribute is produced forming a puzzle piece to a long equation or statistical model that adds up the value of the characteristics to generate a property’s estimated total market value.

Commercial

Commercial properties are estimated by first ascertaining a property’s use or class. Is the property primarily used for industrial, retail, office, multifamily apartments, etc.? Then, the property is categorized with comparable property types. Next, income and expenses generated by the property are investigated, reflecting market-level vacancy based on location and property type. Once completed, an unloaded capitalization rate is applied and converts the Net Operating Income (NOI) to value.

The CCAO provides methodology worksheets that property owners can review to determine if their property is being fairly and accurately assessed. This promotes a sense of transparency and equity and allows those who cannot afford legal representation the ability to use the CCAO’s data to appeal their property’s assessed value. However, as with any large representation of data, errors are prevalent as no model is a perfect representation.

Another hurdle that the CCAO faces is the high turnover rate among workers. Because there are insurmountable files compared to the ratio of workers, CCAO employees become overwhelmed and inundated, ultimately causing long processing times. This can be said for numerous bodies of government. As a former Assistant State’s Attorney for the Tax Litigation Section, I can attest that there were too many cases to consistently and timely settle.

The future of mass appraisal in Cook County is progressing, especially with the onset of Artificial Intelligence (AI). In a recent Crain’s Chicago Business article written by Katherine Davis, Cook County appears to be instituting AI in their property tax valuation process. “The county is also beginning to invest in generative artificial intelligence to streamline some county work, with an initial investment around $4 million. Tom Lynch, Cook County’s chief information officer, said the technology could help with property tax assessments. Using pattern-detection AI, the county could see if changes were made to a resident’s property that would warrant a taxation change.”