Property taxes catching up to a sales price on apartment building

[Mark Hamblin]

Looking for some help from Chicago / Cook County multifamily investors, regarding a property tax question.  It seems property tax calculations there aren't nearly as straightforward as in other markets...  Free high fives to anyone who can help!  

I am evaluating some apartment buildings in Chicago (South Side, Woodlawn / South Shore / Chatham) and am trying to figure out what Property Tax figures to use when underwriting the deals. Some of the buildings are recent gut rehabs, so their previous assessed values are very low, hence the prop taxes were very low. Or they were owned by the same owner for a long time, also resulting in low assessed value. However, when a new sale happens at a much higher price, I imagine the assessed value and property taxes will soon catch up to the new sales price, as is normally the case. Perhaps not right away, but perhaps after the next assessment cycle? Or are there other factors and averaging (neighborhood averages, building types, etc.) that will prevent the new assessed value from jumping straight to the new sales price? And is the process different for residential (SFH, etc) vs. larger apartment buildings? I've read the Cook County Assessor's website, but can't find a clear answer (not surprised!), and they say they do mass assessments anyways, so perhaps a specific building isn't targeted?

Of course, when the listing broker puts together the pro-forma, they only use the historically low prop tax numbers, not saying anything about what could happen in following years.  I'm trying to cut through the broker BS and understand the real numbers.

EXAMPLE:

• Property in Woodlawn, asking price around $1.7M  (16 unit building)
• 2015 First Pass Assessed Value = 70,888 (which I believe means the assessed market value is 708,880, based on "market" = "assessed" x 10 in Cook County)
• 2015 Assessed Value (after review) = 18,576  (Their argument was likely based on the building being mostly vacant at that time, which it was)
• 2015 Taxes = 3,404  (=1.8% of the assumed "market" value used in the 18,576 assessment, see above)
• Current property taxes used in the broker pro-forma:  ~$5,000 / year
• So... lets say I paid full ask of $1.7M... does that mean my taxes could quickly jump to 1.8% of the new market price, or $31,000?  Obviously a HUGE jump vs. current taxes and whats listed in the pro-forma.
• Or does the Assessor in Cook County not chase the specific sale, but instead base assessments only on neighborhood averages, property type, etc.?
• Any idea how quickly Cook County assessor catches up to new sale prices?  Right away, the first year after sale?

Obviously, when I ask listing brokers to comment, they are evasive and don't want to give exact numbers, saying that they just base proformas on current taxes paid.  Regardless, I know hiring an attorney to fight property taxes is almost required in Cook County, so I will be doing that... I just want to know what we're up against.  

Looking for input from people familiar with Cook County specifically, as every state/county has completely different property tax laws / practices.  

Super thanks!!!

-Mark