All Forum Posts by: Sid Franklin

I'm not sure that I agree that a one year $5,400 tax increase (7.6%) on Brie is a "non-event."  Yes, a portion of it came from a higher assessed value but another portion came from property tax rate increases.  Those rates are going up again in 2017 and 2018 as a part of the City of Chicago's $600 million property tax hike so we're not done with that issue.  There's a very strong likelihood another $250 million property tax hike will happen to give some money to CPS that CTU head Karen Lewis has already dubbed as inadequate.  By the way, I think she's correct.  The Mayor also needs to "catch up" on the city workers pension funds that, like police, fire, laborers, etc. are woefully underfunded.  The Supreme Court has already ruled that their pensions and health care benefits cannot be cut so property tax owners are looking at another $300 million hit for this line item unless another source can be found.  So this year (2016), the Chicago Board of Education and the City Council may levy another combined $550 in property taxes to pay debt and keep the schools limping along.  Tax levies may also go up at Cook County and other taxing bodies covering the city to "catch up" on their pension and retiree healthcare debt.  Beyond that, if the City exempts out properties worth less that $250K from the tax rate hikes, the property tax rate burden will shift even higher to north side neighborhoods further increasing their taxes.  If this tax hike (and future ones) tanks values in other neighborhoods (high crime, substandard schools) then, again, the tax burden shifts north.  Given the debt the City has and the current political situation, we will likely see two more tax hikes in the range of $600 million annually just to get the City on track to covering its pensions and retiree healthcare.  

Given the likelihood of these new property taxes happening (if you read this thread, I haven't been wrong yet), I really wouldn't look at this as a non-event but instead as the beginning of a paradigm shift where Chicago property owners pay suburban tax rates but, at the same time, receive services that pale in comparison to the suburbs.  Violent crime is also constantly in the news.  The solution: more cops we can't afford without shorting pensions.  God forbid that this violence starts to hit the north side but investors should be fearful of this happening.  A strike by CTU this fall will also hurt property values throughout the City.

Money will be made in the City because new neighborhoods will be gentrified to avoid these high property taxes but also some neighborhoods will lose value as folks that are raising children start looking more towards the suburbs (or even other states) as an alternative to the City as a place to live and raise a family.

I am having a hard time understanding this statement in light of the fact that rates increased in Chicago.  Are you basing your new rate on estimated values of properties that have yet to be realized?  Can you walk me through your math?

I tend to agree with this statement because Chicago's tax base is so much larger and more diverse that the suburbs.  I belive that many, if not all, suburban communities and counties have been also playing the same BS pension games as the City and the chickens are coming hoime to roost all over the State of Illinois.  That said, if class sizes in CPS hit 40 kids per class, the CTU strikes, services get cut and soccer moms start to worry about their kids safety, many on the north side will gladly pay slightly higher taxes to avoid these problems - especially if everyone else is doing it.  So far, Chicago's Mayor and City Council have shown no interest in raising tax revenues to solve these looming and gigantic issues by any other means other than property tax increases.

 How much did your taxes increase?

 If Chicago's property taxes start to equal, let's say Western Spring's, without Chicago delivering the same schools, parks, safety, services, etc. it will be a problem for keeping families with school age children in the City.  The "deal" historically in Chicago has been that property taxes are lower so families could use private schools to educate their children in a way comparable to the suburbs.

 What neighborhood do you live in Chicago?  

More property taxes on the way in both the City and Suburbs.

http://www.dailyherald.com/article/20160707/news/160528634/

The new tax bills are hitting the mail boxes in Chicago.  Property taxes in Chicago will likely go up an additional 50-100% over the next 5 years before all is said and done.  While taxes spike, schools, parks and police will get cut.  CTU is likely to strike this Fall.

Property taxes on the north side are starting to equal those in the suburbs.  Here's a good Op Ed on the mess that's now beginning to unfold.

http://www.chicagotribune.com/news/opinion/editori...

"The average homeowner's property tax bill is jumping by roughly 13 percent, though there can be wide swings in either direction. A homeowner whose property has a market value of $225,000 will see his or her bill increase by more than $400. Ouch. In areas of the city where property values have climbed steeply — Gold Coast, South Loop, Streeterville — some property owners could get socked with an additional $5,000 in taxes. Ouch and ouch.

The city's failure to adequately pay into retiree pension funds, coupled with an Illinois Supreme Court ruling that locks in pension promises at their current levels, left the city few options. Last fall, Emanuel and the aldermen passed the largest property tax increase in the city's modern history.

So now the city is working on Plan B, a so-called rebate. Under four options being considered so far, low-income homeowners would qualify for one-time rebates averaging $100 to $254, according to an analysis from the mayor's office.

That might sound like compassionate government, but it's a ruse. The rebates would just take from one pocket to stuff a few dollars in the other. Under the various proposals, the rebates would total $10 million to $50 million, plus the cost of administering the program, which would likely be outsourced.

But the city can't just reduce its contribution to the pensions and rebate that money. It would have to find the money elsewhere in the budget, either by cutting operating costs or levying a new tax or fee to make up those dollars. All that to shell out what amounts to a consolation prize: a rebate of a few bucks to ameliorate that whopping tax increase.

Tax rebates are gimmicky. Look, here's some money back! A responsible government doesn't collect taxes and then give back the change. And there isn't any change, anyway.

In fact, there's likely another tax increase on the way. The state budget deal cut Thursday in Springfield threatens Chicagoans with another $250 million property tax increase, this one to help cover contributions to Chicago Public Schools pensions.

City Hall and CPS (and other Illinois governments) wouldn't have to rescue pension funds with massive property tax increases if, during the past decade, they had reduced costs, negotiated more reasonable agreements with organized labor and gotten a handle on runaway pension obligations. They didn't."

Will a school insolvency or bankruptcy hurt or help real estate prices in Chicago?  How's real estate doing in Puerto Rico?  We know it was in Detroit before the bankruptcy?  Is DPS still a drag on Detroit's Real Estate values?

Crain's: Chicago pays premium to lure investors to delayed school bonds

http://www.chicagobusiness.com/article/20160203/NE...

“They're in very severe financial straits,” said Dan Heckman, a senior fixed-income strategist in Kansas City at U.S. Bank Wealth Management, which oversees $128 billion. “This is just an effort to hopefully buy some time so they can continue to get their house in order but what a steep price they're paying.”

***

Chicago's schools are running out of cash after drawing down reserves and shortchanging pensions for years, which caused its annual payment to soar. The district has relied on borrowing to help cover budget shortfalls, making it crucial to maintain access to the municipal market. On Jan. 29, Moody's Investors Service cut the board deeper into junk, citing an “increasingly precarious liquidity position and acute need for market access to support ongoing operations.”

More property taxes on the way.  This time, to pay CPS pension debt.

http://chicago.suntimes.com/chicago-politics/7/71/...

You have to wonder what level of school dysfunction and property tax hikes will finally motivate Gen X and Millennials with kids start pulling up the stakes 

Once the water cooler chit chat turns from "you can make CPS work for your kids" to "you absolutely need to move to the suburbs to properly educate your kids," the City will be on the path to instability, larger wealth disparity and higher taxes (to pay the debt bomb) on those taxpayers willing to stick around to the bitter end.