Austin Berg, Illinois Policy Institute May 2, 2016, 2:28pm


A new report revealed that Klafter & Burke, a property-tax law firm owned by Chicago Alderman Ed Burke, helped Donald Trump cut property taxes on his downtown Chicago hotel by nearly 40 percent over seven years, saving Trump and his investors $11.7 million.

Burke’s firm is now arguing before a court and a state agency that the property taxes paid on the Trump International Hotel & Tower were too high in some years. Notably, in 2002, Burke voted in Chicago City Council to approve the skyscraper’s development.

The powerful Chicago alderman, first elected to office in 1969, is part of a cadre of well-connected politicians who double as lawyers in the field of property-tax law.

The game

As record property-tax hikes hit Chicago families and businesses, a who’s who of the state’s political elite will continue to line their pockets off of a property-tax system in which their connections are priced at a premium. Each dollar they save for their clients is taken from the pockets of those who can’t afford to play the appeals game, can’t “win,” or refuse to play altogether.

Illinois House Speaker Mike Madigan and Burke both run law firms specializing in the lucrative field of Cook County property-tax appeals. Illinois Senate President John Cullerton is a member of a large law firm that handles a range of issues, including property-tax law. The three have held political office in Illinois for a combined 129 years.

The property-tax-assessment process in Cook County is convoluted by design. But here’s how it works in simple terms:

First, the Cook County Assessor’s Office assesses the value of every property in the county. The value of any given property is reassessed once every three years. This “assessed value” is then used to calculate the property taxes owed by each property owner.

Property owners can then appeal that assessed value in a number of ways. They can file a request with the assessor asking for a reduction, appeal the valuation to the Cook County Board of Review, file a lawsuit in which a judge will decide the value, or the property owner and the Cook County State’s Attorney will enter into a settlement agreement over the value.

Flawed property valuations and the process required to fix them are a cash cow for law firms, including those of Madigan, Burke and Cullerton, which know what strings to pull. These law firms handle the ways in which the assessed value of a property is appealed: the request with the assessor, the appeal to the Cook County Board of Review, and lawsuits.

The Cook County Board of Review – which exists solely to field appeals for assessments by the Cook County Assessor’s Office – processed appeals for more than 400,000 properties in 2013.

What doesn’t add up is nearly two-thirds of those appeals were successful: an astonishing number that reveals a faulty assessment process ripe for savvy attorneys.

Any way you slice it, taxpayers lose.

Choose not to appeal your assessment and the government pockets the extra money. Choose to hire a politically connected law firm and that law firm typically pockets anywhere from 25 to 50 percent of the “winnings.” And each reduction for a politically connected business means an increase in property taxes for those lacking the right political connections.

Investigative reporting from the Illinois News Network revealed Madigan’s six-person firm, Madigan & Getzendanner, earned close to $10 million in tax refunds for its clients from April 2013 through April 2014. Madigan’s spokesperson Steve Brown has said that the House speakers’ law firm, which services mainly commercial clients, charges a flat fee for its services. The Chicago Sun-Times’ Tim Novak broke the story in 2014 that Madigan’s firm had saved Mesirow Financial Services $1.7 million dollars by slashing the valuation of its River North headquarters by 60 percent. Mesirow manages $300 million in state pension funds and employs Madigan’s son, Andrew.

Every year from 2010 to 2014, Cook County Assessor and Democratic Party Chairman Joseph Berrios declared the building that housed Mesirow was worth at least $330 million. In each of those years, Madigan’s law firm successfully contested that valuation to the tune of $5 million in tax breaks annually, according to Novak’s research.

That’s the game in a nutshell.

Unsurprisingly, the attorneys making millions on property-tax appeals donate heavily to the candidates for Cook County Assessor, the Board of Review commissioners, Cook County judges and the state’s attorney. That means at each level of the appeals process, law firms are likely to interact with someone they’ve helped get elected.

A 2014 Illinois News Network analysis of campaign donations found the bulk of top contributors to the campaigns of sitting Board of Review commissioners were either attorneys or property developers with cases before the board.

Cook is one of only six Illinois counties where the Board of Review is elected rather than appointed by the county board. Most Illinois counties don’t elect their assessor, either.

Fixing it

Elected officials should not be permitted to sell their services in property-tax law. To anyone outside Illinois’ political machine, this is a clear conflict of interest that has gone untouched for too long.

Further, Cook County should fall in line with the majority of county governments in the state and appoint its assessor and commissioners on the Board of Review. These are independent, bureaucratic positions and should be treated as such. Elections have only served to give highly interested lawyers the opportunity to play both sides of the appeals game.

Further, one major reason for the high number of property-tax appeals in Cook County is the fact that the assessor assesses a property’s value once every three years. This means swings in the market aren’t mirrored by changes in a property’s assessed value, leading to incorrect valuations. Chicago should explore assessing property values annually, as is done in New York City. The increased costs of conducting valuations more frequently could be offset with a right-sizing of government-employee payrolls at the Cook County Board of Appeals as the number of successful appeals falls.

Until lawmakers make sincere efforts at reforming property taxes in Cook County, there’s no reason to think the Chicago’s most powerful players will stop exploiting the system’s flaws.

Organizations in this Story

Cook County Assessor
118 N Clark St
Chicago, IL 60602

Cook County Board of Review
118 N. Clark St.
Chicago, IL 60602

Cook County
118 N Clark St
Chicago, IL 60602

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