When it Rains, Get an Umbrella

by Chicago Agent

October 20, 2008

Politicians hustle at all local levels to keep the tidal wave of bad news away from constituents

By Brian Bernardoni
The look on the faces of a small cadre of Chicago aldermen in Englewood earlier this week said it all. These leaders were scared, and they were not alone. I saw the same looks at City Hall during a hearing on foreclosure notification the prior week, and I am certain I will see it throughout the tense meetings which will take place in the coming weeks as Mayor Daley releases and defends his budget.

These are tough times, and the Daley administration is digging deep to find any solution to keep people in their homes and minimize the impact of rising property taxes and assessments. In his latest move, Mayor Daley called upon Springfield to find solutions to the education funding/property tax problems and also requested that Cook County Assessor Jim Houlihan be cautious in how he proceeds with his 2009 reassessment of Chicago.

Specifically, Daley asked Houlihan to look at current decreased home values versus the much higher 2006 values when reassessing. This call and other reforms to be announced in the coming months by the Mayor’s Property Tax Reform Committee are part of a band-aid approach to reform that is desperately needed in Cook County. Unfortunately, this will do little to ease the burdens of those who have experienced massive increases in the newly-released second installment notices.

While Daley may have some limited success in working with Houlihan, his real challenge is to find a way to close a $469 million dollar hole in his 2009 budget. In August, the preliminary numbers said $420 million grew a startling $49 million in two months, and at that time the real estate transfer tax was at the top of the list of culprits for the massive decline in revenues. The current credit crunch has hit those numbers even harder, and now durable goods and local car dealerships are also suffering. What is the Mayor proposing to fill the gap and how will it impact you?

If you park downtown, your tax will increase from $2.25 to $3 on all charges of $12 and up. If you are able to afford going out for sporting events and concerts, ticket prices will go up due to a tax increase from 8 percent to 9 percent for large venues, and even smaller venues and theatres of 750 seats or less will see a 1 percent increase.

The Denver boot on ticket scofflaws will be the most visible way to see how tight the budget is, and anyone with two unpaid tickets will get booted. Ambulance fees will also increase to an amount undetermined. You can also look forward to seeing more red light cameras at intersections as well.

With these new fees will come layoffs and mergers to keep costs in line. Daley’s budget gurus are seeking to cut almost 1,100 jobs through layoffs and will keep some 3,000 city jobs vacant. Parking meters will be leased (there are about 35,000 in Chicago) and so will Midway Airport, which could generate $40 million in revenue. Debt restructuring will save the city $60 million, while various mergers and the restructuring of several city departments will lead to the cutting of 240 jobs and a savings of $5 million. Real estate-related departments to be hit include zoning, housing and planning and development, to name a few.

Daley aides have also indicated there are no sacred cows, meaning the Chicago Police and the Streets and Sanitation Department have reason to be concerned. The Chicago Police Department has been targeted as top heavy, with layers of bureaucracy ripe for pruning. Perhaps more damaging are recent charges made by the City’s Inspector General against Streets and Sanitation, in particular the garbage haulers, of which the IG stated they could not find a single hauler among those observed who performed a full day’s work.

With all of these cuts and a new focus on Streets and Sanitation and the Chicago Police, Daley has indicated he will challenge the status quo in a real way, but he needs his City Council to follow him, and when word takes root that the garbage pickup and police protection are being targeted, expect opposition.

Assessor Houlihan and the Cook County board threw another wrench into the status quo in the last few weeks as well with a massive change in the assessment level for both residential as well as non-residential properties. In short, residential properties will be assessed at 10 percent (down from 16) and non-residential properties will be assessed at 25 percent, down from the ordinance levels of 36 and 38 percent.

Realtors expressed concern on this measure, as Board President Todd Stroger’s task force on the ordinance has yet to release its report on the matter. The Building Owners and Managers Association (BOMA), the Chicagoland Chamber of Commerce and the Chicago Association of Realtors all suggested that the measure needed more research before such a massive change. Unfortunately, the Cook County Board felt this measure would simplify the process and voted to support the change. Collectively, the business community is reviewing the ordinance and modeling the impact of the measure. Once that work is complete, if necessary, we will go to the County Board to seek modifications.

The General Assembly goes into session in November, and Congress seems to be putting out proposals daily. Check your Realtor Association Web sites for the most up-to-date information and research.

BRIAN A. BERNARDONI IS THE DIRECTOR OF GOVERNMENTAL AFFAIRS FOR THE CHICAGO ASSOCIATION OF REALTORS AND IS ALSO THE CHAIRMAN OF THE GOVERNMENTAL AFFAIRS DIRECTORS FOR THE NATIONAL ASSOCIATION OF REALTORS FOR 2007-2009. HE CAN BE REACHED AT BBERNARDONI@CHICAGOREALTOR.COM.