June 12, 2020
The Illinois Department of Revenue recently announced that the final equalization factor for the Cook County 2019 property assessment year (taxes payable in 2020) is 2.9160. Each year the Illinois Department of Revenue calculates equalization factors for every county in order to achieve uniform property assessment throughout the State.
The 2019 final equalization factor of 2.9160 is slightly higher than the final 2018 equalization factor of 2.9109. This does not mean that individual property tax bills will go up or down. It means that, overall, the weighted average level of assessment in Cook County for all types of property averaged over the past three years has decreased to a level further from the 33⅓% assessment level required by state law than in previous years. The equalization factor compensates for low levels of assessment in Cook County; it does not cause tax increases or decreases.
What is the equalization factor and why do we need it?
An equalization factor is a multiplier used to ensure that the total equalized assessed value (EAV) of real property in all counties in Illinois equals 33⅓% of the fair market value. All counties, including Cook, are required to undergo equalization to ensure that the total equalized assessed value of real property is 33⅓% of fair market value, a process known as inter-county equalization (or state equalization). Each county is assigned its own equalization factor. Counties other than Cook also perform intra-county equalization in order to ensure that townships assessed by different assessing officials are equalized (35 ILCS 200/9-210).
Equalization is necessary for the fair implementation of certain state statutes. Assessed valuation of property is a component in formulas for various education, transportation and public assistance grants to local jurisdictions, so it is important that assessed values be made equivalent statewide. This is particularly important because Cook County, unlike the other 101 counties in Illinois, classifies or assesses different types of property (that is, commercial or industrial or residential) at varying assessment levels set in county ordinance rather than at 33⅓% of fair market value.[1]
The State of Illinois Department of Revenue (IDOR) is responsible for calculating an equalization factor for each county. This calculation is made annually using a multi-year comparison of property assessments and sales prices in each county called the assessment/sales ratio study. This study is described in the IDOR’s Publication 136 and in the Civic Federation’s primer on the Cook County assessment process. The assessment/sales ratio study is used to compute a three-year adjusted average for the countywide median ratio, weighted by class of property. This three-year average was 11.43% for Cook County in 2019, so the 2019 equalization factor was 2.9160 (33.33% ÷ 11.43%).
Before publishing a final equalization factor each year, the Department of Revenue calculates a tentative equalization factor and holds a public hearing on the tentative factor, per 35 ILCS 200/17-20. This tentative factor is computed before the Board of Review releases its final assessments for a given assessment year. For assessment year 2019, the Department issued a tentative equalization factor of 2.7523 on April 1, 2020. The final factor of 2.9109 was published on May 20, 2020. The difference between the tentative and final factors is due to assessment reductions made by the Cook County Board of Review in that intervening period.
Once the Department of Revenue has certified the final Cook County equalization factor, the Cook County Clerk applies the factor to the final assessed values of properties as determined by the Assessor and modified by the Board of Review. The new value is called the equalized assessed value (EAV). Unless the property is a residential property for which the homeowner qualifies for one or more exemptions, this value is the final taxable value. For residential properties, most exemptions are applied to EAV.[2] This reduces the EAV for that property, providing a net EAV, which is then the taxable value of that property. The 2019 equalization factor will be used to calculate second installment property tax bills for tax year 2019 that will be due August 3, 2020.[3]
[1] The Cook County ordinance assessment level for residential and apartment properties is 10% and for commercial, industrial and not-for-profit properties it is 25%. There are additional classifications for other types of property and incentive classes for redevelopment.
[2] There are some exceptions. For example, the Disabled Veterans’ Exemption is applied to assessed value, not the equalized assessed value, and the Homestead Improvements Exemption exempts a portion of cash (market) value. The Natural Disaster Homestead Exemption (35 ILCS 200/15-173) allows an exemption in the amount of the difference between the EAV of a property before it is damaged in a disaster and the EAV after it is rebuilt.
[3] The Cook County Board passed Ordinance 20-2479 on May 21, 2020 that waives penalty interest on second installment 2019 property tax bills until October 1, 2020.