As a candidate in 2018, Fritz Kaegi ran as an outsider, pledging to upend business as usual in the Cook County assessor’s office. He vowed to end corruption and opacity, refused donations from property tax attorneys and promised to correct errors in assessments that the Tribune found often benefited big downtown landholders at the expense of less affluent homeowners.
He’s clearly changed the system, shifting the tax burden away from residents and toward commercial properties while leading an unsuccessful push for big building owners to disclose more data. Along the way, he’s rankled fellow elected officials, trade unions and real estate insiders who say his revamped assessments have sent bills soaring and scared off new investment. His critics say his bungled administration of the office contributed to inaccurate adjustments to account for COVID-19’s impact and delayed the upcoming mailing of tax bills by several months.
Many of those interests are now lining up behind Kari Steele, Kaegi’s sole challenger in the Democratic primary on June 28.
Currently the Metropolitan Water Reclamation District of Greater Chicago board president, Steele says she’d bring a steady hand and a focus on building consensus, including bringing commercial real estate interests back to the table. No Republican candidates are in the running: Whoever wins next Tuesday will face Libertarian candidate Nico Tsatsoulis in the Nov. 8 general election.
Steele presents Kaegi with a considerable challenge: She has garnered endorsements and donations from powerful union groups, including Operating Engineers Local 150 and the Chicago Federation of Labor, and elected officials like popular outgoing Secretary of State Jesse White. She’s also the daughter of John O. Steele, a former judge and alderman of the 6th Ward. Democratic insiders say she could have the upper hand with Black and female voters.
In 2018, Kaegi was the outsider alternative to Cook County Democratic Party head Joe Berrios. This time, Kaegi has the party’s endorsement and the backing of several party progressives.
A former mutual fund asset manager, Kaegi has also lent his campaign close to $2 million since declaring he’d be running again. Other big contributions have come from Democratic megadonor Fred Eychaner, who gave $100,000; Morningstar founder Joe Mansueto, who contributed $106,000; Bulls and White Sox Chairman Jerry Reinsdorf, who gave $10,000; and others in the financial services world.
Meanwhile, real estate and business interests — including the Building Owners and Managers Association, the Chicagoland Apartment Association and the Chicagoland Chamber of Commerce and Magellan Development Group — have given Steele roughly $270,000, according to the State Board of Elections.
She’s received even more money from unions representing construction workers, including $1 million from a fund backed by Local 150 and $170,000 more from other labor groups.
“Development relies upon stability, predictability, and the assessor’s office has given anything but that,” Local 150 spokesman Ed Maher says. Any slowdown in construction activity puts union jobs at risk.
Kaegi backers, like former longtime Cook County Clerk David Orr, say Steele’s support demonstrates she’ll return the office to its old ways. They say Kaegi inherited a deeply broken system and is fighting entrenched powers that benefit from an opaque system. It will take years to fix, they say.
“When you’re a person that knows the system is broken and try to change it, you are at war with the people that want it broken. That is the most important thing to understand about this race. This is a monstrous money-making opportunity and they want to protect what they have,” Orr said.
Kaegi, an Oak Park resident, points to study after study that showed homeowners and small businesses were being treated unfairly under the old system, and that big building owners benefited both from inaccurate valuations and their understanding of the insider appeals game. The remedy was to rebalance the scales.
His initial north suburban assessments led to commercial property valuations climbing by upwards of 70%. In the south suburbs, the median home assessment rose about 4%, while business and industrial properties saw a median increase of about 44%.
After taxpayers had a chance to appeal their assessments to the Board of Review and final bills were calculated by the County Clerk, the average commercial tax bill went up by 15.8% in the north suburbs, compared with residential property rising just 1.1%. The following year, homeowners in the south and southwest suburbs saw their bills rise 2.9% in the 2020 tax year compared with 2019, while commercial and industrial landowners saw bills go up by 7.2%, according to the Cook County treasurer.
Building Owners and Managers Association Executive Director Farzin Parang says Kaegi has unnecessarily villainized commercial landlords and tweaked the system to secure votes from homeowners. “We think he’s dictating a lot of assessment policy by politics.”
But Kaegi says he’s just following the market, and that his assessments are closer to their true value. A study conducted by the International Association of Assessment Officers to determine whether Kaegi’s first look at north suburban properties in 2019 were close to actual sales prices found the assessor’s numbers were “very close to 100% of market value, which indicates a sound overall appraisal.”
And a Crain’s Chicago Business analysis of 35 big commercial properties downtown suggested Kaegi’s assessments might have actually been too low. In all but four cases, the analysis found, Kaegi’s 2021 assessments were lower than the appraised value.
Steele, a Chicago resident, has not been specific about what changes she would make to Kaegi’s formula. But she criticized his decision to tweak assessments to account for the impact of the early days of COVID-19, errors in the administration of the senior freeze program and slow response to open records requests.
Kaegi defends the COVID-19 assessments as a necessary response to pandemic’s early economic plunge. Many of the senior freeze errors, his office said, were due to problems that dated back to Berrios. And after firing the former head of records requests, his office has recently sped up its FOIA compliance.
Kaegi has also tangled with members of the elected Board of Review, a property tax appeals body that has blunted the impact of Kaegi’s reforms. In an interview with Crain’s, Board of Review Commissioner Larry Rogers described the 2021 cycle under Kaegi as “the worst assessment cycle that I’ve seen of any assessor that I have served with.”
Both blame each other for technological problems that are leading to tax bills being significantly delayed. It’s the kind of “chaos” that Steele says she’d end.
But much of Steele’s campaign has also been overshadowed by controversy involving her husband, Maze Jackson, whose been criticized for a history of making of antisemitic, homophobic and anti-Latino comments on the same radio show in which he’s promoted Steele’s campaign. Both Steele and Jackson have since apologized. Steele has also faced questions about Jackson’s work as a lobbyist for Onni Group, one of Chicago’s most active real estate developers of the past decade.
In a recent candidate forum, Steele said Jackson would not lobby the assessor’s office and that she would recuse herself from “anything that appears to be a conflict of interest” involving Jackson’s work.
Steele also pointed to the Metropolitan Water Reclamation District’s hiring of its first-ever inspector general and overseeing the amendment of the body’s ethics ordinance. But current and former MWRD insiders say that while Steele supported the changes, both were long-fought initiatives of former Commissioner Debra Shore. Three of Steele’s colleagues on the MWRD board have endorsed Kaegi.
Steele has floundered, at times, when asked what exactly she would change about the assessor’s practices. On a recent episode of the “Munir Muhammad Show,” she misstated the income threshold for the senior freeze exemption. And Kaegi’s office billed Steele and her mother nearly $3,500 for four years of homeowners exemptions the office says were erroneously claimed on a South Side home that Steele previously listed as her residence. Attorneys for Steele’s mother, who owns the home, are fighting it.