Classification Changes to Mixed Use Buildings

Issue Overview

Under the “Definitions for the Classification of Real Property in Cook County”, Class 3-18 properties are located under the Class 3 Section of Multifamily properties which include mixed use buildings with commercial and residential uses. In March 2023, the Cook County Assessor’s Office (“Assessor”) specifically redefined Class 3–18 Properties as “mixed use commercial/residential building with apartment and commercial area totaling 7 units or more or between 20,000 to 99,999 square feet of building area, with the commercial component of the property consisting of no more than 35% of the total rentable square footage.”

This change was in response to a report issued by the Cook County Office of Independent Inspector General (OIIG) on January 5, 2023, highlighting a loophole that resulted in some owners paying property taxes at a lesser assessment level, also referred to as the “apartment loophole.” In Cook County, residential properties are assessed at 10% versus the commercial assessment level of 25%.  Because they were assessed at a much lower level, the system creates an “apartment loophole” giving an unfair advantage to commercial properties with any amount of residential units.

Legislative Outlook

The Assessor’s Office made the aforementioned changes to the Class 3-18 Property classification without input from the Cook County Board of Commissioners. His unilateral decision was met with strong opposition not only from County Commissioners, but also from community members, property owners and REALTORS®.

Subsequently, the Cook County Board of Commissioners, led by Commissioner Josina Morita (13th District), introduced a resolution in June 2024 requesting the Assessor appear before the Legislation and Intergovernmental Relations Committee. At this hearing, REALTORS® testified that the Assessor’s policy changes were unfair and requested increased transparency and public engagement for any policy changes made by the Assessor’s office. The Assessor acknowledged the lack of communication but reasserted his authority to make policy changes to the classification of properties.

After several months of negotiations and REALTOR® advocacy, the Assessor announced additional changes to Class 3-18 Properties:

  • Mixed-use properties under 20,000 SF will be classified as 3-18s with a 10% assessed value (AV). If they were assessed at the wrong level, they will receive a certificate of error and a return to the 10% AV.
  • Mixed-use properties between 20,000 and 99,999 SF will receive a split  AV if there is over 60% commercial real estate space. The split will assign a 10% AV for the residential SF and the commercial SF will have 25%.
  • If a mixed-use property, regardless of its size contains 60% or less commercial space, it will not receive a new/higher AV.

The Assessor decreased the applicability of this policy change, and it is estimated it will only impact about 30 properties in the County (not 890 properties).

Our Stance

REALTORS® believe assessment processes should be transparent and include an opportunity for public engagement. The Assessor’s unilateral decision to increase assessment levels was fundamentally unfair to property owners, who should always have an opportunity to discuss the effects and unintended consequences of changes to assessment practices with elected officials in a public forum.

The changes made by the Assessor in December 2024 represent a victory for REALTORS® and property owners as the policy is much narrower in scope and limits the parameters in which owners will be impacted by the change (mixed-use buildings with at least 60% commercial, not 35%). There remains a concern over the authority of which the Assessor has been granted for policy changes. Staff will continue to monitor any new developments on this issue and advocate for further changes to the Assessor’s practices.

Additional resources