This repository contains code, data, and output files for estimating the tax effect on Chicago residents from reductions in downtown Commercial Real Estate (CRE) valuations. The data with the results from the analysis is available here in a Google Sheet.
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Software tools: This repo uses the R package PTAXSIM developed by the data team in the Cook County Assessor's Office in order to estimate the effect of reductions in downtown Commercial Real Estate values on tax bills in Chicago. The basic workflow was based on the vignette available here. The database linked here is a data dependency for running PTAXSIM.
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Geographic definitions: The physical extent of "Downtown Chicago" used in this analysis is based on the CBD delineation in the Chicago Data Portal. The analysis is restricted to only estimating effects of CRE declines on tax bills for residents in the City of Chicago.
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Projected real estate values: Reductions in commercial real estate value ranging from 10 to 40% are based on this BCG report, which estimates a loss in building office value of $20-25 billion (35-45%) and a loss of annual rent revenue $2-3.5 billion (25-35%) in Chicago. We apply those decreases to the 2021 valuation level for all "multi-story office/retail" or "commercial/industrial" (see table below) properties in the Chicago Downtown area to derive 2024 valuation estimates. Valuations of residential properties and property outside downtown are held constant in this analysis.
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Projected levies: The two largest sources of property taxes in Chicago is the City and CPS. To take into account the anticipated levy we based our estimates on the proposed city and CPS budgets for 2024, while other agencies such as the Park district, Library, or Water Reclamation District are held constant. Below we list the property tax revenues used to inform the forecasted levies for the City and CPS. Data source for City property tax revenue was the Chicago Department of Finance and the source for CPS tax revenue was found here at cps.edu. For 2023 City budget data available see links here and here, for 2024 City budget data see link here.
| Year | City Budget | CPS Budget |
|---|---|---|
| 2019 | $1,514,102,000 | $2,984,300,000 |
| 2020 | $1,539,811,000 | $3,134,500,000 |
| 2021 | $1,633,162,000 | $3,264,912,413 |
| 2022 | $1,709,390,000 | $3,374,173,082 |
| 2023 | $1,734,390,000 | $3,685,311,455 |
| 2024 | $1,824,390,000 | $3,816,007,845 |
- Property class definitions: For ease of analysis we regrouped detailed property class codes into high level categories in our analysis (shown in the table below). For a detailed dictionary of property classes see the link here.
| Property grouping | Class codes |
|---|---|
| Residential | 200, 201, 202, 203, 204, 205, 206, 207, 208, 209, 210, 211, 212, 213, 218, 219, 224, 225, 234, 236, 239, 240, 241, 278, 288, 290, 295, 297, 299 |
| Multi-story office/retail | 591, 592 |
| Commercial/industrial | 100, 190, 300, 301, 313, 314, 315, 318, 390, 391, 396, 397, 399, 400, 401, 417, 418, 422, 423, 426, 427, 428, 429, 430, 431, 432, 433, 435, 480, 481, 483, 487, 489, 490, 491, 492, 493, 496, 497, 499, 500, 501, 516, 517, 522, 523, 526, 527, 528, 529, 530, 531, 532, 533, 535, 550, 580, 581, 583, 587, 589, 590, 593, 597, 599, 637, 638, 650, 651, 654, 655, 663, 666, 668, 669, 670, 671, 673, 677, 679, 680, 681, 683, 687, 689, 693, 700, 701, 716, 717, 722, 723, 726, 727, 728, 729, 730, 731, 732, 733, 735, 742, 743, 745, 746, 747, 748, 752, 753, 756, 757, 758, 760, 761, 762, 764, 765, 767, 772, 774, 790, 791, 792, 797, 798, 799, 800, 801, 816, 817, 822, 823, 826, 827, 828, 829, 830, 831, 832, 833, 835, 850, 880, 881, 883, 887, 889, 890, 891, 892, 893, 897, 899, 900, 901, 913, 914, 915, 918, 959, 990, 991, 996, 997 |
For any technical inquiries please feel free to create a Git issue and tag nmarchio. For other questions, please contact Nicholas Marchio, data scientist at the Mansueto Institute at nmarchio at uchicago dot edu.