As a result of the unprecedented assessment increases to commercial and industrial property values in Cook County, how will lenders deal with the resulting impact on their borrowers' tax liabilities? How will they respond to borrowers who claim they cannot meet their lender's call for substantial upward adjustments in their tax escrows? With regard to income producing properties, what happens when loan to value ratios change due to the decline in market values resulting from the affect of additional property tax expenses on the borrower's NOI. A $50,000 increase in property tax expenses, capped at 7%, could diminish the market value of a property by more than $700,000. It's not always that simple, but a decline in market value is the logical consequence of a higher tax bill for both owner/occupants and landlords. And that leads to an additional line of inquiry as to how tenants, and prospective tenants, will respond to a significant increase in their overall rent coming from these potential increases in their property tax liabilities? Will it, or has it already, caused a slow down in both leasing and sales activity? Will prospective tenants, as well as prospective purchasers and lenders, be taking a more cautious approach to making their final decisions going forward? How will lenders ultimately respond to their increased risk as existing loan to value ratios begin to fluctuate? The typical response would be for them to adjust interest rates upward where possible, to account for the sudden increase in risk, and to work to get their loan to value ratios back in synch. How they choose to accomplish this could have significant consequences for the real estate market.

The Cook County Assessor continues his relentless vendetta against business properties in north suburban Cook County. Unprecedented assessment increases upward of 200-300% are being mailed to unsuspecting taxpayers. Every property is being treated as institutional grade investment property, from mom and pop storefronts to small apartment buildings. The assumption that all properties are being leased on a triple net basis allows the Assessor to eliminate property taxes as an expense, which results in higher net incomes and allows the use of much lower capitalization rates. These low rates only allow for a return of the investment necessary to cover debt service, not a return on the investment which allows a return on owner equity. This practice is being used to greatly increase the market value of virtually every commercial and industrial property in the north and northwest suburbs. While claiming complete transparency, Freedom of Information Requests filed on behalf of taxpayers by their attorneys to determine the reason for a denial of relief, are taking upwards of 6 weeks to process, while the law requires a response in not more than 10-days. When responses do become available, a review indicates how the Assessor is manipulating data to ensure that virtually every appeal will be denied. The good news is that the Board of Review has opened a month early, in anticipation of a huge increase in the volume of appeals due to the Assessor's refusal to grant relief, even on the most meritorious cases. The Board has also disclosed that it will continue to review cases as it always has, and will grant relief on the merits of each case, without a pre-determined policy intended to find any means to deny relief to property taxpayers who could see their tax bills skyrocket due the Assessor's failure to act in a fair and equitable manner.