Trump Tower Chicago: Cook County Board of Review slashes hotel value

Because the county uses assessed values ​​to calculate property taxes, the reduction will result in a lower tax bill for the hotel than based on the assessor’s assessment. Still, that’s nowhere near the low value the hotel’s tax lawyers put on the property, $26.7 million, which would have resulted in an even lower tax drop. Lawyers had argued that the value of the Trump Hotel had fallen due to the pandemic, which had hit all downtown hotels hard.

Like many owners of large commercial properties in the county, the former president’s company, the Trump Organization, appealed the hotel’s valuation, first to Kaegi’s office and then to the Board of Review, a three-member panel where owners can challenge appraiser assessments. .

Landlords complain that Kaegi, who was re-elected last night, has grossly overvalued commercial properties, unfairly shifting more of the property tax burden onto them. Kaegi defends his methodology, arguing that his ratings are much closer to the mark than those of his predecessor, Joseph Berrios.

But the owners have a friend on the review board, who has granted deep reductions in Kaegi’s assessments in recent years, sparing them steep tax increases. This year is no exception.

The process for the Trump Chicago matched the template. Last year, Kaegi’s office originally valued the 339-room luxury Trump International Hotel & Tower at $168.2 million, up from $58.1 million in 2020, according to county records. The hotel’s attorneys appealed the valuation to Kaegi’s office, which lowered the value of the property to $105.1 million.

Dissatisfied with this result, the lawyers then appealed to the review board, which further reduced the value to $73 million, or about $215,000 per room. This value will be used to calculate the hotel’s final tax bill for 2022, which is expected to be released in the coming weeks.

The hotel’s property taxes could rise further from 2021, as the council’s estimate is nearly 26% of the property’s previous value of $58.1 million. But the tax hit would be much greater without the intervention of the panel.

It’s hard to estimate where hotel taxes will settle in the wake of the board cut; too many other variables go into the tax calculation even to guess. Property taxes for the hotel totaled $3.2 million in 2020.

It’s also unclear whether the Trump Organization will take the process further and file another appeal with the Illinois Property Tax Appeals Board, a step the company has taken in the past. One of the hotel’s attorneys, Patrick McNerney of Mayer Brown, declined to comment. Representatives of the Trump Organization did not respond to an email.

Kaegi defended the process used by his office to estimate the value of the Trump property.

The valuation is “in line with market data and the value of a similar property in the area,” he said in a statement. “Our publicly available data and third-party sources show that the methodology we use to appraise at market value means our work is more accurate and fair than before. For large commercial properties like this, asking appeal after appeal to lower their assessments only increases the tax burden on residents and small businesses. I will continue to denounce these practices which create inequalities in the property tax system and which must be reformed.

A representative for the review board did not respond to a request for comment.

Whatever its value today, the Trump Hotel may not be worth as much as it was a few years ago. The hotel’s performance has lagged that of its competitors since Trump took his infamous escalator trip to announce his presidential campaign in 2015. The hotel’s revenue fell 30% from 2015 to 2018 , and a profit metric plunged 89% over the same period, according to financial documents filed at the assessor’s office.

Trump’s Chicago skyscraper at 401 N. Wabash Ave. also includes residential condos, which are separately owned, and commercial space at the base of the building, which is owned by a Trump company. When he developed the project, he planned to sell all 339 condominium hotel rooms, but sales stalled during the financial crisis and he retained ownership of approximately 175 rooms.

The Trump Organization also appealed the estimated 2021 value of the building’s retail space, which has been largely vacant since the building opened in 2008. Kaegi’s office assessed the space at 74,000 square feet. squares at $21 million, but the review board recently knocked its value down. down 19% to $17.1 million, according to the appraiser’s office.

Still, that’s a nearly 37% increase over the property’s previous value, so it’s possible, if not likely, that his tax bill will rise this year. Property taxes for commercial space totaled $698,399 in 2021, according to the Cook County Treasurer.

Comments are closed.