Fritz Kaegi - City Club of Chicago - 3.8.18
We’re really lucky to have the City Club as a such an active civic forum. It takes a special organization and membership to convene a group such as this at 7:30 am to hear about how we can do real estate assessments more accurately and fairly. I’d like you to know that attending City Club events over the years—usually sitting somewhere in the back—and meeting and talking with folks here helped give the inspiration and insight to launch this campaign. So I thank you for this opportunity.
If we take a step back, I think the reason we’re here goes far beyond the technical aspects of real estate assessments. We’re here because our assessment system creates tremendous economic inequity throughout the region. We’re here because the current assessment process systemically overtaxes Black and brown communities, transferring wealth from the South and West sides of the county to downtown corporate property owners and the politically connected. We’re here because it’s regressive everywhere. In every neighborhood, more modest homes are taxed more heavily than lavish ones. We’re here because this system displaces people, hurts small businesses, and causes devastation in our neighborhoods.
All of this is the direct consequence of a corrupt system that benefits a small number of political insiders and wealthy business people at the expense of millions around the county who desperately need fairness in government. This is wrong. And that’s why I’m running for Cook County Assessor. We need to fix this system and I stand before you today asking that you join me in demanding
So, in the immortal words of a recent Crain’s Chicago Business headline, “Who is this Fritz Kaegi?” Well, I live in Oak Park with my wife Rebecca, a teacher. We have three children, William (10), Rose (9), and Anna (7). Or as they like to refer to themselves: my Co-Campaign Manager, my Co-Co Campaign Manager, and my Assistant Campaign Manager. That said, I can assure you that none of them will be drawing a salary when I’m Assessor.
I’m a Chicago native, I was born and raised in Hyde Park, where my parents have lived for 40 years. As you know, Hyde Park has long been a crucial progressive bastion in Chicago, and my family was no different. My grandmother was a New Dealer and worked in FDR’s administration. Her lifelong emphasis on the values of fairness and equity transferred on to my mother. She was one of the first Peace Corps volunteers, in Tunisia, and was involved in Martin Luther King’s Poor People’s Campaign. One of the first things she did after moving to Hyde Park was to go out canvassing to register new voters with her new friend Jackie Grimshaw, who became one of Harold Washington’s most important aides and counsel.
My father was a professor of history specializing in Rome and Byzantium. He just retired last year after 52 years of teaching.
Growing up, the conversation around the dinner table was all about the Council Wars. Back then people paid attention to aldermanic races taking place on the other side of town. Because so much was at stake. The very prospect of progressive government hung in the balance.
That was when I first heard the names of David Orr and Chuy Garcia.
This was the 1980s. I vividly remember walking to school and playing baseball with my friends in the alleyways around Hyde Park, where the telephone poles were plastered with posters and slogans that still echo today. “Come alive October 5!” And, “We shall see in ‘83!”
I also vividly remember Harold Washington and all that he stood for. I remember his voice, his wit, his presence, and his magnetism in gathering community support across the city. When Harold Washington was mayor, he met incredible resistance from this man I knew only as “Vrdolyak.” Vrdolyak and his political faction, including Committeeman Joe Berrios, waged implacable resistance to progress. And as we all know, remnants of those battles live on even today.
As I progressed through school, my teachers at Kenwood Academy in the Chicago Public Schools nurtured my interest in politics and in the rest of the world, helping me shape my worldview, my ideals
I went on to Haverford College, where I studied political science and economics. Soon after college, I went to Russia initially as a Watson Fellow to study the emergence of private companies and financial institutions. I stayed to work as a financial analyst. In just the four years I spent there, I watched a country with enormous promise and potential become bogged down and diminished by cynicism, weak institutions, and corrupt leadership. Parallels that I see eroding the fabric of our communities here. I went on to earn my MBA at Stanford, attracted by Stanford’s strong public management and nonprofit program. When I graduated, I came straight back home to Chicago.
I am passionate about Chicago, and about Cook County—my home. I have seen first hand the incredible potential of what can occur when civic institutions are strong, and the devastation that can result from their failures. That is why I want to use my valuation skills and professional experience to address the deeply-rooted problems in our property tax assessment system. And yes, like so many others, I was deeply affected by the results of the 2016 election, and that only reaffirmed my determination that standing up for fairness and justice, and changing the Assessor’s office for the better, is a fight well worth taking on.
I believe that the people of Cook County deserve an Assessor with a proven track record of strong, progressive values, who will value all property in a fair, ethical and transparent manner. This office needs to focus in on accuracy in mass valuation, using the best data and models available, and I have the ideal background to do this. Since returning to Chicago, I have spent my whole career valuing assets and acting as a financial steward. I worked at Columbia Wanger Asset Management for 13 years as an investment analyst and portfolio manager. While at Wanger, I valued thousands of companies around the world, including major investments in real estate companies. My work involved investigating the tangible and intangible qualities of an asset in order to make fair, consistent valuations of them.
Before Wanger, I worked at Morningstar and helped build the company’s equity valuation models. I hold the Chartered Financial Analyst (CFA) and Certified Illinois Assessment Officer (CIAO) designations. I have an appreciation of the professionalism of people employed in this field and of our township Assessors. I want to work with them to better serve the public, as they are a vital part of the system in processing exemptions and improving data accuracy.
I have a deep appreciation for housing and poverty issues, as well as for our regional nonprofits, as a partner and investment committee member at Social Venture Partners Chicago. SVP Chicago provides the financial backing and capacity-building resources of its many partners to Chicago nonprofits fighting the cycle of poverty. In recent years, SVP Chicago has partnered with Metropolitan Tenants Organization, Greater Englewood Community Development Corporation, Project SYNCERE and One Million Degrees.
And contrary to what my opponent is trying to tell voters, I am a lifelong progressive Democrat and have worked to elect progressive Democrats for the entirety of my political life. I have a long history of supporting grassroots causes and campaigns, including the 2014 minimum wage ballot measure and organizations such as Planned Parenthood, the ACLU
That said, let me switch gears for a moment.
This office, this race—it isn’t about Fritz Kaegi and Joe Berrios. It’s much, much more than that—and I think all of you know this, and the public knows this.
Luminaries like our Cook County Clerk, David Orr, have warned us about the perils of machine politics. When David Orr ran for Clerk in 1991, he called it a reformer’s dream.
The Assessor’s office is the reformer’s dream of 2018. The way it is currently run, and the person who runs it, represent everything that is wrong with Illinois and Cook County politics. We know too well what happens when government offices get corrupted for the political and economic benefit of a select few.
Ethical issues, a lack of transparency, pay-to-play, nepotism—these are all hallmarks of machine politics. We’ve seen this story before. And we’ve seen the consequences. The public pays a steep price, and in particular black and brown communities do.
People lose faith in
The Assessor’s office is the epitome of this. And the consequence is that hundreds of millions of dollars in wealth is transferred from working and
Over the past year, we have watched a mountain of evidence pile up, confirming what many people already knew and felt to be true—that the system Joe Berrios oversees generates shocking inequities.
Finally, in February, the County’s very own commissioned report from the Civic Consulting Alliance was released. Each report came to the same single conclusion: our regressive property tax assessment system under Joe Berrios continues to marginalize black and brown communities while creating tremendous economic benefits for the wealthy and politically connected.
These are the dire consequences we are left with.
But let me take a step back and share a bit more about how the Assessor’s office operates in a way that is completely at odds with the principles of good government.
Let’s start with the lack of transparency. Assessors throughout the United States of America and everywhere else in Illinois tell property owners how their assessments are calculated. This is
That brings me to pay-to-play. As the Chicago Tribune reported last summer, nearly half of the $5 million dollars collected by Joe Berrios for his various campaign committees, came from the same property tax lawyers that practice before his office. Again, this is business as usual for machine politicians. Let’s remember, Joe Berrios learned the ropes in the 1980s when he and his City Council ally, Ed Vrdolyak, opposed good government reforms brought by Harold Washington. To no one’s surprise, the Cook County Board of Ethics fined Berrios $41,000 in January for accepting illegal contributions from property tax attorneys. He’s shamelessly fighting this in court.
Then we have nepotism, another
So what are the consequences of all this? First and foremost, as I mentioned earlier, we have regressivity in assessments throughout Cook County. What does this mean exactly? The more modest your home, in every neighborhood in Cook County, the higher the rate you pay. What the Civic Consulting Alliance study showed is that in Chicago, the owner of a $600,000 home would be paying a 24% lower effective tax rate than the owner of a $300,000 home. That’s not supposed to be the way the system works under the law.
And there is dramatic underassessment of downtown commercial properties. That means when they get billions of dollars in benefits, homeowners and small businesses make up the difference. You may have seen the Crain’s analysis of the 50 most expensive commercial real estate transactions in Cook County in the last five years. Their conclusion: “The prices of all 50 properties add up to $17.1 billion, while the assessor values them at only $7.8 billion (
And there is more to the story. The communities that are hit hardest are Black and Latino communities. The same communities that have been burdened by housing discrimination for decades—from the era of redlining, blockbusting and contract sales, to the abandonment of public housing, all the way up until today.
Our assessment system is a part of this shameful legacy. It has been called institutionally racist by University of Chicago professor Chris Berry, who has studied the system and developed a better model for the Assessor’s office, the same model Joe Berrios lied about using until the Tribune showed
And this dramatic under- and over-assessment has real human consequences: hundreds of millions of dollars
That’s quite a
As Assessor, I am committed to swiftly implementing the hiring and performance measurement requirements of the Shakman Monitor, and eventually exceeding them. I will make sure all employees undergo a professional assessment education program, such as that available from the Illinois Property Assessment Institute (IPAI). That means only highly qualified, well-trained staff will be assessing the value of taxpayers’ homes–no more family members or cronies on the payroll. This is serious business and we need to approach it with the same seriousness and importance.
We need to equip this office to serve all of Cook County—with all of its racial, ethnic, and linguistic diversity. That means implementing a robust diversity hiring
As Assessor, I will make sure that every tax assessment—residential, commercial, and industrial—is handled in a transparent and fair manner. No more closed door, back room adjustments. I commit myself to telling property owners how their assessments are calculated. This should be the minimum standard for this office.
We will go further by making data and algorithms (including assessment variables) available to outside parties so that people can check our work. By opening up the data in this way, we can root out the biases and unsound valuation practices and favoritism that we know have existed–and restore confidence in the office.
As a candidate, I have already
Finally, we’re going to aim to get assessments right the first time around, rather than rely on appeals which have been shown to actually make things worse. This means for residential properties, implementing the Price-weighted Regression model. That’s a fancy way to refer to a tool already at the disposal of the Assessor that will reduce regressivity by 50%. And we’re going to improve upon it. We’re going to take into account the prevalence of short sales, foreclosures
We’re also going to reassess downtown commercial properties with modern valuation techniques that reflect prices actually paid in the market. And again, all of this will be done openly and fairly.
The good news is that because the
What’s at stake here isn’t just the outcome of this single election. When I defeat Joe Berrios on March 20, it will send a message to machine politicians throughout Cook County and Illinois who seek to use government offices to benefit themselves, their family and their businesses. People are watching. And they won’t be duped. Fairness, transparency