Chicago’s real estate industry has ignited a battle over a $19 billion tax bill that property owners say is holding back new construction and contributing to surging rents.
Donors have poured $1.4 million in the past six months into the campaign to unseat Fritz Kaegi, the tax assessor responsible for valuing properties in Cook County. Contributors include the Chicagoland Chamber of Commerce and political action committees tied to hotels, merchants and construction workers. He will face Pat Hynes, backed by many in the real estate industry and the Cook County Democratic Party, in this week’s March 17 Democratic primary elections.
The fight over a seemingly obscure corner of local government offers a window into a power struggle roiling Chicago’s real estate industry. Property owners say the lack of predictability over how a $19 billion tax bill is divvied is curbing development and contributing to rent increases that were the largest in the Midwest in February, according to CoStar data.
“The one major obstacle that certain investors might have is: where’s the predictability?” said Michael Glasser, president of Magellen Properties and head of the Neighborhood Building Owners Alliance. “If we’re going to invest in a 200-unit apartment complex or a 40-unit apartment complex, in order for us to justify the investment, we need to have a decent handle on what our taxes will be.”
The county assessor determines real estate values for taxation purposes to help pay for levies set by school districts, the county and the city. In 2024, taxes on Cook County homes rose 6.3%, with median residential bills climbing by more than 30% in parts of Chicago, according to the county treasurer.
These double-digit gains come at the same time that undersupply has left Chicagoans struggling with rising rents. In February, average rents in the third-largest US city surged 3% from a year earlier, with bigger gains registered only in San Francisco, Norfolk and San Jose, Costar data showed.
Kaegi, who left a finance career in Chicago, came to power in 2018 vowing to clean up the office. Back then, a Chicago Tribune investigation showed that his predecessor disproportionately penalized lower-income homeowners who were left with paying a higher share of the county’s tax bill while commercial landlords often got off light.
The current assessor, who is mostly self-funding his campaign to the tune of about $1.5 million, says Hynes wants to return to the clubby approach that undervalued commercial properties. While Kaegi received donations of $5,000 from Ariel Investments’ Mellody Hobson, and $100,000 from Newsweb Corp. Chairman Fred Eychaner, his own party didn’t endorse him.
“They see an assessor who’s focused on being fair to homeowners, fair to everyone, trying to make the system more fair, and they see a chance to get away with yanking it back to the old system,” Kaegi said. “This is about bringing back a pay-to-play culture to this office.”
Hynes, who used to work for Kaegi and is now the assessor in a suburban township, scoffed at the description. He argued he’s winning support from labor unions and business executives who want to tame volatile assessments that are hindering new construction and crimping the recovery from the pandemic.
“The market moves in a fairly predictable and steady pace and even a hot market, we don’t have doubling of value in three years,” Hynes said. “When you insert that kind of volatility and unpredictability, it makes it very difficult for someone to pencil out on their pro forma what the most expensive line item is going to be, and that’s the property tax.”
It’s become increasingly hard to attract institutional investors to Chicago because developers can’t determine how much they will pay in property taxes year to year, according to Farzin Parang, executive director of the Building Owners and Managers Association of Chicago.
“I hear all the time from folks that when they go to recruit investment, they’re making a pitch for something, that institutional money is saying in Chicago: ‘No we’re not touching it, your tax system is a mess,’” Parang said.
Alan Lev, chairman of Belgravia Group, a Chicago multifamily developer that has expanded some of his investment to markets such as Arizona in recent years, said the state of Illinois stands out not just for consistently high taxes but also greater challenges in predicting tax bills from one year to the next. That’s giving pause to investors and lenders, he said.
“There’s a lot of high-tax cities. Texas has got huge real estate taxes, but there’s a level of certainty as to what they are going to be and how much they can go up,” Lev said. “It’s making capital harder to come by for projects in Chicago, and that’s constraining the supply.”
Photo: Chicago’s real estate industry has ignited a battle over a $19 billion tax bill that property owners say is holding back new construction and contributing to surging rents.
Copyright 2026 Bloomberg.
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