Illinois Department of Revenue Brian Hamer, Director January 2010 Publication 136 Property Assessment and Equalization The information in this publication About this publication is current as of the date of the publication. Please visit our web site at Property tax is the largest single tax in the state of Illinois. It is also a major source of revenue for local government taxing districts. Every person and business in Il- tax.illinois.gov to verify you have the linois is affected by property taxes, whether by paying the tax or receiving services most current revision. or beneits paid for by property taxes. This publication is written in the plain English style so the tax information is When Illinois became a state in 1818, the constitution contained a provision for easier to understand. As a result, we taxing property in direct proportion to the value of the property. From 1818 to do not directly quote Illinois statutes 1930, amendments to the constitution provided the state with various powers and the Illinois Administrative Code. concerning property taxation. The last year the state levied real estate taxes was The contents of this publication are 1932. Since then, property taxes have been levied at the local level. informational only and do not take Property tax is governed by the Property Tax Code, 35 ILCS 200/1-1 through 32 the place of statutes, rules, and 20. It is a local tax imposed by local government taxing districts ( e.g., schools, court decisions. For many topics, municipalities, counties). Revenues from property tax are collected and spent at we have provided a reference to the local level. Property taxes are raised, spent, and distributed locally. Property the applicable section or part of the taxation produces more than three-fourths of the total tax revenue and inances a Illinois Administrative Code for further major part of the services provided by local governmental units which beneit citi- clariication or more detail. All of the zens and their property. The largest share of property tax goes to school districts. sections and parts referenced can be There are 102 counties in Illinois. Most counties, referred to as township counties, found in Title 86 of the Code. have a township level of government. There are 17 counties, called commission counties, which do not have the township form of government. The supervisor of assessments has the primary assessment responsibility in commission counties. Property can be divided into two classes – real and personal. Real property is land and anything permanently attached to the land ( e.g. buildings and ixtures permanently or constructively attached to a building). Personal property is all property that is not real property ( e.g., automobiles, livestock, money). In Illinois, taxpayers pay property taxes only on their real property. This publication is designed to explain, in general terms, the sales ratio and equal- ization procedures authorized by statute and the people and agencies responsible. It is not a deinitive interpretation of property tax law. Local assessment oficials are the resource for speciic factual information about property taxes. The appli- cable Illinois laws can be reviewed in the Illinois Property Tax Code. Note: See “Illinois Property Tax System” publication on our Web site for general information about Illinois property assessment and billing procedures. Get forms and other information faster and easier at tax.illinois.gov = Page 1 = Property Assessment and Equalization Contents Acronyms ........................................................................................................................................3 Glossary of Terms ...........................................................................................................................4 General Information What is property tax? ...........................................................................................................................6 What is “market value”? .......................................................................................................................6 How is fair cash value determined? ......................................................................................................6 Sales Ratio Studies What is the purpose of a sales ratio study? .........................................................................................7 What is the sales ratio process? ..........................................................................................................7 Which transfers (sales) transfers are not included in a sales ratio study? ............................................8 Are any other sales excluded from the sales ratio study? ....................................................................8 Do outliers affect the statistics obtained from the sales ratio study? ....................................................8 Statistics and what they represent ........................................................................................................9 Table 1 — Assessment ratios ..........................................................................................................9 Table 2 — Urban weighted median ratios .....................................................................................12 Table 3 — Final Equalization factors .............................................................................................12 Formulas for sales ratio studies and equalization ...............................................................................12 Examples of statistical calculations ....................................................................................................13 How are sales ratio studies used? ......................................................................................................14 Assessment levels What is an assessment level? ...........................................................................................................15 How is level of assessment computed? ..............................................................................................15 Do assessment levels vary? ..............................................................................................................15 Why must assessment levels be uniform? ..........................................................................................15 Who must ensure uniform assessments? ..........................................................................................15 Equalization What is equalization? ............................................................................................................. ............16 Do all counties use intra-county equalization?........................................................................ ............16 Why do local assessors and boards of review issue multipliers?............................................ ............16 Does the state force local assessment oficials to do local equalization?................................ ...........16 Must IDOR equalize assessments?...................................................... ..............................................17 Why is IDOR required to issue a state multiplier?................................. ..............................................17 How does the state calculate the county-wide multiplier?...................................................................17 How is the state multiplier computed?..................................................................................... ...........17 Which years of sales are used when the multiplier is calculated?............................................ ..........17 Why are three years’ worth of sales ratios used?..................................................................... ..........18 How does the states multiplier affect assessments?................................................................ ..........18 Applicable statutes ........................................................................................................................ 20 Page 2 of 24 PUB-136 (R-01/10) = Page 2 = Property Assessment and Equalization Acronyms Board of Review BOR Chief County Assessment Oficer CCAO Coeficient of concentration COC Coeficient of dispersion COD Coeficient on variation COV Equalized assessed value EAV Illinois Department of Revenue IDOR Median absolute deviation MAD Price-related differential PRD Real Estate Transfer Declaration RETD State Property Tax Appeal Board PTAB PUB-123 (R-01/10) Page 3 of 24 = Page 3 = Property Assessment and Equalization Glossary of terms Ad valorem - According to value. Effective tax rate - Ratio of taxes billed to market value. Generally found by multiplying the level of assessment by the local current tax rate. Expressed as a percentage, Appraisal - Opinion of value supported by evidence. applied to the full market value (if level of assessments 1/3 is 33 percent and the local rate is 6 percent; Effective Arm’s length sale - Sale between two parties, neither Tax Rate = 2 percent; if market value $90,000, tax = is related to or under abnormal pressure from the other. $1,800). Assessed value - Value placed upon property after Equalization - Application of a uniform percent in- multiplying its market value by the level of assessment. crease or decrease to assessed values of various ar- eas or classes of property to bring assessment levels, Assessment - Oficial act of discovering, listing, on the average, to a uniform level of market value. appraising, and entering a value for property on the assessment rolls for ad valorem tax. Equalization factor - Factor applied to assessed val- uation of each county that raises or lowers the level of 1/3 Assessment level - Percentage of full value at assessments to the mandated level of 33 percent of which property is being assessed. This may refer market value (intra-county factors may be used by a 1/3 to the statutory level (33 percent) or the actual county to bring all property to a uniform level. Factors level as inferred from a sales ratio study. are sometimes referred to as multipliers. Not applied to farm land, buildings and coal rights. Board of Review (BOR) - Appeal agency in each county, consists of 3 members; commission counties Equalized assessed value (EAV) - Assessed val- - county commissioners; in other counties members ue multiplied by any applicable equalization factor; are appointed by the county board, or are elected. can form tax base from which tax rate is calculated; for farm acreage, farm buildings, and coal rights the inal assessed value is the equalized value. Classiication - Practice of classifying various types of property according to use, and assigning different assessment levels to each class. Purpose Exemption - Removal of property from the tax is to tax various kinds of property at different effec- base; may be a partial (a homestead) or complete tive tax rates though the nominal rate is the same. (church building used exclusively for religious use). Coeficient of concentration (COC) - Percentage Extension - Process in which the county clerk of observations falling within 10 percent of the me- determines the tax rate needed to raise the revenue dian level of assessments. A high COC indicates (levy) certiied by each taxing district. The actual more uniformity. dollar amount billed to property taxpayers in district. Coeficient of dispersion (COD) - Statistical measure General assessment year - Assessment year that oc- of variation of individual assessment ratios around the curs every 4 years in which all property assessments median level of assessments: Average error expressed are reviewed, formerly known as quadrennial year. as a percent (%); Indicator of assessment uniformity found by dividing the average deviation by the median. Level of assessments - Ratio of assessed value to the sale price. Coeficient of variation (COV) - Statistical mea- sure of variation of individual assessment ratios Levy - Money a taxing body certiies to be raised around the mean assessment ratio. from the property tax to meet its operating expenses. Page 4 of 24 PUB-136 (R-01/10) = Page 4 = Property Assessment and Equalization Glossary of terms Market value (full value) - Most probable sale price Tax base - Composed of the equalized assessed of a property in terms of money in a competitive and value (EAV) of all locally assessed property, less open market, assuming that the buyer and seller are all qualiied exemptions, plus the value of any state acting prudently and knowledgeably, allowing sufi- assessed property. cient time for the sale, and assuming that the trans- action is not affected by undue pressures. Tax rate - Amount of tax due stated as a percentage of the tax base, derived by dividing the levy by the Mean - An arithmetic average. EAV. Some districts have a maximum statutory rate; the sum of the fund rates equals the total district rate. Median - Middle value of a group of numbers after they have been ranked. Tax year - Refers to the year of assessment. Median absolute deviation (MAD) - Median of the Taxing body - Governmental organization that lev- absolute deviations from the median as a percent- ies a property tax. age of the median. Taxing district - Territorial area under the taxing Mode - Number that occurs most frequently in a body's jurisdiction. set of numbers. 1/3 1/3 33 % - Means 33 percent of the actual value Outlier - Observations that have unusual values, of real property as determined by IDOR’s assess- that is, differ markedly from the median. ment/sales ratio studies for the 3 most recent years preceding the assessment year, adjusted to take Overlapping taxing districts - Taxing districts that into account the implementation of any changes in assessment levels since the data for such studies are located in more than one county. were calculated. Price-related differential (PRD) - Measures a pattern of Urban weighted method - Non-farm values; used inequity in assessments related to the value of property. in determining a county's median level of assess- ment by dividing the county's total assessed value Quartiles - Values that divide a set of data into four (AV) by the county's total estimate of full value equal parts (25%, 50%, 75%, 100%) when the data (EFV); this is the preferred method of calculating a are arrayed in ascending order. county multiplier. Sales ratio study - Analysis of the percentage re- Useable sales/appraisals - Those sales that re- lationship of assessed value (AV) to market value; lect the deinition of “market value” ratio equals prior year assessed value divided by the current year sales price (SP) (Minimum of 25 useable sales/appraisals required). State Property Tax Appeal Board (PTAB) - Highest state quasi-judicial body which hears appeals from taxpayers and taxing bodies on property tax assess- ment decisions by the county Board of Review. PUB-123 (R-01/10) Page 5 of 24 = Page 5 = Property Assessment and Equalization General Information What is property tax? How is fair cash value determined? Property Tax is a tax based on the value of a prop- Fair cash value is determined by using one or erty. For this reason it is often called an ad va- more of the following methods: lorem tax i.e., . ( according to value). Property tax Market data : Comparison of similar, neighbor - is a local tax imposed by local government taxing ing properties recently sold to the property being districts ( e.g., school districts, municipalities, coun- assessed. ties) and administered by local oficials ( e.g., town- Cost : Calculation of the cost to reproduce (or ship assessors, Chief County Assessment Oficers rebuild) a property, subtracted by the deprecia- (CCAOs), local Boards of Review (BORs), county tion ( e.g., wear and tear, age) amount, plus the collectors). Property taxes are also collected and land value. spent at the local level. The state of Illinois does not have a state property tax. Income : The present worth of the income from an income-producing property is calculated by measuring the amount, quality, and duribility of the future net income the property can be What is “market value”? expected to return to an investor. “Market value” is the most probable sale price Illinois law requires farmland to be reassessed (in terms of money) in a competitive, open market. each year and all other property must be viewed, This is under the assumption both buyer and seller inspected, and revalued every four years. The are acting prudently and knowledgeably, and allow- only exception is for Cook County, which has a ing suficient time for the transaction which is not three-year reassessment cycle. The general as- sessment date is January 1. This is also the date affected by undue pressures. the assessment cycle begins for all real property In Illinois, most real property must be assessed which must be valued as to its condition at that based on its market value. The Illinois Property Tax time. Local assessment oficials may revalue prop- erty at any time if its value is incorrect. Code uses the term “fair cash value” to describe market value. Once market value has been determined, asses- sors put a value on the property for the tax as- sessment books. This value should be 1/3 33 percent of the fair cash value. For example, if the fair cash value of a property is $150,000, and the county level of assessments is at the 1/3 statutory level of 33 percent, the assessed value of the property to be entered in the assessment books would be $50,000. Page 6 of 24 PUB-136 (R-01/10) = Page 6 = Property Assessment and Equalization Sales Ratio Studies A sales ratio study compares a property’s assessed value as of January 1 in one year to its selling price in the following year. For example, the assessed value of property as of January 1, 2008, is compared to its selling price in 2009. The sales ratio is the prior year’s assessed value ( e.g., 2008) divided by the cur- rent year’s selling price ( e.g., 2009). What is the purpose of a sales ratio study? (arm’s-length) transaction. An arm’s length transac- tion is a sale between two parties, neither of whom The sales ratio study shows whether assessments is related to or under abnormal pressure from the 1/3 within a given area actually average 33 percent of other. The assessed value as of January 1 from the the market value. If the study results in something year prior to the sale is also included. 1/3 other than 33 percent, a blanket percentage change Note: Transfers of farmland are excluded because (increase or decrease), called an “equalization factor” farmland assessments are not based on market or “multiplier”, is applied to all non-farm property to value; instead, farmland is assessed based on its 1/3 bring the level of assessments to 33 percent. use value (ability to generate income from farming based on the soil’s ability to produce a crop). In addition to its value in determining inter-county equalization factors, an assessment/sales ratio Step 2: IDOR reviews each real estate transfer study is a useful tool for local assessing oficials declaration in their efforts to achieve assessment uniformity; Identiies bona ide useable (arm’s-length) sales Comparison of median assessment levels for occurring between willing sellers and buyers. Once townships or property categories within a county identiied, IDOR calculates the sales ratio for each can reveal a lack of uniformity among categories useable transfer. or geographic areas within the county. This lack of uniformity can often be remedied by intra-county Step 3: Statistical measures are calculated equalization, which may raise the average assess- Statistical measures, (median ratio, irst and third ment level in some townships, areas, or categories quartiles, coeficient of dispersion (COD), etc. ) and lower it in others, until all are at the average are computed for urban or non-farm property in assessment level of the county. each geographic area with 25 or more useable In addition to supplying information about aver- (arm’s-length) sales. For Cook County, statistical age assessment levels, the study can also provide measures are computed for any class of property knowledge of the degree of uniformity, or degree of with 25 or more useable sales. For all other coun- divergence from the average, in the assessments ties, IDOR calculates median assessment levels for of individual parcels within a district. The closeness both “improved” and “unimproved” urban property of individual assessments to the average assess- when there are 25 or more useable transfers in ment level is just as important to a property owner each category. Statistical information helps as- as the level itself. sessing oficials identify systematic bias toward assessment levels on unimproved property. What is the sales ratio study process? Step 1: County recorded RETDs are sent to IDOR. Step 4: Median levels of assessment are adjusted Median levels of assessment from the sales ratio When property is sold in Illinois, a real estate trans- study are adjusted to relect any signiicant as- fer declaration (RETD) is completed. The RETD identiies the property sold, amount paid, and other sessment changes during the year of the study. By information used to determine if a sale is a useable analyzing the county’s assessment data, PUB-123 (R-01/10) Page 7 of 24 = Page 7 = Property Assessment and Equalization township medians can be adjusted to relect the Are any other sales excluded from the extent of any reassessment during that period. sales ratio study? Revised township levels are used to obtain an ad- Yes. Outlier ratios are observations that have justed urban-weighted county average, forming the unusual values, that is, values that differ mark- basis of IDOR’s inter-county equalization process. edly from the median. For example, a property assessed at $30,000 and selling for $5,000 would Step 5: Adjust prior years’ assessment levels very likely be an outlier ratio since the ratio of Step 4 is for a single-year sales ratio study. If sig- 600% (30,000 ÷ 5,000 x 100%) is so extreme. niicant adjustments are made during the year There are various explanations for outlier ratios: of the study, medians for the two prior years are • Unusual market changes — Inlation or also adjusted. Finally, the average of the last three delation in the regional economy, variation years’ medians is calculated. The result is the basis in the interest rates, population movements on which the tentative and inal multipliers will be due to shifts in the labor market often cause certiied. rapidly rising or decreasing real estate prices. See Exhibit A on Page 18 to determine which years Under such conditions accurate property are included when adjusting prior year assessment assessments become very dificult and may levels for equalization purposes. differ signiicantly from market price. • Non-market transactions — The most Which transfers (sales) are not included common is transactions involving related in a sales ratio study? parties where the property sells for below Some examples of transfers (sales) not included in its market price. Forced sales are also non- the sales ratio study are market transactions. • Land and improvements classiied as “farm” • Data errors — These are usually clerical errors, such as mismatching the assessment • Between relatives and the sale price. • Under compulsion (foreclosures, bankruptcies, etc. ) • Erroneous assessment or sale price information — • Conveying less than full title Incorrect sale price and/or assessment entries • To governmental units on the real estate transfer declarations. • To/from a charitable organization • Assessment errors — Limited or total lack of access to a property, inaccuracies in • To/from a lending institution measurements, or incomplete assessments. • Auction sales Do outliers affect the statistics obtained • Transfers in which the assessed value and sales price are not comparable ( e.g., property from the sales ratio study? formerly assessed as a “model home”, parcel Some of the measures of uniformity are sensitive to was split/divided, building destroyed or torn down) the presence of outlier ratios; others are not. The • Deeds of convenience or to correct errors COD, one of the most widely used measures of uniformity, may vary greatly when outlier ratios are • Deeds recording sales made in previous years present. By deinition, the COD is a statistical mea- • Certain speciic deed types sure of variation of individual assessment ratios around the median level of assessments (an aver- age error expressed as a percentage). Eliminating these outlier ratios may lower the COD. The affect on the PRD is very minimal. Page 8 of 24 PUB-136 (R-01/10) = Page 8 = Property Assessment and Equalization Statistics and what they represent The COD is the most commonly used statistical measure of uniformity of assessments. The higher the COD, the greater the scattering of individual assessments around the county median level and the great- er the degree of inequity in the sharing of the tax burden among property owners in a county. To illustrate the practical effect of dispersion and inequity in assessments on a property with a $40,000 market value, consider the following example: Assume a county has a median level of 35 percent and a COD of 30 percent. A COD of this degree means the assessment levels of individual properties can be expected, on average, to deviate from the median level by 30 percent. Thirty percent of the median is 10.5; therefore, 30 percent less than the median is 24.5 percent and 30 percent more is 45.5 percent. The assessed value of the property at 35 percent would be $14,000 ($40,000 x .35 = $14,000); at 24.5 percent it would be $9,800; and at 45.5 percent it would be $18,200. Assuming a tax rate of $6.80 per $100 of assessed value, a taxpayer owning property with a market value of $40,000 would pay a property tax bill of $952 on an assessment of 35 percent ($14,000 x 6.80 ÷ 100 = $952); $666 on an assessment of 24.5 percent; and $1,238 on an assessment of 45.5 percent. Below is a listing of the statistical tables the state maintains, followed by a detailed explanation of their contents. • Table 1, Assessment Ratios • Table 2, Urban Weighted Median Ratios • Table 3, Final Equalization Factors Table 1, Assessment Ratios Example of Table 1: Assessment Ratios Coefficient of Number Price-related 95% Coefficient of Geographic Adjusted Dispersion Of Quartiles Ratio Differential Confidence Concentration st rd Area Median Median (COD) Sales 1 3 Range (PRD) Interval (COC) County Name Total County Urban - 28.42 18.66 727 25.10 31.77 68.56 1.01 27.89 - 28.92 43.19 Townships Township 1 Urban 31.72 30.34 14.53 42 25.45 33.91 25.40 1.01 26.70 - 31.73 40.48 Township 2 Urban 29.87 28.57 16.90 532 25.44 31.53 64.19 1.00 27.93 - 29.00 46.80 All Others Urban 28.69 27.50 25.71 153 23.26 32.68 66.72 1.03 26.36 - 29.14 33.99 Description of Table 1 contents • Column 1— Geographic Area (County, township, and multi-township) This column lists the geographic area to which the ratios apply. Separate township studies are reported if there were 25 or more usable sales in that township. All townships with less than 25 useable sales are grouped together and reported in the All Others category. • Column 2— Category The category shown is “urban,” with the exception of Cook County. For Cook County, the major classes, as deined by the county ordinance, are shown. The Total county median shown in this table is an un-weighted median. When suficient usable sales were available, the urban sales were further separated into “unimproved” and “improved” subcategories. In order for the subcategories to be presented, there must have been more than 25 useable sales contained in both “unimproved” and “improved”. For this purpose, “unimproved” property is deined as a property without a building. PUB-123 (R-01/10) Page 9 of 24 Page 1 = Page 9 = Property Assessment and Equalization • Column 3— Adjusted median The ratio study was conducted using the current year selling price and the prior year assessed value. For example, in the 2007 tables, the 2006 assessments were compared to the 2007 selling price. The ratios are then adjusted according to the percentage changes in assessments made in 2007 by any township or multi-township assessor, CCAO, or BOR. If there was a reassessment in 2007, the adjusted median becomes the level of assessment for that township in 2007. If there were no signiicant assessment changes in 2007, the median in Column 4 is the 2007 level of assessment. • Column 4— Median The median is the best measure of the average assessment level for a category and a geographic area since it is not unduly sensitive to extreme ratios (as can be the case with mathematical average or mean). The median is the exact midpoint of all individual assessment ratios for a given property and area category. The median is found by ranking the individual assessment ratios in ascending or descending order and counting downward until the middle value is reached. If an even number of ratios is found, the two middle ratios are averaged to calculate the median. • Column 5— Coeficient of dispersion (COD) This statistic provides a measure of the variation of individual assessment ratios around the median. The median indicates the average assessment level but does not provide information about how closely the individual ratios are grouped around it. If the individual ratios are clustered closely around the median, the COD will be low, which implies the assessments are relatively uniform. How ever, if the individual ratios vary widely from the median, the COD will be high, which indicates that the property was not uniformly assessed and the property tax burden was not fairly distributed among taxpayers in that particular area. Statistically, the COD expresses the average absolute deviation of the individual ratios from the median ratio as a percentage of that median. The average absolute deviation from the median is the sum of the differences between each individual ratio and the median ratio (disregarding whether the difference is positive or negative) divided by the total number of ratios. • Column 6 — Number of sales The number shown is the number of “usable” or “arms length” transactions that were included in the study. This igure represents the total number of property transfers used in the analysis. • Columns 7 and 8 — Quartiles Just as the median is the ratio that divides the ranking of all individual assessment ratios into two equal parts, quartiles are ratios that divide the ranking into four equal parts. These measures deine the distribution in greater detail and indicate any skewness. • Column 9— Ratio range The range is the difference between the highest and lowest ratios in a given geographic area or category. This measure indicates the absolute variation in the distribution. Page 10 of 24 PUB-136 (R-01/10) = Page 10 = Property Assessment and Equalization • Column 10— Price-related differential (PRD) In addition to the COD, the intra-area price-related differential can be used as an indicator of assessment uniformity. While the COD measures the general scattering of individual ratios around the median ratio, the intra-area price-related differential measures a pattern of inequity in assessments that has a correlation with the value of the property. If there is a tendency for the higher-valued properties to exhibit lower assessment ratios than lower- valued properties, the price-related differential will be greater than 1.03. If, on the other hand, higher- valued properties have higher assessment ratios than lower-valued properties, the price-related differential will be less than .98. Differentials greater than 1.03 or less than .98 are both indicative of an inequity in assessment. The mean assessment ratio is the sum of all ratios divided by the number of ratios. The sales-based average ratio is computed by adding all assessed values and sale prices and then dividing the irst sum by the second. The intra-area price-related differential, like the COD, is an indicator of a speciic type of inequity. It cannot be used to calculate factors that will correct an inequity, nor will it indicate if a particular parcel of property has been assessed fairly. However, it will help locate the source of the inequity so a program can be formulated to correct the inequity. • Column 11 — 95% conidence level The range in which one can predict with 95 percent conidence the true median assessment level. As the interval widens, the measure of central tendency is less reliable. • Column 12 — Coeficient of concentration (COC) The coeficient of concentration (COC) is a measure of uniformity that measures the percentage of ratios that fall within a given percentage of the median. The percentage from the median used in IDOR’s calculations is 10. If 50 percent of the ratios fall within 10 percent (plus or minus) of the median, the COC is 50. A higher COC is an indicator of better assessment equity. Table 2, Urban Weighted Median Ratios Urban-weighted assessment levels are calculated using township aggregate assessment totals in con- junction with the median levels. This process ensures that each township’s median level of assessment has an impact on the countywide igure in proportion to the relative market value of its property. The urban-weighted assessment level is used in the computation of the state equalization factor. Before that factor is calculated, an adjustment is made to the ratio to account for any signiicant changes in as- sessments made by local assessing oficials since the data was collected. The steps in the weighting procedure are shown below. The aggregate assessed values for each catego- ry or area are obtained from the abstract of assessments, submitted by the county clerk after inal action by the board of review, but prior to state equalization. To prevent bias, any parcels having assessments greater than $999,999 are not included in the weighting process. The remaining assessed values are divided by the corresponding median ratio to obtain an estimated full market value of real estate for each category or area. The assessed values are added to a county urban total and then divided by the sum of the estimated full values. The result is an urban-weighted median that represents the best estimate of the average assessment level for urban property in the county. PUB-123 (R-01/10) Page 11 of 24 = Page 11 = Property Assessment and Equalization Steps in the weighting procedure (Amounts reported in thousands) Area Assessed value Median ratio Estimated full value Urban township 1 $ 1,648 25.00% $ 6,592 Urban township 2 10,450 31.62% 33,049 All other urban townships 3,105 28.75% 10,800 Urban total $15,203 $ 50,441 Urban weighted ratio: $15,203 ÷ $50,441 x 100% = 30.14% Table 3, Final Equalization Factors Example of Table 3: Example of Table 3, Final Equalization Factors Table 3, 2008 Final Equalization Factors 3-year 2008 Final Equalized County 2006 2007 2008 Average Equalization Assessment Factor Level County A 34.47 33.67 31.90 33.35 1.0000 33.33 County B 32.03 31.26 32.15 31.81 1.0478 33.33 County C 32.58 37.49 33.16 34.41 0.9686 33.33 IDOR is required to provide an equalization factor for each county that will equalize the level of assess- 1/3 ment at the statutory level of 33 percent of the fair cash value. The level of assessment to be equalized is the mean, or average, of the urban-weighted medians of the three years immediately preceding the as- sessment year, after adjustment for assessment changes through the current assessment year. The urban-weighted levels of assessment for the three years involved in the calculation of the equaliza- tion factor are shown in Columns 2 through 4. These levels have been adjusted for assessment changes, including those made by any board of review for the current assessment year. Column 5 indicates the mean of the urban-weighted medians for the three years. Column 6 shows the inal equalization factor and Column 7 shows the equalized level of assessment. Formulas for Sales Ratio Studies and Equalization Sales Ratio = Prior year assessed value current year sale price X 100% ÷ Coeficient of Dispersion (COD) = Average deviation median X 100% ÷ Median Absolute Deviation (MAD) = Median deviation median of sales ratios X 100% ÷ Coeficient of Concentration (COC) = No. of sales ratios within 10% of the median total no. of sales ratios X 100% ÷ Price-Related Differential (PRD) Sales-Based Average Ratio = Sum of assessed values sum of sales price X 100% ÷ Mean Assessment Ratio = Sum of the sales ratios number of ratios ÷ Price-Related Differential = Mean assessment ratio sales-based average ratio ÷ Equalization Factor = Desired level (33.33%) prior 3-year average median level ÷ Page 12 of 24 PUB-136 (R-01/10) Page 1 Page 1 = Page 12 = Property Assessment and Equalization Examples of Statistical Calculations Distribution of sales ratios Absolute Sales deviation from Assessment Sale price ratio the median $ 9,000 ÷ $ 45,000 = 20% 15 6,000 ÷ 30,000 = 20% 15 9,000 ÷ 30,000 = 30% 5 7,500 ÷ 25,000 = 30% 5 7,000 ÷ 20,000 = 35% 0 7,000 ÷ 20,000 = 35% 0 6,000 ÷ 15,000 = 40% 5 4,500 ÷ 10,000 = 45% 10 7,500 ÷ 15,000 = 50% 15 5,000 ÷ 10,000 = 50% 35 Total $68,500 $220,000 355% 85 Calculations ( derived from above data) Number of Transfers: 10 Median: 35 + 35 = 35% 2 First Quartile: 30% Third Quartile: 45% Lowest ratio: 20% Highest ratio: 50% Range: (50% - 20%) = 30% Coefficient of Dispersion (COD) Sum of absolute deviations from the median: 85 Average absolute deviation: 85 ÷ 10 = 8.5 COD: Average absolute deviation = 8.5 ÷ 35% = 24.3% Median Price-related Differential (PRD) Mean assessment ratio: Sum of ratios = 355% = 35.5% Number of ratios 10 Sales-based average ratio: Sum of assessments = 68,500 x 100% = 31.1% Sum of sale prices 220,000 Price-related differential: Mean assessment ratio = 35.5% = 1.14 Sales-based average ratio 31.1% Coefficient of Concentration (COC) (derived from distribution of sales ratio data) Median: 35 Department’s concentration percentage: 10% 35 x .90 = 31.50 35 x 1.10 = 38.50 Only 2 of the 10 ratios are in the range of 31.50 to 38.50; therefore, the COC is 20 percent. PUB-123 (R-01/10) Page 13 of 24 Page 1 = Page 13 = Property Assessment and Equalization How are sales ratio studies used? Sales ratio studies are used for a number of purposes. Computation of multipliers — Determing both county and township multipliers used in equalizing the level of assessments among counties (inter-county) and within the county (intra-county). Examples of intra-county multipliers include township, neighborhood, and class (residential, commercial, industrial, etc. ) multipliers. Review and appeal of assessments — Provides a measure of the average assessment level for a given geographic area or category of property against which assessments of individual parcels may be judged in determining the degree of over or under statement, if any. Diagnostic tool to evaluate local assessment practices — Local assessing oficials are required to use the sales ratio study to evaluate their assessment policies and make assessment changes to sales and non-sales so the inal assessments are at the uniform percentage of value. Determine the assessor bonus — To qualify for the assessor bonus award, the average median levels of assessments of the 1/3 prior 3 years must be between 31 percent and 1/3 35 percent and the COD must be below the appropriate COD as determined by the county’s population. Reimbursement to a county of a portion of S/A salary — To qualify for the reimbursement to the county, the average median levels of assessments of the 1/3 prior 3 years must be between 31 percent and 1/3 35 percent. Page 14 of 24 PUB-136 (R-01/10) = Page 14 = Property Assessment and Equalization Assessment Levels What is an “assessment level”? Do assessment levels vary? The percentage of fair cash value a property is as- Yes. Assessment levels may vary from the statutory 1/3 sessed is the “assessment level”. Illinois law requires 33 percent within or between assessment jurisdic- 1/3 the assessed value of non-farm property equal 33 tions within a county, and between counties. These percent of its fair cash value except for in Cook County. occur for many reasons including the large number of local assessing oficials with different value opin- How is level of assessment computed? ions, and the inherent dificulties of the assessment The level of assessments is computed by using the process ( e.g., pressure to keep assessments low, following steps to calculate a “sales ratio study” for lack of time and resources, ministerial errors, outdat- each county in the state. You must know the total ed valuations, changes in economic conditions). assessed values and total fair cash values of prop- erty in the county. Total assessed values for each Why must assessment levels be uniform? township are reported to IDOR on the counties’ Assessment levels must be uniform to ensure tentative and inal abstracts. Estimating the total equal distribution of the tax burden among taxpayers; that tax rate and bonded indebtedness limita- market value (Estimate of Full Value) is necessary tions are applied equally to local government and computed by dividing the total assessed value taxing bodies; and, for the township by the median level of assess- ? fair distribution of state grants-in-aid for educa- ments (as a decimal number). If a township had at least 25 usable sales, IDOR will calculate a median tion, highways, and public assistance. Assessed valuation is a component in the formulas used to level of assessment. If not, the remaining sales are calculate these distributions. placed in an “All Others” category from which a me- The following examples help clarify why uniform dian is calculated. Once both median levels have assessment levels provide equal distribution of the been determined, a county median is calculated to tax burden among taxpayers. determine the county’s state equalization factor. Example 1: Assessment level not uniform within Urban (non-farm) weighted assessment levels are assessment jurisdiction. Two homes with identical calculated by the township’s aggregate assessment market values of $150,000. totals in conjunction with the township’s median In valuing each property, the assessor estimates: levels. This ensures each township's median level House #1’s value = $144,000 of assessment has an impact on the county's me- House #2’s value = $162,000 dian level of assessment in proportion to the rela- 1/3 Level of assessments of 33 percent applied to tive market value of its property. each valuation: Urban weighted assessment levels are used in #1 assessed at $48,000 (32% of fair cash value) the state equalization factor after any adjustments to #2 assessed at $54,000 (36% of fair cash value) ratio(s), after considering any signiicant changes in assessments by local assessing oficials since the The owner of House #2 will have a higher tax bill data had been compiled. To avoid bias, parcels with although the true value is identical to House #1. assessments greater than $999,999 are deducted Example 2: Assessment level not uniform within before the weighting process. The remaining assess- the county. Two townships (A and B) within the same ment values are divided by the corresponding median county and school district. ratio to obtain an estimated fair cash value of property A assessed at average level of 20% of full value for each category or area. The assessed values are B assessed at average level of 40% of full value added to provide a county urban total assessed value. The sum of all estimated fair cash values provide Taxpayers in the township assessed at the higher level a county urban total estimated full value. The total would, on average, pay twice as much in school taxes as taxpayers of similar properties in the other township. assessed value is divided by the total estimated fair cash value for the county's median level of assess- Who must ensure uniform assessments? ment for the year. This urban weighted median repre- Both local assessment oficials (township assessors, sents the best estimate of the average assessment CCAOs, and county BOR) and IDOR are responsi- level for non-farm property in the county. ble for ensuring property assessments are uniform. PUB-123 (R-01/10) Page 15 of 24 = Page 15 = Property Assessment and Equalization Equalization What is equalization? county boards of review use equalization within the Equalization is the application of a uniform percentage county only (intra-county equalization). Local as- increase or decrease to assessed values of various ar- sessment oficials may equalize assessments within eas or classes of property to bring assessment levels, the county by class, area, and/or by township in or- 1/3 on average, to a uniform level of the market value (33 der to ensure that the median level of assessments percent). Both local assessment oficials and IDOR are 1/3 is at 33 percent of market value (fair cash value). responsible for equalizing assessment levels. Why do local assessors and boards of Two types of equalization: Intra-county: Multipliers issued within the county to review issue multipliers? equalize the level of assessments within that county. Local jurisdictions must focus on valuing all property “Intra-county equalization” is the work done by (uniformly and equitably), assuring all assessed local assessment oficials. values represent current market values. The assess- ment/sales ratio study becomes a tool of the county Inter-county: State-issued county multiplier used to evaluate assessment policies and make assess- to carry out the statutory responsibility of equalizing ment changes when warranted. Ideally, the inal the level of assessments among counties. assessments of all properties in the jurisdictions are “Inter-county equalization” is the work done by IDOR. then at a uniform percentage of value to provide an Equalization factors will not correct assessment ineq- equitable distribution of the property tax burden. uities between properties within an area or class. If the average three-year level of assessment for a county is Does the state force local assessment 1/3 • less than 33 percent, IDOR will certify an oficials to do local equalization? equalization factor (multiplier) greater than 1.0000. No; but the Property Tax Code states that they act 1/3 • greater than 33 percent, IDOR will certify an as the equalizing authority. Factors may be used equalization factor (multiplier) less than 1.0000 to raise or lower assessment levels based on the This is to bring the counties assessments levels, county’s independent monitoring of property trans- on average, to a uniform level of market value. fers, based on results of the sales ratio study per- Inter-county equalization of assessments is necessary to formed by IDOR, or based on the tentative multi- • maintain the statutory assessment level through- plier certiication. out the state, For example, a township assessor who monitors • provide a uniform basis for the distribution of state sales within a particular development may note that aid to schools and other state grant-in-aid programs, the sales prices are increasing and will apply a fac- • allow for an equitable distribution of the tax burden tor to ensure that the development is assessed at the in districts that lie in more than on county, and statutory level. Chief County Assessment Oficers and • provide a comparable base of r the applications County Boards of Review may notice similar trends. of tax rate and bonded indebtedness limitations Factors can be applied based on a geographic area for units of local government ( e.g., neighborhood, township), property character- Equalization of assessment levels within counties, istics ( e.g., lakefront lots, lots near a golf course), or intra-county equalization, is necessary to achieve type of property ( e.g., residential, commercial). equitable distribution of the tax burden, prior to Similarly, if IDOR’s sales ratio study and tentative mul- IDOR’s inter-county equalization. Local assessing tiplier calculations indicate that a particular township oficials are responsible for using the assessment/ is under-assessed, then local assessment oficials sales ratio study to evaluate their assessment poli- have two options: correct the assessment level for 1/3 the particular township (to raise assessments to 33 cies and to make any changes needed to ensure percent) or do nothing and apply the state multiplier to that inal assessments of all properties within their all properties. If the second option is chosen, the result jurisdictions relect a uniform percentage of value. 1/3 is that properties already assessed at 33 percent will be assessed at a higher percentage. IDOR’s role Do all counties use intra-county equalization? No. Every county but Cook County possesses is to ensure that the county-wide assessment level, on 1/3 this intra-county equalization authority. Township average, is 33 percent. assessors, chief county assessment oficers, and Page 16 of 24 PUB-136 (R-01/10) = Page 16 = Property Assessment and Equalization Must IDOR equalize assessments? Which years of sales are used when the Yes. IDOR is required by law to provide for each multiplier is calculated? county an equalization factor which will equalize Sales from the three years immediately before the the level of assessments at the statutory level of year for which the multiplier is calculated are used. 1/3 33 percent of fair market value. The level of as- For example, the 2009 multiplier is based on the sessments to be equalized is the mean, or aver- sales ratio studies from sales in 2006, 2007, and age, of the urban-weighted medians of the three 2008. Because the sales ratio study compares the years immediately before the assessment year, prior year assessed value to the current year sell- after adjustments for assessment changes through ing price, any reassessment work by the township the assessment year. assessor, CCAO, and BOR in subsequent years is also used when the multiplier is calculated. In Why is IDOR required to issue a state essence, the ratios are adjusted so that “credit” is multiplier? given when property is reassessed or local equal- The purpose of the state multiplier is to equalize ization factors are applied. assessments between counties (inter-county equal- ization). Inter-county equalization eliminates certain Why are three years’ worth of sales tax burden inequities among taxpayers who live ratios used? within the boundaries of taxing districts that overlap Using sales ratios from three years provides some two or more counties. It is not, however, a substitute predictability when the market is luctuating. It for proper intra-county equalization by local oficials. prevents extreme changes from happening in one IDOR's emphasis is slightly different from local con- year. When the market is rising rapidly, the effect is cerns. The state's concern is developing inter-county to “smooth” out the increases and owners are not equalization and does not focus on inconsistencies forced to pay a dramatic increase in a single year. that may exist among individual properties. The same is true when the market decreases. This helps taxing districts with determining their budgets How does the state calculate the county- and how much must be raised from property taxes. wide multiplier? As explained on Page 7, IDOR uses informa- How does the state multiplier affect as- tion from the Real Estate Transfer Declarations sessments? (RETD’s) to develop sales ratio studies. Assessed The county clerk must multiply the assessed value values from the Tentative Abstract are used to com- of each parcel of non-farm property, as corrected pute the tentative multiplier and assessed values and equalized by local assessment oficers or the from the Final Abstract are used to compute the county BOR, by the state certiied Multiplier. inal multiplier. If the average three-year level of as- 1/3 Example based on a $90,000 home: sessments for a county is less than 33 percent, County A - Multiplier is 1.0000 IDOR will certify an equalization factor (multiplier) greater than 1.0000 to bring the counties assess- Home assessed at $30,000 with an EAV of $30,000 ments levels, on average, to a uniform level of ($30,000 x 1.0000 = $30,000) market value. If the average three-year level of as- 1/3 County B - Multiplier is 2.0000 sessments is greater than 33 percent, IDOR will Home assessed at $15,000 with an EAV of $30,000. certify an equalization factor less than 1.0000 to ($15,000 x 2.0000 = $30,000) bring the counties assessments levels, on average, to a uniform level of market value. Equalization has eliminated the effects of the origi- nal underassessment in County B by the use of How is the state multiplier computed? the equalization factor (multiplier). This new value The preferred method is to divide the county’s total is called the “equalized assessed value.” By law, assessed value reported to IDOR by the county’s the equalization factor (multiplier) is not applied to total estimated full value (based on the assessment farm acreage, farm buildings, or coal rights, which levels from the sales ratio study). Only non-farm are assessed using alternate assessment methods values are used. speciied in Illinois law. PUB-123 (R-01/10) Page 17 of 24 = Page 17 = Property Assessment and Equalization Page 18 of 24 PUB-136 (R-01/10) = Page 18 = Property Assessment and Equalization Applicable Statutes Property Tax Code (4) If the person has served as a supervisor of assessments for (35 ILCS 200/1 1) 12 years or more, a Certiied Illinois Assessing Oficial certiicate Sec. 1 1. Short title. This Act may be cited as the Property Tax Code. from the Illinois Property Assessment Institute with a minimum (Source: P.A. 88 455.) of 360 additional hours of successfully completed courses ap- Deines “fair cash value” proved by the Department if at least 180 of the course hours (35 ILCS 200/1 50) required a written examination. Sec. 1 50. Fair cash value. The amount for which a property In addition, a person must have had at least 2 years' experience can be sold in the due course of business and trade, not under in the ield of property sales, assessments, inance or appraisals duress, between a willing buyer and a willing seller. and must have passed an examination conducted by the Depart- (Source: P.A. 88 455.) ment to determine his or her competence to hold the ofice. The 1/3 Deines “33 percent” examination may be conducted by the Department at a con- (35 ILCS 200/1 55) venient location in the county or region. Notice of the time and 1/3 Sec. 1 55. 33 %. One third of the fair cash value of property, place shall be given by publication in a newspaper of general cir- as determined by the Department's sales ratio studies for the 3 culation in the counties, at least one week prior to the exam. The most recent years preceding the assessment year, adjusted to Department shall certify to the county board a list of the names take into account any changes in assessment levels implement- and scores of persons who pass the examination. The Depart- ed since the data for the studies were collected. ment may provide by rule the maximum time that the name of a (Source: P.A. 86 1481; 87 877; 88 455.) person who has passed the examination will be included on a list of persons eligible for appointment or election. The term of ofice Deines “property” (35 ILCS 200/1 130) shall be 4 years from the date of appointment and until a succes- Sec. 1 130. Property; real property; real estate; land; tract; lot. sor is appointed and qualiied. The land itself, with all things contained therein, and also all build- (Source: P.A. 92 667, eff. 7 16 02.) ings, structures and improvements, and other permanent ixtures thereon, including all oil, gas, coal and other minerals in the IDOR responsibility to equalize assessments land and the right to remove oil, gas and other minerals, exclud- (35 ILCS 200/Art. 8 heading) ing coal, from the land, and all rights and privileges belonging Article 8. Department of Revenue or pertaining thereto, except where otherwise speciied by this Sec. 8 5. General duties. The Department shall: Code. Included therein is any vehicle or similar portable structure (1) Direct and supervise the assessment of all property so that used or so constructed as to permit its use as a dwelling place, if all assessments are made relatively just and equal. the structure is resting in whole on a permanent foundation. Not included therein are low income housing tax credits authorized by (2) Confer with, advise and assist local assessment oficers rela- Section 42 of the Internal Revenue Code, 26 U.S.C. 42. tive to the performance of their duties. (Source: P.A. 91 502, eff. 8 13 99.) (3) Prescribe for assessment oficers general rules, relative to the assessment of property, which rules shall be binding upon Supervisor of Assessments (35 ILCS 200/Art. 3 heading) all assessment oficers until reversed, annulled or modiied by a Article 3. County Assessment Oficials court of competent jurisdiction. Sec. 3 5. Supervisor of assessments. In counties with less than (4) Prescribe or approve forms for returns, reports, complaints, 3,000,000 inhabitants and in which no county assessor has been notices and other documents, and the contents of required iles elected under Section 3 45, there shall be a county supervisor of as- and records authorized or required by law or by rule and regula- sessments, either appointed as provided in this Section, or elected. In counties with less than 3,000,000 inhabitants and not having tion of the Department. All assessing oficers shall use true cop- an elected county assessor or an elected supervisor of assess- ies of such forms or reasonable electronic facsimiles of them. ments, the ofice of supervisor of assessments shall be illed by (5) Assess all property owned by or used by railroad companies appointment by the presiding oficer of the county board with the operating within this State, except non carrier real estate. advice and consent of the county board. To be eligible for appointment or to be eligible to ile nomination (6) Equalize the assessment of property among the different papers or participate as a candidate in any primary or general counties of the State and ix the aggregate amount of the as- election for, or be elected to, the ofice of supervisor of assess- sessment for each county upon which taxes shall be extended in ments, or to enter upon the duties of the ofice, a person must each year; and publish a statement of the methods and proce- possess one of the following qualiications as certiied by the individual to the county clerk: dures used in making such equalization. (1) A Certiied Illinois Assessing Oficial certiicate from the Il- (7) Keep a correct record of its acts relative to the assessment of linois Property Assessment Institute, plus the additional training property and the equalization of assessments. The record shall be required for additional compensation under Section 4 10. available for public inspection and copies shall be distributed to (2) A Certiied Assessment Evaluator certiicate from the Interna- any person upon request and payment of the cost of reproduction. tional Association of Assessing Oficers. (8) Grant or deny non homestead exemptions under Sections 16 (3) A Member of the Appraisal Institute (MAI), Residential Mem- 70 and 16 130. ber (RM), Senior Real Estate Analyst (SREA), Senior Real Prop- (Source: P.A. 91 357, eff. 7 29 99.) erty Analyst (SRPA) or Senior Residential Analyst (SRA) certii- cate from the Appraisal Institute or its predecessor organizations. PUB-123 (R-01/10) Page 19 of 24 = Page 19 = Property Assessment and Equalization (continued) Applicable Statutes Statutory level of assessments value of the property and the assessed valuations at which the (35 ILCS 200/Art. 9 Div. 4 heading) property is listed for each township, multi township or assess- Division 4. Valuation procedures ment district. To make this analysis, he or she shall use property Sec. 9 145. Statutory level of assessment. Except in counties transfers, property appraisals, and other means as he or she with more than 200,000 inhabitants which classify property for deems proper and reasonable. purposes of taxation, property shall be valued as follows: With the ratio determined for each township or assessment (a) Each tract or lot of property shall be valued at 33 1/3% of its district, the supervisor of assessments shall then determine the fair cash value. percentage to be added to or deducted from the aggregate as- sessments in each township or assessment district, other than (b) Each taxable leasehold estate shall be valued at 33 1/3% of property assessed under Sections 10 110 through 10 140 and its fair cash value. 10 170 through 10 200, in order to produce a ratio of assessed (c) Each building or structure which is located on the right of value to fair cash value of 33 1/3%. That percentage shall be way of any canal, railroad or other company leased or granted to issued as an equalization factor for each township or assess- another company or person for a term of years, shall be valued ment district within each county served by the chief county at 33 1/3% of its fair cash value. assessment oficer. The assessment oficer shall then change (d) Any property on which there is a coal or other mine, or stone the assessment of each parcel of property by application of the or other quarry, shall be valued at 33 1/3% of its fair cash value. equalization factor. Oil, gas and other minerals, except coal, shall have value and be (Source: P.A. 88 455; 88 670, eff. 12 2 94.) assessed separately at 33 1/3% of the fair cash value of such oil, gas and other minerals. Coal shall be assessed separately at 33 Publication of BOR equalization factor 1/3% of the coal reserve economic value, as provided in Sec- (35 ILCS 200/12 40) tions 10 170 through 10 200. Sec. 12 40. Notice provisions; equalization by board of review. (e) In the assessment of property encumbered by public ease- The assessment of any class of property or of any township ment, any depreciation occasioned by such easement shall be or multi township or part thereof, or any portion of the county, deducted in the valuation of such property. Any property dedi- shall not be increased by an equalization factor applied by a cated as a nature preserve or as a nature preserve buffer under board of review until the board has made one publication of the Illinois Natural Areas Preservation Act, for the purposes of notice in a newspaper of general circulation published in the this paragraph, is encumbered by a public easement and shall county, of such proposed increase and has given an oppor- be depreciated for assessment purposes to a level at which its tunity to be heard, within 20 days of the publication date, to valuation shall be $1 per acre or portion thereof. This Section is the owners of the property affected or any one representing subject to and modiied by Sections 10 110 through 10 140 and them, and other citizens of the territory. The assessor or chief 11 5 through 11 65. county assessment oficer shall have like opportunity to be (Source: P.A. 91 497, eff. 1 1 00.) heard thereon, except where such action is taken in individual cases upon complaint. The board shall hear any person, upon Township assessor or CCAO authority to equalize assess- request, in opposition to a proposed reduction in the assess- ments within or between townships or by class of property ment of any person or territory. (35 ILCS 200/9 205) (Source: P.A. 86 345; 86 413; 86 1028; 86 1481; 88 455.) Sec. 9 205. Equalization. When deemed necessary to equalize Mailed notice to property owner of BOR equalization factor assessments between or within townships or between classes of property, or when deemed necessary to raise or lower assess- (35 ILCS 200/12 50) ments within a county or any part thereof to the level prescribed Sec. 12 50. Mailed notice to taxpayer after change by board of by law, changes in individual assessments may be made by a review or board of appeals. If inal board of review or board of township assessor or chief county assessment oficer, under appeals action regarding any property, including equalization Section 9 75, by application of a percentage increase or de- under Section 16 60 or Section 16 65, results in an increased crease to each assessment. or decreased assessment, the board shall mail a notice to the (Source: P.A. 81 1034; 88 455.) taxpayer, at his or her address as it appears in the assessment records, whose property is affected by such action, and in the County equalization by CCAO case of a complaint iled with a board of review under Section 16 (35 ILCS 200/9 210) 25 or 16 115, to the taxing body iling the complaint. A copy shall Sec. 9 210. Equalization by chief county assessment oficer; be given to the assessor or chief county assessment oficer if his counties of less than 3,000,000. The chief county assessment or her assessment was reversed or modiied by the board. Writ- oficer in a county with less than 3,000,000 inhabitants shall act ten notice shall also be given to any taxpayer who iled a com- as an equalizing authority for each county in which he or she plaint in writing with the board and whose assessment was not serves. The oficer shall examine the assessments in the county changed. The notice shall set forth the assessed value prior to and shall equalize the assessments by increasing or reducing board action; the assessed value after inal board action but prior the entire assessment of property in the county or any area to any equalization; and the assessed value as equalized by therein or of any class of property, so that the assessments will the board, if the board equalizes. This notice shall state that the be at 33 1/3% of fair cash value. The equalization process and value as certiied to the county clerk by the board will be the lo- analysis described in this Section shall apply to all property ex- cally assessed value of the property for that year and each suc- cept farm and coal properties assessed under Sections 10 110 ceeding year, unless revised in a succeeding year in the manner through 10 140 and 10 170 through 10 200. provided in this Code. The written notice shall also set forth For each township or assessment district in the county, the speciically the facts upon which the board's decision is based. supervisor of assessments shall annually determine the percent- In counties with less than 3,000,000 inhabitants, the notice age relationship between the estimated 33 1/3% of the fair cash shall also contain the following statement: "You may appeal this decision to the Property Tax Appeal Board by iling a petition for Page 20 of 24 PUB-136 (R-01/10) = Page 20 = Property Assessment and Equalization (continued) Applicable Statutes review with the Property Tax Appeal Board within 30 days after aggregate assessment on property subject to local jurisdiction in this notice is mailed to you or your agent, or is personally served order to produce a ratio of assessed value to 33 1/3% of the fair upon you or your agent". In counties with 3,000,000 or more cash value equivalent to 100%, the board shall not, in any one year, increase or decrease the aggregate assessment of any inhabitants, the notice shall also contain the following statement: assessment district by more than 25% of the equalized valua- "You may appeal this decision to the Property Tax Appeal Board tion of the district for the previous year, except that additions, by iling a petition for review with the Property Tax Appeal Board deletions or depletions to the taxable property shall be excluded within 30 days after the date of this notice or within 30 days after in computing the 25% limitation. The board shall complete the the date that the Board of Review transmits to the county asses- equalization by the date prescribed in Section 16 35 for the sor pursuant to Section 16 125 its inal action on the township board's adjournment, and, within 10 days thereafter, shall report in which your property is located, whichever is later". The Board the results of its work under this Section to the Department. At least 30 days prior to its adjournment, the board shall publish shall publish its transmittal date of inal action on each township a notice declaring whether it intends to equalize assessments in at least one newspaper of general circulation in the county. as provided in this Section. The notice shall be published in a The changes made by this amendatory Act of the 91st General newspaper of general circulation in the county. If the board fails Assembly apply to the 1999 assessment year and thereafter. to report to the Department within the required time, or if the (Source: P.A. 91 393, eff. 7 30 99; 91 425, eff. 8 6 99.) report discloses that the board has failed to make a proper and adequate equalization of assessments, the Department shall BOR equalization authority after publication direct, determine, and supervise the assessment so that all as- (35 ILCS 200/16 60) sessments of property are relatively just and equal as provided Sec. 16 60. Equalization within counties Publication and hear- in Section 8 5. ing. After notice and hearing as required by Section 12 40, the (Source: P.A. 84 1343; 88 455.) board of review may increase or reduce the entire assessment, State equalization process (equalization among counties) or the assessment of any class included therein, if, in its opinion, the assessment has not been made upon the proper basis. The (35 ILCS 200/Art. 17 heading) board may also equalize the assessment in any multi township Article 17. State Equalization Process or township, or part thereof, or any portion of the county. Sec. 17 5. Equalization among counties. The Department shall act as an equalizing authority. It shall examine the abstracts of (Source: P.A. 86 345; 86 413; 86 1028; 86 1481; 88 455.) property assessed for taxation in the counties and in the assess- BOR equalization process ment districts in counties having assessment districts, as re- turned by the county clerks, and shall equalize the assessments (35 ILCS 200/16 65) between counties as provided in this Code. Except as hereinafter Sec. 16 65. Equalization process. The board of review shall act provided, the Department shall lower or raise the total assessed as an equalizing authority, if after equalization by the supervi- value of property in each county as returned by the county clerk, sor of assessments the equalized assessed value of property in other than property assessed under Sections 10 110 through 10 the county is not 33 1/3% of the total fair cash value. The board 140 and 10 170 through 10 200, so that the property will be as- shall, after notice and hearing as required by Section 12 40, sessed at 33 1/3% of its fair cash value. lower or raise the total assessed value of property in any assess- The Department shall annually determine the percentage rela- ment district within the county so that the property, other than tionship, for each county of the State, between the valuations at farm and coal property assessed under Sections 10 110 through which locally assessed property, other than property assessed 10 140 and Sections 10 170 through 10 200, will be assessed at under the Sections 10 110 through 10 140 and 10 170 through 33 1/3% of its fair cash value. 10 200, as listed by assessors and revised by boards of review, For each assessment district of the county, the board of review and the estimated 33 1/3% of the fair cash value of the property. shall annually determine the percentage relationship between To make this analysis, the Department shall use property trans- the valuations at which property other than farm and coal prop- fers, property appraisals, and other means as it deems proper erty is listed and the estimated 33 1/3% of the fair cash value of and reasonable. such property. To make this analysis, the board shall use at least With the ratio determined for each county, the Department shall 25 property transfers, or a combination of at least 25 property then determine the percentage to be added to or deducted from transfers and property appraisals, such information as may be the aggregate reviewed assessment on property subject to local submitted by interested taxing bodies, or any other means as it assessment jurisdiction, other than property assessed under the deems proper and reasonable. If there are not 25 property trans- Sections cited above, to produce a ratio of assessed value to 33 fers available, or if these 25 property transfers do not represent 1/3% of the fair cash value equivalent to 100%. a fair sample of the types of properties and their proportional (Source: P.A. 91 555, eff. 1 1 00.) distribution in the assessment district, the board shall select a random sample of properties of a number necessary to provide Sales ratio studies a combination of at least 25 property transfers and property (35 ILCS 200/17 10) appraisals as much as possible representative of the entire as- Sec. 17 10. Sales ratio studies. The Department shall moni- sessment district, and provide for their appraisal. The township or tor the quality of local assessments by designing, preparing multi township assessor shall be notiied of and participate in the and using ratio studies, and shall use the results as the basis deliberations and determinations. for equalization decisions. In compiling sales ratio studies, the With the ratio determined for each assessment district, the board Department shall exclude from the reported sales price of any shall ascertain the amount to be added or deducted from the property any amounts included for personal property and, for aggregate assessment on property subject to local assessment sales occurring through December 31, 1999, shall exclude seller jurisdiction, other than farm and coal property, to produce a ratio paid points. The Department shall not include in its sales ratio of assessed value to 33 1/3% of the fair cash value equivalent to studies sales of property which have been platted and for which 100%. However, in determining the amount to be added to the PUB-123 (R-01/10) Page 21 of 24 = Page 21 = Property Assessment and Equalization (continued) Applicable Statutes an increase in the assessed valuation is restricted by Section cation. The notice shall state the date and time of the hearing, 10 30. The Department shall not include in its sales ratio studies which shall be held in either Chicago or Springield, the basis for the initial sale of residential property that has been converted to the estimate of the Department, and further information as the condominium property. Department may prescribe. The Department shall, after giving When the declaration required under the Real Estate Transfer a hearing to all interested parties and opportunity for submitting Tax Law contains inancing information required under Section testimony and evidence in support of or adverse to the estimate 31 25, the Department shall adjust sales prices to exclude seller as the Department considers requisite, either conirm or revise paid points and shall adjust sales prices to "cash value" when the estimate so as to correctly represent the considered judg- seller related inancing is used that is different than the prevail- ment of the Department respecting the estimated percentage ing cost of cash. The prevailing cost of cash for sales occurring to be added to or deducted from the aggregate assessment of on or after January 1, 1992 shall be established as the monthly all locally assessed property in the county except property as- average 30 year ixed Primary Mortgage Market Survey rate for sessed under Sections 10 110 through 10 140 or 10 170 through the North Central Region as published weekly by the Federal 10 200. Within 30 days after the conclusion of the hearing the Home Loan Mortgage Corporation, as computed by the Depart- Department shall mail to the County Clerk, by certiied mail, its ment, or such other rate as determined by the Department. This determination with respect to such estimated percentage to be rate shall be known as the survey rate. For sales occurring on or added to or deducted from the aggregate assessment. after January 1, 1992, through December 31, 1999, adjustments (Source: P.A. 91 555, eff. 1 1 00.) in the prevailing cost of cash shall be made only after the survey rate has been at or above 13% for 12 consecutive months and Application of equalization factor will continue until the survey rate has been below 13% for 12 (35 ILCS 200/17 25) consecutive months. For sales occurring on or after January 1, Sec. 17 25. Application of inal equalization factor. The as- 2000, adjustments for seller paid points and adjustments in the sessments of all property, other than property assessed under prevailing cost of cash shall be made only after the survey rate Sections 10 110 through 10 140 and 10 170 through 10 200, as has been at or above 13% for 12 consecutive months and will returned by the county clerks, shall be equalized by adding to continue until the survey rate has been below 13% for 12 con- the aggregate assessed value thereof in every county in which secutive months. The Department shall make public its adjust- the Department inds the valuation to be less than 33 1/3% of the ment procedure upon request. fair cash value of the property, the rate per cent which will raise (Source: P.A. 91 555, eff. 1 1 00.) the aggregate assessed valuation to 33 1/3% of fair cash value, and by deducting from the aggregate assessed value thereof, in Tentative equalization factor every county in which the Department inds the valuation to be (35 ILCS 200/17-15) more than 33 1/3% of the fair cash value, the rate per cent which Sec. 17 15. Tentative equalization factor. The Department shall will reduce the aggregate assessed valuation to 33 1/3% of fair forward to the County Clerk of each county in each year its es- cash value. timate of the percentage, established under Section 17 5, to be However, no equalization factor shall be certiied by the Depart- added to or deducted from the aggregate of the locally assessed ment to raise or reduce the aggregate assessed value of any property in that county, other than property assessed under county in which the aggregate assessed value of property other Sections 10 110 through 10 140 and 10 170 through 10 200. than that assessed under the Sections cited above, is more than The percentage relationship to be certiied to each county by the 99% and less than 101% of 33 1/3% of fair Department as provided by Section 17 25 shall be determined by (Source: P.A. 91 555, eff. 1 1 00.) the ratio between the percentage estimate so made and forward- ed, as provided by this Section, and the level of assessments of Certiication of inal equalization factor the assessed valuations as made by the assessors and thereaf- (35 ILCS 200/17 30) ter inally revised by the board of review of that county. Such es- Sec. 17 30. Certiication of inal equalization factor. When the timate shall be forwarded by the Department to the County Clerk Department has completed its equalization of assessments in of any County within 15 days after the chief county assessment each year, it shall certify to each county clerk the percentage oficer iles with the Department an abstract of the assessments inally determined by it to be added to or deducted from the listed of the locally assessed property in the county, as inally revised. or assessed valuation of property in the county as returned by The abstract shall be in substantially the same form as required the county clerk. of the County Clerk by Sections 9 250 and 9 255 after comple- (Source: P.A. 91 555, eff. 1 1 00.) tion of the revisions thereafter to be made by the board of review of the county, except that the abstract shall specify separately Publication of inal equalization factor the amount of omitted property, and the amount of improvements (35 ILCS 200/17 40) upon property assessed for the irst time in that year. The chief Sec. 17 40. Publication of inal equalization factor. The Depart- county assessment oficer shall forward the abstract to the De- ment shall publish in each county the percentage and equaliza- partment within 30 days after returning the county assessment tion factor certiied to each county clerk under Section 17 30. books to the county board of review. If the percentage differs from the percentage derived from the (Source: P.A. 91 555, eff. 1 1 00.) initial estimate certiied under Section 17 15, a statement as to the basis for the inal percentage shall also be published. The Tentative equalization factor hearing Department shall provide the statement to any member of the (35 ILCS 200/17 20) public upon request. Sec. 17 20. Hearing on tentative equalization factor. The Depart- (Source: P.A. 79 703; 88 455.) ment shall, after publishing its tentative equalization factor and giving notice of hearing to the public in a newspaper of general circulation in the county, hold a hearing on its estimate not less than 10 days nor more than 30 days from the date of the publi- Page 22 of 24 PUB-136 (R-01/10) = Page 22 = Property Assessment and Equalization (continued) Applicable Statutes County clerk applies inal equalization factor value determined for the property. (35 ILCS 200/18 40) In all counties, the statement must include information that cer- Sec. 18 40. Application of equalization factor. Each county clerk tain taxpayers may be eligible for tax exemptions, abatements, shall apply the percentages certiied by the Department and and other assistance programs and that, for more information, enter the equalized valuations in the columns provided for that taxpayers should consult with the ofice of their township or purpose. The percentages certiied by the Department shall be county assessor and with the Illinois Department of Revenue. applied to the assessed valuation of property, as corrected and In all counties, the statement shall include information that equalized by the board of review, board of appeals, or local as- certain taxpayers may be eligible for the Senior Citizens and sessment oficers. In all cases of extension of valuations where Disabled Persons Property Tax Relief and Pharmaceutical As- the equalized valuations are fractional, the clerk shall reject all sistance Act and that applications are available from the Illinois fractions that fall below 50¢. Fractions of 50¢ or more shall be Department on Aging. extended as $1. In counties which use the estimated or accelerated billing If the equalized assessed value of any property is less than $150 methods, these statements shall only be provided with the inal for an assessment year, the county clerk may declare the imposi- installment of taxes due. The provisions of this Section create a tion and collection of all tax for that year to be extended on the mandatory statutory duty. They are not merely directory or dis- parcel to be unfeasible and cancelled. No tax shall be extended cretionary. The failure or neglect of the collector to mail the bill, or or collected on the parcel for that year and the parcel shall not be the failure of the taxpayer to receive the bill, shall not affect the sold for delinquent taxes. validity of any tax, or the liability for the payment of any tax. (Source: P.A. 85 312; 88 455.) (Source: P.A. 95 644, eff. 10 12 07.) County and state equalization factor printed on tax bill (35 ILCS 200/20 15) Sec. 20 15. Information on bill or separate statement. There shall be printed on each bill, or on a separate slip which shall be mailed with the bill: (a) a statement itemizing the rate at which taxes have been extended for each of the taxing districts in the county in whose district the property is located, and in those counties utilizing electronic data processing equipment the dollar amount of tax due from the person assessed allocable to each of those taxing districts, including a separate statement of the dollar amount of tax due which is allocable to a tax levied under the Illinois Local Library Act or to any other tax levied by a municipality or town- ship for public library purposes, (b) a separate statement for each of the taxing districts of the dollar amount of tax due which is allocable to a tax levied under the Illinois Pension Code or to any other tax levied by a munici- pality or township for public pension or retirement purposes, (c) the total tax rate, (d) the total amount of tax due, and (e) the amount by which the total tax and the tax allocable to each taxing district differs from the taxpayer's last prior tax bill. The county treasurer shall ensure that only those taxing districts in which a parcel of property is located shall be listed on the bill for that property. In all counties the statement shall also provide: (1) the property index number or other suitable description, (2) the assessment of the property, (3) the equalization factors imposed by the county and by the Department, and (4) the equalized assessment resulting from the application of the equalization factors to the basic assessment. In all counties which do not classify property for purposes of taxation, for property on which a single family residence is situ- ated the statement shall also include a statement to relect the fair cash value determined for the property. In all counties which classify property for purposes of taxation in accordance with Section 4 of Article IX of the Illinois Constitution, for parcels of residential property in the lowest assessment classiication the statement shall also include a statement to relect the fair cash PUB-123 (R-01/10) Page 23 of 24 = Page 23 = = Page 24 =