Property taxes likely to rise with Broadway upzoning - News Star

Benefits to businesses may be illusionary; no housing rise seen

BY BOB ZULEY - News Star - July 16, 2025 (pdf)

The City is hoping to move ahead with the Broadway Upzoning framework despite a lack of studies, planning, neighborhood cooperation and policy implementation. Any benefits the City touts may be illusionary.

Instead, neighbors say this is a ham-handed, bulldozer-approach befitting an insider-deal charade thrust upon the residents and stakeholders of Edgewater who feel they lack an elected ward spokesperson to speak as an advocate on their behalf.

What the City is unlikely to tell Edgewater stakeholders is the apposite destruction of community businesses and rising property taxes.

Andrea Raila is a specialist in property taxes and a former candidate for Cook County Tax Assessor in 2018. She is a senior tax analyst and property management instructor at Raila & Associates, P.C. She resides in Edgewater.

Raila says that in the valuation of commercial property, the Cook County Assessor specifically considers the potential highest and best use of a property under its current zoning. So a property with a B3-5 zoning would have a significantly greater development potential than a property zoned B1-2, thus a higher property value and therefore higher property taxes.

However, Illinois Policy points out in a 2023 study that Chicago had the second highest commercial property taxes in the U.S. Chicago’s property tax rate of 3.78% is more than double the U.S. average for the largest cities in each state according to a study from the Lincoln Institute of Land Policy and the Minnesota Center for Fiscal Excellence.

What this suggests is that the owners of commercial properties facing higher property taxes may find it beneficial to sell their properties to developers.

In an independent report done by Yonah Freemark entitled “Upzoning Chicago: Impacts of a Zoning Reform on Property Values on Housing Construction,” and published in Urban Affairs Review, Freemark studies “recent Chicago upzonings that increased allowed densities and reduced parking requirements in a manner exogenous of development plans and neighborhood characteristics.”

The Broadway Upzoning framework is about increasing building height and density while allowing for reduced parking requirements in this Transit Oriented Development [TOD] zone.

Freemark “... detect[ed] significant, robust increases in values for transactions on parcels that received a boost in allowed building size. [He] also identified value increases for residential condominiums, indicating that upzoning increases prices for existing housing units.” [Freemark indicated that it seems reasonable to extrapolate that whatever forces changed the prices of owned units would also affect rented ones.]“I find no impacts of the reforms, however, on the number of newly permitted dwellings over five years. As such, I demonstrate that the short-term, local level impacts of upzoning are higher property taxes but no additional new housing construction.”

Freemark found that “... one effect of upzoning is a short-term increase in property transaction prices. First, the upzone for increased construction (density classes) quickly increased transaction values.”

“This is a sign that land prices adjusted to the expanded ability to build, providing a one-time boost to incumbent landlords and suggested interest in future developments at higher density.”

“Second, the finding that the reduction in parking requirements (parking classes) had a greater impact on the value of vacant land suggests that the upzoning largest impact will be on land ripe for building.”

“An increase in housing unit-level values may suggest that affordability for potential new owners on affected parcels declined with upzoning,” Freemark wrote.

This is what critical thinkers not aligned with City Hall have been saying since the Broadway Upzoning Framework debacle was announced in the Winter of 2024. There is still time to pause the rush to upzone and study the matter responsibly, if the political will can be found.