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In a recurring feature, the Reader will conduct 15-minute interviews with candidates running for city, county, state, and federal offices that represent Illinois. First up: Fritz Kaegi, a candidate in the Cook County assessor's race.
Former investment analyst Fritz Kaegi is running a largely self-funded campaign for Cook County assessor on a progressive platform against the embattled incumbent, Joseph Berrios. A recent series of investigations by the Chicago Tribune and ProPublica Illinois revealed that under Berrios property tax assessments in Cook County have been grossly unfair, resulting in higher property tax bills for lower-income homeowners and small businesses. Meanwhile, Berrios has received millions in campaign contributions from law firms that represent the wealthiest individuals and businesses seeking to lower their property taxes.
While on a break from phone-banking recently, Kaegi—a 46-year-old Hyde Park native who now resides in Oak Park—spoke about how working in finance in Russia fueled his commitment to Chicago, why renters should also care about property taxes, and what he's learned about power and machine politics while campaigning against Berrios.
What were you up to in Russia in the 1990s?
[Kaegi, in rusty Russian] You speak Russian? This experience was very important for my career. [In English] I had a Watson Fellowship that was about researching the emergence of private banks from this formally planned economy. I was interested in it from the point of view of an economics student: What happens when you have a command economy and it suddenly transitions, and how do banks fit in? I studied that emergence in '93 and '94. That's right when they were starting to privatize everything. That got me interested in investing: How do you try to value, say, an old asset like a candy plant that's in a very risky country where you can't trust the accounting? That got me interested in how you value things as an investor, how you take into account risk, and then I worked as an analyst for a brokerage there called Brunswick, focusing on steel, and it was a really interesting time. My job was to go out and try to figure out what was going on at all these different steel companies in Cherepovets, Magnitogorsk, Orsk—all of these famous steel towns.
Famous for the oligarchical takeovers too.
Yes, right, and what I saw was incredible, horrible corporate governance, so we generally advised not to invest in these companies. I was the youngest guy on the team. Our job was to give advice to foreign investors: Should you invest in these companies about which you don't know anything? We're trying to find information and we'd find out in principal this company has pretty good assets but it has a management that will cheat you and rip you off, so you shouldn't buy their stock. I was there at a time when there was some hopefulness—'96, '97, '98—and then it all collapsed. I was there when the crisis hit. I had friends who lost money in the banks. The government defaulted on its bonds. We were all fired. I was fired. I told my boss I was about to apply to business school, and he said that's good because we're all about to be fired. When the government's defaulting on its bonds it's total chaos. It made quite an impression on me because you saw these hopeful signs of an emerging democracy and there was a semblance of new companies being formed, optimism, free press, some democracy going on in local elections. And then because of cynicism, corruption, bad luck, and bad leadership it all fell apart. And it fell like a pear right into the hands of Vladimir Putin.
It's also when the gap between very rich people and everyone else in Russia became a chasm, and things have stayed that way.
Yes, because of a government choice. The government didn't have to choose to do things the way they did. They were so cavalier about the global libertarian philosophy, having no government intervention, that was shown to be wrong. You need the government institutions as a check on corruption.
That experience of being in a country where I was an observer of bad things happening but didn't have a voice because I wasn't a citizen—that made me think a lot about what life is about. I said I want to come back to my country, I want to go back to my home, to Chicago. I knew I wanted to go to Stanford business school, but I always wanted to come back. In the fall of 1998 is what fixed in my mind that I'm coming back here and I'm gonna work in a place that I care about. So many of the people that I worked with were driven out of the country—native Russians who would've been in the heart of the middle class.
Why should renters care about the assessor race? How does the property assessment debacle under Berrios affect them?
Renters are about half of the electorate in Cook County, and they're just as affected by the property tax system as the owners are because it's inside your rent. The person who owns your building has to pay property taxes and they pass it on to you. Actually, renters are even more affected by assessment issues because they don't get the exemptions available to property owners. If you're a property owner in a neighborhood that's gentrifying you get some benefits. You can get the long-term residential freeze. But if you're renter you don't get that, so if you get dramatic changes in assessment happening, especially in changing housing values, you should care. You should care about the property tax assessment system because gentrification can lead to you being displaced from your home as a renter. So that's one thing. Also, if your community is losing people because of overassessment, if people are being displaced, that affects you. Think of all the things that people who have been in a community for a long time do and contribute, so renters really should care. Renters also are involved in working in those communities, and if you have businesses that are disinvested or are displaced because of overassessment, that decreases the amount of jobs that are available.
I'm curious if it's the same for large multifamily buildings, large properties with more than 50 units, not just mom-and-pop landlords. Do you have a sense of how big corporate landlords in the city play into the system or are potentially benefiting from this unfair assessment system?
I have not looked at what the assessment rate for multiunit properties is versus single-family residential. That's an interesting question. I'd like to know what the difference is. I would surmise that because big multiunit residential owners would have a bigger incentive to hire a property tax lawyer, they might be more entrenched in the appeals culture. But I would want to see data on it. That would be my guess.
There's so much technical information when it comes to how property taxes are assessed. Even the reporters doing these investigations are grappling with how to get to the heart of the matter behind the numbers and the jargon. How do you do it, especially when you have a limited amount of time to capture someone's attention?
We try not to get lost in the minutiae. You gotta take a step back and say, "OK, we have a system where our current assessor is largely financed by property tax appeals lawyers, who mainly deliver value to and whose principal clients are downtown commercial property owners. And guess what? They're dramatically underassessed. And guess who makes up the difference? People in the most vulnerable position of getting overassessed and displaced—poor people, people who are not informed, people who don't appeal. It's a great social injustice. That's something most people can understand. We elaborate on the corruption: It's not just pay to play, but it's nepotism, favoritism in how assessments are done, other cronies. People don't like that. And we can also talk about how there's a happier side here because it's an executive office where we can address a lot of these problems through new leadership and executive authority—we don't need a new law. And that connects with a lot of people, especially if they're someone who does own a home—they've gotten these bills and they get pelted by this mail, so you can connect with them on that experience. And even people who've appealed and who've won, they still don't feel good about it. That's what we hear and what we see and that's what our polling tells us. The areas of greatest underassessment—that's where the system is least popular, which is really interesting.
But those owners are still going through the appeals process.
They're still doing it—but that doesn't mean they feel good about it. A lot of people just want it to be accurate the first time so they don't have to waste time and hire a lawyer to get the just outcome they wanted the whole time.
It's a complicated situation you're facing with Berrios being the chairman of the Cook County Democratic Party on top of holding the assessor's office. You're a Democrat running in the county, he's the chair of the Democratic Party in the county. How do you run against someone who controls the organization that decides who your party endorses?
I feel comfortable with it first of all because I know that voters are with us. I also know that things that he stands for and how he's run this office does not represent the values of everyday Democrats. Pay to play, corruption, recklessness in terms of how [Berrios] doesn't even change two-thirds of the commercial assessments for the whole county affecting countless mom-and-pop businesses. He just happens to be on top of the machine. I'll just take you back to the 1980s experience I grew up with—I see [Berrios] as a guy who came out of the Vrdolyak machine, which he did, and which has done great damage to the city. And I see this as part of a longer arc of the narrative of progressives trying to improve the way the Chicago area is governed. Just as Harold Washington did great things to put in the first ethics law and signed the  Shakman decree that put a great dent in patronage, so too we can do with this race. Not only would we take out the source of patronage and pay to play that's at the heart of Cook County and the assessment system, but also if he's defeated I think it opens up a way to a challenge of his leadership of the party and we can have new leadership.
Have you learned anything about power in this process that maybe you weren't expecting?
My favorite author is Robert Caro, who wrote The Power Broker about Robert Moses in New York, and he wrote a massive biography of LBJ. Caro explains the books he writes aren't about people, they're about power and how it affects people. Power reveals who you are. The subtext from a lot of Robert Caro's stuff is there can be great power in these positions that don't necessarily sound so romantic. And I didn't really make the connection between enjoying those books and this situation, but it kind of rhymes. Robert Moses and Joe Berrios would easily understand each other, because they're using the levers of power and the end result often is people who don't have power are victimized. People who are not proximate to power are the most victimized, and it accelerates inequality. Then you see power and vividly how it works. I go earnestly to aldermen and committeemen who represent people who have been affected by this in a bad way, and you present the data to them, and you can present actual examples: Here are people in your community in the last year who have sold their house and they were overassessed. Here's how much they're overassessed by. Here's how much the average person is overpaying. You present all of this to them earnestly, talk about the consequences, and I can't tell you how many times you hear, "Yes, I know that it's all bad and it's unfair, but Joe's helped me. Joe got me a judge." Or "Joe did a favor for me." And that's the end of the conversation. And if you think about that, the only reason why they're trading off a favor they got from Joe Berrios while not doing something about what's really hurting their community—it's power.
So what's the antidote?
Take the assessment system off the table in terms of being a money machine for pay to play. That's how. Do it accurately. Do it how assessor's offices do it in the rest of the country, where no one knows who the assessor is. Other assessors do this just fine—get it to a point where the appeals are low, you don't have to hire a lawyer to get a just outcome, and it's not fueling certain individuals who are proximate to power, fueling their fortunes and their political power. Take it off the table.