1 in 10 City of Chicago Properties Have Delinquent Taxes

[Bob Floss II]

https://chicagocitywire.com/st...

More than 163,000 Cook County property taxpayers didn’t pay their bills this year, according to an analysis of Cook County Treasurer records by Chicago City Wire. That’s about 9 percent of the county’s 1.88 million total.

But only 7 percent of those delinquent properties -- 11,780 -- were able to attract a buyer at the county auction, the analysis showed.

The remaining 150,000 properties — in arrears on property taxes in perpetuity because their bills are so high as to deem them unwanted — represent yet another warning of sorts for Cook County politicians who believe they can tax and spend with impunity.

In south suburban Ford Heights, Cook County Treasurer records show 47 percent of property owners didn’t pay their property taxes in 2018 -- 1,070 out of 2,274.

Nine of the 1,070 attracted a buyer at auction. The market says the rest of them are, effectively, worthless or even worse.

That’s not to their owners, however, who can continue to occupy them until the market improves, resting assured that their local taxing districts don’t want the properties, either.

In 12 Cook County communities, including Ford Heights, more than 20 percent of property owners didn’t pay their 2018 tax bills. All are in the south suburbs. They are Harvey (45 percent), Robbins (37 percent), Dixmoor (36 percent), Riverdale (34 percent), Phoenix (33 percent), Chicago Heights (27 percent), Sauk Village (25 percent), Markham (23 percent), Dolton (22 percent), Burnham (21 percent) and Calumet Park (20 percent).

Another 21 Cook County suburban communities have property tax delinquency rates of more than 10 percent; 17 are in the south suburbs. They are Hazel Crest (19 percent), Calumet City (19 percent), South Chicago Heights (18 percent), Park Forest (18 percent), Lynwood (17 percent), Posen (14 percent), Steger (13 percent), Country Club Hills (13 percent), Blue Island (12 percent), Richton Park (12 percent), Thornton (12 percent), Summit (10 percent), Matteson (10 percent), South Holland (10 percent), Olympia Fields (10 percent), Lansing (10 percent) and Glenwood (10 percent).

The City of Chicago represents 48 percent of Cook County and 54 percent of delinquent tax bills, or 87,962.

This includes most owners of 13 of the 20 supposedly highest-valued properties in town.

[Eric M.]

@Bob Floss II It concerns me that you post something like this without proper context when you probably know better. What is the conclusion you think we should come to? What is the point? What should this information actually tell an investor about his investments or is it just designed to leave an "impression", whether accurate or not?

Because plenty of these out of towners are just going to jump on the meme that Chicago is a doing poorly and is a corruptly run place. Which we locals certainly know that to SOME EXTENT it is true....it is poorly run and corrupt and dangerous but NOT EXACTLY in the way the media likes to portray. It is much more nuanced than that. Despite all it's real issues (which basically all big cities and many small cities have), the fact that Chicago has become a punchline is almost completely undeserved.....as partly evidenced by Conde Nast readers this week naming Chicago the best big city for the 3rd year in a row and by Chicago being the #1 corporate relocation destination for multiple years, etc. etc.  I have businesses which cater to tourists and I'll tell you, people who visit think Chicago is a fantastic place. Beautiful, clean, safe, easy to navigate, great food, great architecture, friendly people.....yes...really. Almost unanimously....their experience exceeds their expectation. It is the very very rare person who is not from Chicago who comes here and says, this place feels bad, unsafe, dead, unwelcoming, poorly run, broken, or any other negative we often hear. We all know there are real warts under the skin that tourists don't see but you get the point. Sometimes, people like to only see the warts.

Ok, that was a little bit of a rant I wasn't planning on. I just hate when stuff like this gets thrown out and people who don't REALLY know how to interpret it get skewed impressions and throw out uneducated comments and pile on.

As for issues with the specific article....First of all, I would like some perspective as to what percentage of delinquent properties is typical in big cities. We have no perspective for whether 1 in 10 is good or bad, only our intuition which is not worth much.

Second, as a former tax lien investor, I know this number of "delinquent properties" is somewhat misleading. More correctly, 1 in 10 PIN's are delinquent. And yes a PIN is a property number so it does technically correspond to a "property"....but not necessarily the kind of "property" you are imagining. They can be tiny (1 foot) slivers of easement, they can be parking spaces, they can be 3' square cage storage units in the basement of a condo building, they can literally be air. In a big city, there are thousands or tens of thousands of these. The article gives you the image of a street where every tenth house or building is delinquent....which again, I am not even sure is negative...but it isn't really accurate.

There are also literally thousands of PIN's that simply exist in error. I know because I have purchased liens for one and know others who have purchased them. I have seen high rises stuck in the planning stage for years which have several hundred associated PIN's no one is paying tax on. They only exist on paper. As properties get divided and combined and in particularly as condo buildings are built PIN's get created based on a legal documents and blueprint plans. Then plans change for numerous reasons and the PIN can be left to exist. Happens all the time. Again, you can fault government for not cleaning up the bad or extraneous PINs and it should be easier to fix these errors than it is, but that is another issue not related to delinquency.

As an example, I purchased the taxes on a whim (under $100) for a high rise parking space that was on the plan but when the building actually got built (20 years earlier), a column was in slightly the wrong place and the "parking space" was not big enough to be a legal parking space. So the PIN stays and taxes accumulate that no one pays (actually other investors like me have bought them in error) but it's not a real property nor should it be considered a problem of delinquency. Again, this is not uncommon. 

Often people don't even know they own the PIN to pay tax on it because it was tossed in with a larger property. It's just part of the paperwork. So many PIN's are unusual or small pieces of land that have been "abandoned" decades ago. Again, this is just the reality of a huge city going through changes over time. No one even realizes they are privately owned property. They become neighborhood landscaping near a street or someone claims them as a garden. About 10 years ago my neighborhood association learned that a little, triangular sliver of land in the middle of one of the busiest 6-way intersections in the city was "abandoned" private property. We had walked past it for years and no one had any idea. We claimed it, paid the back taxes and turned it into a little landscaped seating area. These "properties" exist and they are "abandoned" but are they really the type of abandoned property you imagine when you read this article?

Certainly, we all know there are extremely blighted areas of Cook county which have horribly high real delinquency problems. Every big county has these place which skew the overall percentages. But should the fact that Dolton is severely blighted effect your opinion of Cook County, or Chicago as a whole? Should that data effect your REI decisions in Jefferson Park?

Also, I would guess if you took a national poll on whether "Chicago" had deteriorated or improved in the past 5 years, more would say deteriorated. But that is far from true. The nice places are still nice as ever or better, but I think people would be surprised at what has happened in some of the neighborhoods which were considered blighted just 5-10 years ago. I am a local and very frequently, I drive into a neighborhood on the South or West side that I haven't been to for a long time and am shocked to see how it has turned around. Not all of them but a surprising number. Just happened this weekend when I went to 47th and Evans. What a great area. Shops, restaurants, $600K single family homes, vibrant, rehab everywhere. 5 or 10 years ago, I would not have wanted to stop my car and get out. Surprisingly great things are happening in some places that many think are blighted and delinquent and dangerous, based on just reading stories like these (or even just headlines like these) without knowing the context. I have been here 30 years. The underlying problems then are still here now and will be here for a long time, but I have never seen more parts of the area and people in the area doing great than I do right now.