1 in 10 City of Chicago Properties Have Delinquent Taxes

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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.

That's absolutely incredible. How can government function like this? Maybe with lower taxes, most people would pay their bills? Or is it a function of the government accepting less than what's owed when the property is "underwater" tax wise?

@Bob Floss II What are some solutions?

@Andy Mirza The new Assessor is making an effort to swing the tax burden away from residential properties over to commercial properties. These are mostly lower income areas where property owners have been complaining the residential properties are paying too much when compared to income properties in the same neighborhoods.

I think the difficultly of our tax lien system in Illinois plays a role. It can take several years of paying taxes before a lien holder can attempt to seize the property. The court system puts a heavy burden on the lien holder to do everything perfect or the suit is tossed and the lien holder must start over. In the meantime, the property owner is given opportunities to redeem the taxes. I have several clients that flip properties that don't even try to pay the tax bill. They just wait for me to pay any delinquent bills at closing so it comes out of proceeds and they don't have to come out of pocket. 

Craziness....things can't be good in those communities.  The article is written poorly....but we get the direction.   I'm guessing you are in a tax lien state vs tax deed state and that can be an issue.  

@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. 

Originally posted by @Andy Mirza :

That's absolutely incredible. How can government function like this? 

Maybe with lower taxes, most people would pay their bills? 

Uhhh, why did you get the impression "most people" are not paying their bills? Is that what the article says or is that you bringing your own bias because I bet you can read.

90% of the bills are NOT delinquent is what it says. I think in most places 10% is not considered to be "most people".  Sorry, not intending to pick on you but it drives me nuts that people can actually read this article and come away with the conclusion or impression that "most people" are not paying their tax. This is a problem. It's like the fact that 40% of people don't think Trump mentioned Biden on the phone call despite it being right there in the transcript multiple times. Doesn't matter which "side" you are on. It is right there in black and white. How does this happen? It blows my mind.

Reading comprehension aside, I shouldn't blame you for getting the wrong impression from this kind of article. But think about it. Let's say 1 in 10 being delinquent is a problem. (I am not sure it is. What is the delinquency on your town? Probably you don't know so you have no perspective)

Your knee jerk suggestion is maybe lowering taxes is some kind of solution. Sure, we all wish we could have lower taxes, but is it smart? From a business standpoint, does it really make sense to lower taxes on EVERY property to fix this? We should lower tax on 9 properties that are current to collect the 1 that isn't? Would you do that in your business? Doesn't make business sense. 

But it is even worse because the statistic 1 in 10 is even more misleading. Although it might be 10% of the properties it is not 10% of the total property tax that is delinquent. As the article says...and common sense says...property in poor areas are more likely to be delinquent. Wouldn't it be more helpful to know the percentage of the total tax that is delinquent?

So just as a simplified example, if I have 9 properties with $1000 tax paid up and 1 with $500 that is unpaid, is it accurate or useful to call that 10% delinquent? What kind of discount would it take for that one to maybe pay up? 20%? More? Would it make sense to lower everyone 20% so that 1 maybe would pay? Especially when you know that the 1 is going to pay at some point. 

Of course not.

This article tells you nothing of substance that would allow you to reasonably determine if this is a problem, why its a problem, why it isn't a problem, whether it needs a solution or what the solution is. In other words, useless. I am sorry you were misled.


@Eric M.  Sorry for taking so long to get back to you. It's been a long week.

Yeah, it looks like you got pretty riled up about this issue and overreacted. You inferred a lot about me and my thought processes from a 3 line post. I didn't read all of your lengthy post directed toward Bob but I know that @Bob Floss II is a very sharp attorney and investor and his post was thoughtful and meant to stimulate conversation.

From what I did read of your posts, our differences seem to be more a matter of opinion as opposed to fact. This article pointed out that there is a significant amount of delinquency that could greatly affect government's abilities to collect revenue and that it would be better to find a solution to this problem quickly before more property owners quit paying.

You're right, though, without more data and metrics, this article shows only a small part of the picture. I've never run a city or county so I don't know what numbers are truly the most important but the article (and Bob) did a good job pointing out that this is a problem....

Interesting info. I think on BP folks tend to look at this as an opportunity for investors, but as was noted, I think it’s perhaps more important to consider what is happening to these communities and the folks who are not able to pay their bills. Solutions that don’t involve only evictions may require larger scale efforts. I agree that some context/comparative data would be helpful.

@Steven Vance

@Brian H.

Along with the taxes, I was interested in some properties that had $80k+ in fines on them. They have been repaired but fines are not waived so guess what, that house is not selling anytime soon.

@Eric M. Yes it did LOL

For what it is worth Baltimore City has a population of 600k~ (I don't know about the number of properties) and about 10,000 properties go into the tax sale every year.  Based on population that is about 1.6%  Yes we have lots of junk parcels also.

If you are worried about what people think of your area just be thankful you are not in Baltimore. 

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