Thousands of languishing vacant and abandoned properties with unpaid taxes harm Black neighborhoods and suburbs. Cook County treasurer says program aimed at fixing the problem is not working.

But if they don’t pay up, the lienholder from the scavenger sale can take ownership if they pay some of the taxes owed. They also don’t have to pay the back taxes and penalties the previous owner accrued.

“This lengthy process may discourage participation and bidding at the scavenger sale,” states the treasurer’s report, which the Tribune received in advance of its release.

Anemic sales

The scavenger sale takes place every two years. From 2007 to 2019, more than 51,000 individual parcels were offered, but private buyers bid on less than 8,500 of them, the report states.

The numbers are even worse, however. Bids on 4 out of 5 properties end up not making it through the end of a lengthy, complex process, public records reviewed by the Tribune show.

One sign of the scavenger sale’s paltry success rate: Nearly 7,300 of the properties now on the list have lain fallow for so long that their tax bills have gone unpaid for either 19 or 20 years, according to the treasurer’s report.

About half of all the properties offered through the scavenger sale were in the city, with more than 80% of those in predominantly Black wards that have lost population and suffer from high crime, according to the report. The other half were in the suburbs, with nearly 80%in villages and cities that were at least 40% Black, the report stated.

Ald. Roderick Sawyer knows the problem all too well. Reached on Monday, he was at the site of two vacant lots in his 6th Ward trying to determine what if anything could be done with them.

“They’re odd lots, in undesirable areas,” said Sawyer, whose ward includes all or part of Chatham, Englewood, Greater Grand Crossing, Park Manor and Auburn Gresham. “It’s devastating to communities.”

In addition to the lots on the scavenger list, there’s another 15,000 or so properties the city owns, again in mostly Black wards, data shows. Those properties were acquired in many ways.

Mayekar, the deputy mayor, said Lightfoot is focused on the problem. It’s a key emphasis of her $750 million Invest South/West initiative, which aims to redevelop 10 communities on South and West sides.

It’s also a reason she hired Maurice Cox, who developed innovative programs for using vacant lots in Detroit, as her commissioner of planning and development, Mayekar said.

To reverse the long-standing trend, the city needs to make the struggling neighborhoods attractive to would-be buyers, Mayekar maintained. “We need to address the issue of demand for properties, not supply,” he said, noting that other major cities have faced similar problems since the Great Recession.

Enter the Land Bank

The Land Bank has been the subject of Sun-Times investigations probing its deals, sparking County Board President Toni Preckwinkle to commission an outside audit that determined the agency needs to do more to avoid conflicts and ensure it’s selling land to qualified buyers

The agency also received plaudits for the work it does to restore properties in distressed neighborhoods. The Land Bank acquires vacant, abandoned, foreclosed and tax-delinquent properties to prepare for sale to rehabbers and developers in several ways.

To help the agency accomplish that goal, it was given the power to scoop up scavenger sale properties with no money down, same as Chicago and the Cook suburbs.

That gives the agency a distinct financial advantage over private buyers. To override the Land Bank’s bid, those buyers must offer at least the amount of the back taxes owed, which can range from hundreds to millions of dollars and sometimes exceeds the property’s market value.

The Land Bank can then take properties it has bid on if the owner fails to pay the back taxes with interest on time. Developers then get the property with a clean financial slate, without having to pay the back taxes, though they do have to pay market value for the property as set by the Land Bank.

The agency bid on 17,342 properties during the 2015 and 2017 scavenger sales, but returned 8,886 of them to the county’s list. That’s more than half.

During the 2019 sale, the Land Bank sought 9,190 properties. The agency has yet to return any of them, but still has time to do so. Any scavenger sale bidder is allowed to return properties without penalty.

Many properties are returned because they are still occupied, and the Land Bank won’t keep them because its mission is to put properties back to use, not collect unpaid taxes, said Gainer, the county commissioner.

Other properties turn out to be lots that are not possible to develop because of their small size or shape. And sometimes, because of the complicated process to complete a sale — which the Land Bank maintains involves 75 distinct steps — they don’t finish that process by the required deadline. In those cases, they may return to the property and then rebid so they can get the work done in the next cycle, said Land Bank Executive Director Robert Rose.

And Gainer said the Land Bank is not getting in the way of private buyers. She maintained that they have not shown any interest in the properties being bought by the Land Bank, which works primarily in struggling Black and Latino neighborhoods.

“Historically, over the last 20 years of the scavenger sale, the only properties that were of any interest to the private tax buyers were properties in gentrifying communities — Pilsen, East Garfield Park, South Loop, West Loop,” Gainer said.

“The stuff that doesn’t get bid on (by the Land Bank)? About 80% of that is in Black neighborhoods and is sitting there for year after year after year, and it’s impossible for some neighborhood developer to get their hands on it, because the process is overwhelming,” Gainer continued, saying that’s where the Land Bank steps in to handle the process before selling the property to developers at costs they can manage.

Rose and Gainer point to Land Bank results, noting that to date it has taken deed to 1,183 homes from scavenger sale bids, easily topping the total of all private purchasers taken together over an even-longer period of time.

Land Bank officials and Pappas agree on one thing: The scavenger sale law needs to be reworked.

Last year, the General Assembly considered a bill to streamline the process. It was supported by Habitat for Humanity of Illinois, the Illinois Housing Development Authority and the Land Bank, but not Pappas’ office.

The measure, which is stuck in a committee, would have allowed government agencies such as the Land Bank to complete the scavenger sale on residential property in six months if the property is abandoned, instead of the normal two years.

“This is a process that is not easy to navigate, nor is designed to be easy to navigate,” Rose said. “What we’re fighting against is an inherently flawed system.”

hdardick@chicagotribune.com