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The opinions expressed herein are those of the authors and should not be construed as representing the opinions or policy of the organizations by which they are employed or the National Clearinghouse for Legal Services, Inc. Annual Subscription price: free to attorneys and paralegals practicing in LSC-funded programs; $95 for subscriptions outside the Continental United States; $75 to all others. Back issues are available at a cost of $6.00 per copy. Copyright © 1987 by National Clearinghouse for Legal Services, Inc. All rights reserved. ISSN 0009-868X ........ ....... .331 Reclaiming Tax Delinquent Properties for Low-Income Housing: The Multifamily Tax Reactivation Program in Chicago, by Jean Pogge..... Among the many obstacles to acquisition and rehabilitation of multifamily buildings in low- and moderate-income neighborhoods, the most difficult to work around has been the amount of back taxes owed by the former owner; this article describes the Multifamily Tax Reactivation Program, which utilizes a technique in the Illinois Revenue Code that enables Cook County to secure ownership of seriously delinquent parcels and to transfer ownership to certified nonprofit developers. An article on the health hazards of VDT use, "An Ounce of Prevention" by Jeffrey A. Chester, and the usual search results are this month's topics. Federal Register Highlights .375 Reclaiming Tax Delinquent Properties for Low-Income Housing: The Multifamily Tax Reactivation Program in Chicago by Jean Pogge I. Introduction Forty-one percent of the housing stock in Chicago is in buildings with five or more units. The majority of the multifamily buildings in Cook County, Illinois are located in Chicago. These buildings are the cornerstone of neighborhoods. They are home for the nearly two-thirds of Chicago residents who are tenants and, in many low- and moderate-income neighborhoods, provide the primary source of housing. The majority of the multifamily buildings in Chicago were built before 1940. All are well constructed; many are architecturally interesting; most are in need of repair. Among the many obstacles to acquisition and rehabilitation of multifamily buildings in low- and moderate-income neighborhoods, the most difficult to work around has been the amount of back taxes owed by the former owner. Because the penalties for nonpayment of property taxes usually apply only to the property and not to the taxpayer, nonpayment of property taxes is a common practice for owners interested in squeezing additional dollars out of the cash flow of the building. In fact, Jean Pogge is Executive Vice-President of the Woodstock Institute, 53 W. Jackson Blvd., Suite 304, Chicago, IL 60604, (312) 427-8070. The Woodstock Institute is a nonprofit organization which, for the past 14 years, has carried out applied research and has developed and implemented programs that increase private sector investment in modest-income and minority communities for the benefit of those who live there. The Institute designs programs that bridge the gap between the needs of communities and the resources of banks, savings and loan associations, foundations, and others. The author wishes to acknowledge the assistance of Ann Irwin, formerly officer manager of the Woodstock Institute, in the preparation of this article. nonpayment of taxes is frequently the first sign of the deterioration of a building. Over time, property tax delinquencies can add up to hundreds of thousands of dollars, making acquisition and rehabilitation of the building financially infeasible. This problem encourages further disinvestment, which often leads to abandonment and demolition. In 1982, an ad hoc working group of five nonprofit developers, the Lawyers' Committee for Better Housing, and the Woodstock Institute was formed to design a program that addresses the need for a practical, efficient way to acquire multifamily buildings without the burden of accumulated tax liens. The result was the Multifamily Tax Reactivation Program, which utilizes a technique in the Illinois Revenue Code that enables Cook County' to secure ownership of seriously delinquent parcels and to transfer ownership to a third party. Under the terms of the program, the Cook County Board, which is the elected governing body of the county, enters a non-cash bid at a tax sale to acquire preselected multifamily buildings, removes accumulated property tax debts, and then transfers ownership to certified nonprofit developers. This method of acquisition provides developers with buildings unencumbered by past debt and back taxes, and it helps Cook County find property owners committed to payment of future property taxes. The pilot phase of the program was small and not well known. At the 1983 scavenger sale, Cook County entered non-cash bids on 20 buildings for 7 certified developers. However, its proponents claim that the impact of the program has been felt in a substantial way in five Chicago neighborhoods 1. Cook County serves as the property tax collection agency for the Chicago metropolitan area. |