Client: Chicago Community Trust

Source: Crain’s Chicago Business 

It began with an audacious idea between five Black developers on Chicago’s South Side.

Purchase 12 vacant lots in West Woodlawn to “Buy Back the Block” of 6300 South Langley Avenue.

Just two years later, the idea became reality this March, with five new apartment buildings now standing where once there was nothing but grass, debris, and not much else.

The project helped the developers grow their businesses, created dozens of jobs and produced much-needed affordable housing.

More important, the builders hope the endeavor will create a ripple effect for the neighborhood to attract more investment.

This is the story that community developer DaJuan Robinson shared with Illinois legislators this spring that helped convinced them to overwhelmingly pass a bill to create thousands more opportunities to “buy back the block” by reforming the property tax sale system to incentivize investing in local communities instead of unfairly profiting investors.

With Gov. J.B. Pritzker’s signature, this measure promises to unleash investment in Black and Latinx neighborhoods with the highest rates of vacant or abandoned land. Cook County alone contains 50,000 vacant properties, mostly concentrated on the south and west sides of Chicago, and in the south suburbs.

The Chicago Community Trust was proud to convene the coalition that helped to spotlight pioneers like DaJuan and unite forces like Cook County Treasurer Maria Pappas, Commissioner Bridget Gainer, the University of Chicago and a coalition of tax experts, municipalities across Illinois, affordable housing advocates, and community developers to bring this bill to the point of enactment.

For decades, private tax sales have perpetuated the blight and disinvestment in communities that could least afford it. Here’s how it has worked:

Each year, state law mandates the county conduct a tax sale to collect on delinquent payers. Private buyers — typically institutional investors like hedge funds — gulp up vacant properties and either hold them until their values mature or return their investment to the local county via a little-known loophole known as a “sale in error.”

This loophole has allowed tax buyers to recoup a full refund on their investment plus interest paid by local governments (aka taxpayers), simply by claiming there was an error in their original purchase (for example, the home was constructed of stucco instead of brick, per the listing, or there was a $100 mowing lien prior to purchase).

Meanwhile, the abandoned properties recirculate through the tax sale system for years, sitting vacant and deteriorating to the detriment of neighboring residents and the community at large.

By signing this bill into law, the governor will fuel the transformative change needed to break this cycle, and the Trust will continue to support its many local, state and private partners who are doing the hard work of reclaiming abandoned properties, reversing blight and reinvesting in historically overlooked neighborhoods.

Andrea Sáenz is president and CEO of the Chicago Community Trust, a community foundation whose strategic focus is on closing the racial and ethnic wealth gap in the Chicago region. The bill SB 1675 AMD. 1 is the result of three years of research, data analysis, and community engagement sponsored by the Trust.