March 31, 2021 Professor Christopher BerryToday the University of Chicago Harris School of Public Policy and the Center for Municipal Finance released a groundbreaking report that examines the Cook County Scavenger Sale, the last step in the process for properties whose owners have consistently failed to pay their property tax bills. The first comprehensive independent analysis of the Scavenger Sale, the report finds that the system is not succeeding in its core function of returning delinquent properties to market use; the vast majority of properties that enter the Scavenger system never leave it. Meanwhile, the number of properties in the system continues to accumulate, growing from 4,266 properties in 2007 to 28,466 in 2019, predominantly in communities of color. “The Scavenger Sale represents the end stage of a property tax system that is unfair from the very beginning,” said Christopher Berry, William J. and Alicia Townsend Friedman Professor at Harris Public Policy and Director of the Center for Municipal Finance. “Assessments in Cook County are regressive, overburdening owners of low-priced properties and overtaxing communities of color, and those who can’t pay these taxes end up in a complex and hard-to-navigate system of tax delinquency. Few ever make it out.” Held every two years, the Scavenger Sale is an institution unique to Cook County. The sale takes place at an auction at which a property’s outstanding tax debt, along with a right to acquire the underlying property itself, is sold to the highest bidder. In 2019, the most recent Scavenger Sale, nearly 30,000 properties—representing more than $500 million in accumulated tax debt, interest, and fees—were involved in the auction. The report finds that: The Scavenger system is not achieving its primary objective of returning tax delinquent properties to normal market use. According to the report, only 7% of all properties involved in the Scavenger Sale since 2007 have been successfully “taken to deed” (returned to the private market). In 2019, only 6% of properties were sold to private buyers, while 33% were claimed by the Cook County Land Bank Authority (CCLBA), and 61% received no bid. Most of the properties that are acquired ultimately re-enter the system. As a result, the Scavenger system has become a sort of limbo that few properties escape. The Scavenger Sale auctions, which sell properties with a minimum bid of $250, are dominated not by individuals but by large operators, several of which are out of state, as well as by the Cook County Land Bank Authority. Small-scale buyers, who buy only one or two properties, accounted for only 4% of sales to private buyers. Properties involved in the Scavenger System are highly geographically concentrated, with most being found in 10 communities scattered throughout Western and Southern Cook County, and are disproportionately in communities of color. Nearly a quarter of all listings are in south suburban Thornton Township. The average property in the Scavenger Sale in 2019 had a market value of $26,000 according to the Cook County Assessor and a tax debt of nearly $18,000, but the report’s analysis finds that even the Assessor’s modest valuation may be too high, given that most of these properties fail to sell to private buyers even when the costs to acquire them are reduced to nearly zero. A survey of private developers shows that there are valuable properties contained in the Scavenger System that are going unsold. Developers participating in the survey identified many residential and commercial properties with potential for redevelopment, including some described as viable even without any renovation. The survey suggests that 10% to 15% of properties in the Scavenger System may be economically viable but have gone unsold, perhaps because potential developers are unaware of the Scavenger Sale or deterred from participating due to its barriers to entry. “The only interests being served by this system are small number of large-scale buyers at the Scavenger auction,” said Berry. “There has to be a better way.” The analysis is based on public records obtained from multiple government agencies, representing every property involved in the Scavenger system between 2007 and 2019. The research was made possible by a grant from The Chicago Community Trust, as part of its strategic focus on closing the racial and ethnic wealth gap in the Chicago region. “This critical study will help us determine the number of viable properties in the Scavenger Sale pipeline and the impact of redeveloping a greater percentage of those properties. It also lays the groundwork for developing policy recommendations to unlock the potential of the Scavenger Sale process,” said Helene D. Gayle, president and CEO of The Chicago Community Trust. “Making the Scavenger Sale system more focused on and accessible to community-based interests, including emerging Black and Latinx developers, can be a wealth-creation vehicle and change the trajectory of disinvested neighborhoods and municipalities.” Though the Scavenger Sale is unique to Cook County, it is governed by state statute. 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