January 23, 2012
If the city won't reexamine the boondoggle of a tax break that the Daley administration gave Lollapalooza, even in the midst of an epic budget crisis, the county will.
Cook County Commissioner Bridget Gainer says she has heard from many of her North Side constituents complaining about the negative impact on their businesses caused by Lollapalooza, and its tax break adds insult to injury. "No tax is paid or reported," she says. "It's absurd."
As first noted in the Sun-Times Thursday, Gainer has introduced a measure that would shift the responsibility of determining whether a non-profit group or event qualifies for an exemption from the 1.5 percent county amusement tax from the county revenue director to the board of commissioners. It is co-sponsored by four other commissioners--Earlean Collins, Deborah Sims, Joan Patricia Murphy, and Liz Doody Gorman--and Gainer said several Republican commissioners are likely to lend their support. Although Lollapalooza is very much a for-profit event, it partners to apply for all of its licenses with the non-profit Parkways Foundation, a favorite group of former Mayor Daley and his late wife, Maggie. A long-term sweetheart deal negotiated in part by the festival's attorney and lobbyist, Daley nephew Mark Vanecko, exempts it from paying the 5 percent city amusement tax and the 1.5 percent county amusement tax, as well as the state sales tax levied on every other major event in Chicago--even though the municipal code clearly states that every big concert and sporting event must pay what's owed unless 100 percent of its profits go to charity. Key Lollapalooza beneficiaries: Kevin Killerman, Mark Vanecko, C3 Presents main man Charlie Jones, and Ari Emanuel. Last year, Lollapalooza gave Parkways more than $2 million for park improvements, but its gross revenues were more than $21 million. The county got nothing from the event. The break on the city and county amusement tax saved the festival more than a million dollars, on top of the approximately $1 million city officials say any other group would pay to commandeer Grant Park for more than a month at the height of the summer.
The loss in sales tax could be even more substantial, Gainer said, since local government has no idea what that cut of souvenir, food, and alcohol sales would even be. Parkways applies for the festival's liquor license, but as this blog has reported, actual sales are handled by a corporation co-owned by Texas promoters C3 Presents and local bar owner Kevin Killerman, a client and friend of Vanecko. Gainer knows a lot about how both the Park District and Parkways should work: The energetic young progressive worked for the former as the director of Lakefront Parks until 2001, and she sat on the Parkways board until 2005, including the period when Lollapalooza first came to Chicago.
"This wasn't the way this [the Lollapalooza deal] was supposed to go down," Gainer says. Initially, it was considered a break to bring a speculative venture to Chicago. But Lollapalooza now has proven to be very successful and hardly in need of a benefit that no other major entertainment event is granted. "If you don't need that kind of support to survive, it should be given to someone else... some other cultural event," Gainer says. She and her fellow board members approached the state's attorney about how best to rectify the situation, and Anita Alvarez's office recommended bringing the annual review of the Lollapalooza tax abatement under board control.
County commissioners will vote on the proposal on Feb. 1. Meanwhile, Gainer says Illinois Representative Sara Feigenholtz plans to examine the festival's waiver on the state sales tax. Initially modeled on C3's Austin City Limits festival, Lollapalooza has become one of the most successful and profitable concerts of its kind in the world, and its owners since have expanded to stage similar events in Chile, Brazil, and Australia. Cook County Board President Toni Preckwinkle had no comment on Gainer's initiative last week, and this reporter still is waiting for a response to questions about the county tax break posed to Preckwinkle's spokesperson last August. At that time, after questions about Lollapalooza's tax break were raised by the Sun-Times and this blog and harshly criticized in a strongly worded Tribune editorial, Mayor Rahm Emanuel pledged to ask for an independent review of Lollapalooza's break on the city amusement tax before this year's concert. Emanuel has recused himself from any negotiations with the concert because it is co-owned by C3 and William Morris Endeavor, the Hollywood talent agency run by his brother Ari, many of whose employees made substantial donations during the mayoral campaign. Chicago aldermen Joe Moreno and Scott Waguespack have also called for a new look at Lollapalooza's sweetheart deal. But to date, as services are being slashed, fees and fines increased, and city employees laid off in record numbers, the city council has yet to turn its attention to the substantial revenues that have been waived from the music festival.
]]>January 19, 2012
The Cook County Board would have the final say before granting tax exemptions for big-ticket events such as Lollapalooza under a plan introduced this week by County Commissioner Bridget Gainer in response to a report in the Chicago Sun-Times last year.
Currently, County Board President Toni Preckwinkle's revenue director decides whether a group such as a non-profit or event qualifies for an amusement-tax exemption. But if the board approves Gainer's measure that authority would shift, at least on bigger deals, to the board. The measure comes months after the Sun-Times reported the city and county have been granting amusement tax exemptions for Lollapalooza for the last seven years. In 2011, that meant promoters saved $1 million in taxes at the event. Here's how it works: Though Austin, Texas-based Lollapalooza promoter C3 Presents puts on and manages the festival, booking the acts, hiring the vendors, overseeing the entire operation and reaping the profits, the Chicago Park District, which owns Grant Park, doesn't contract directly with C3. Nor does C3 obtain the liquor licenses for the festival. Instead, that's arranged through the Parkways Foundation, the park district's not-for-profit fund-raising arm, which serves as a conduit between the promoters and the district -- an arrangement that cost the county $350,000 in amusement tax revenues last year.
Gainer's proposal -- which fellow commissioners Earlean Collins, Deborah Sims, Joan Patricia Murphy, and Liz Doody Gorman agreed to co-sponsor -- calls for a board vote on any amusement tax exemption in which the county would lose $150,000 or more. The measure, introduced Wednesday, also states: The County Board "may deny the exemption application if it finds that the exemption is not in the best economic interest of the county."
"When we are laying off people at the county who work at the hospital and provide vital services then we have to look carefully at who's getting away with not paying taxes," Gainer said.
Preckwinkle did not immediately comment on the measure. But Gainer did say that the revenue director and the state's attorney's office were consulted in crafting the measure. The proposal could come up for a vote as early as Feb. 1. Mayor Rahm Emanuel has said he would ask the City Council to appoint a "third-party, independent" negotiator to broker talks with Lollapalooza and determine whether to eliminate the music festival's multi-million dollar amusement tax exemption. The hands-off stance is necessitated by the involvement of Emanuel's brother, Hollywood super-agent Ari Emanuel. Ari Emanuel is the CEO of William Morris Endeavor, which co-owns Lollapalooza.
Copyright © 2012 -- Sun-Times Media, LLC
]]>January 18, 2012
The Federal Housing Finance Agency is seeking a summary judgment in its case against Chicago's vacant building ordinance before the city even files a response to the lawsuit.
The FHFA, which oversees Fannie Mae and Freddie Mac, filed suit against Chicago last month, claiming that federal law prohibits the ordinance from being imposed on the regulator. The suit seeks to exempt all Fannie Mae and Freddie Mac-owned mortgages from the ordinance, a number that tops 250,000 within the city. In a court filing the FHFA made last week in support of a ruling in its favor without a trial, it also noted that in addition to those mortgages it owns, it guarantees another 750,000 loans in Chicago.
The city's ordinance, passed in November, requires mortgage lenders and loan servicers to pay to register and maintain vacant properties during the foreclosure process, before the properties have legally changed ownership. Cook County subsequently passed a similar ordinance for unincorporated areas of the county and any municipality that chooses to participate. The government argues that the city's ordinance creates a legal liability for the FHFA, that the registration fees required in the ordinance are, in fact, taxes, and that following the ordinance would interfere with the agency's mandate to conserve assets and reduce taxpayer costs. It also noted that if the FHFA must observe the ordinance, it opens the door to 50 states and 60,000 communities to impose similar requirements.
The two sides are expected to appear in court Thursday. Neither responded to phone calls Wednesday for comment. The city, which did not have to file a response to the suit for another month, agreed to move up the court date but has opposed FHFA's request for summary judgment. " It is premature and inappropriate to rush this very important case to summary judgment at this early juncture," the city said in a court filing Tuesday. A ruling against the city will have implications far more reaching that the city's borders. Other municipalities nationally have taken similar actions to help care for the growing number of vacant, dilapidated homes in neighborhoods.
The FHFA "is living in Washington, far away from the reality of what's happening," said Cook County Commissioner Bridget Gainer, D-Chicago, who sponsored the county ordinance. "You give total impunity to the bad actors in the market."
Copyright © 2012, Chicago Tribune
]]>December 25, 2011
The cavalry may be on the way. But until it arrives, some of Chicago's most at-risk citizens -- many of whom were once productive members of the community -- will be in greater jeopardy from what experts describe as a frequent nonsystem of care.Expect more of those who are uninsured to be turned away from community centers, more desperate souls seeking shelter with their families, more children whose conditions go undiagnosed, more patients than John H. Stroger Jr. Hospital can deal with, more disturbed offenders shuttled off to Cook County Jail and more homeless people. As budget cuts continue, the ripple effects will hit many: people with chronic mental illnesses whom we may avoid on the streets; and hidden cases, like the suburban mother whose depression is so strong she can't work or care for her children. The cavalry is President Obama's health care reform law, which takes effect in 2014. It's seen by advocates as a way to ensure equal access to quality mental health services. But its worthy aims can only be achieved if it survives court challenges and if state legislatures don't undermine it when devising related regulations, according to nonpartisan experts like Harold Pollack at the University of Chicago's School of Social Services Administration. The help would come in the form of insurance for those often uninsured and incentives for providers who now often spurn the uninsured. But while the law's full impact can't be predicted, the Chicago area's mental health landscape will deteriorate in the interim.
Should we expect continuing declines in government support and a worsening mess? "Yes. Historically that's been the pattern," said Sara Feigenholtz, a state representative from Chicago who chairs the human services appropriations committee in the Illinois House. The budget cuts affecting a traditionally weak mental health system show no sign of abating. Mental health will remain low on the priority lists of most legislators, and among the first items to be slashed. Mental health gets about 6 percent of health care spending, according to The American Journal of Psychiatry. But the journal estimates staggering indirect costs of perhaps $200 billion a year nationally when one includes the impact of incarceration, homelessness, a high rate of medical complications, dependence on emergency room care, lower educational attainment, a reduced ability to hold jobs and the burden on families. But the mentally ill don't have an army of lobbyists and clout-heavy executives making hefty campaign contributions. "In Illinois, mental health services have never been a serious political priority, as evidenced by the recent city and county cuts," said Dr. Ronald Davidson, director of the mental health program at the University of Illinois at Chicago's department of psychiatry. "And reform is at risk of being whittled away by 50 state legislatures, and that means a powerful insurance lobby in Springfield gets one more shot at limiting access to mental health services." When Illinois cut mental heath financing for the uninsured several years ago, hundreds of mentally ill people were told they could no longer get help at the five Community Counseling Centers of Chicago, said Dr. Anthony Kopera, president and chief executive officer. Dr. Kopera runs those centers, employing 260 people with a $17 million budget. But he said the state is six months late with $3 million in payments to him for treating mentally ill patients. "Now the unfunded don't ask us for help," he said. "They suffer until they go to the hospital emergency department, or their symptoms flare up and they get picked up by the police and taken to state hospitals." Mr. Pollack concedes there is immediate stress on a system whose configuration is based on old assumptions as to where the needy live. The suburbanization of poverty, as many exit Chicago, means the migration to Harvey, Calumet City, Hazel Crest and elsewhere aggravates the problem because our network of facilities is based on where they lived long ago. And even if the street peddler confronting you is getting help from a city center that's closing, said Mr. Pollack, he probably won't have the wherewithal to switch to one that remains open.
His last-ditch options? Bridget Gainer, a Cook County commissioner, foresees unrealistic demands placed on the jail and Stroger Hospital, and quotes the poet Robert Frost. "Home is the place where, when you have to go there, they have to take you in."
jwarren@chicagonewscoop.org
]]>December 14, 2011
The Cook County Board on Wednesday passed a vacant building ordinance that largely mirrors one adopted by the city of Chicago and now the subject of a federal lawsuit. The county measure, passed without opposition, requires a property's mortgagee to pay $250 to register buildings as vacant on a countywide registry. A similar ordinance, with some tweaks and a $500 property registration fee, was passed by the Chicago City Council last month.
Monday, the Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac, filed a federal lawsuit against the city, charging that the city's rules encroach on its role as the sole regulator and supervisor of Fannie and Freddie, which own about 258,000 mortgages within the city of Chicago. The suit seeks to exempt all those mortgages from the ordinance, and on Tuesday, Chicago officials said they plan to vigorously defend the ordinance in court. Despite that legal challenge, county commissioners were eager Wednesday to continue the months-old effort to pass an ordinance at the county level and by the end of a public hearing, all of the commissioners asked to be added as co-sponsors to the measure first sponsored by Commissioner Bridget Gainer.
Gainer, D-Chicago, who noted that almost 10 percent of residential buildings within the county are vacant, said the federal agency's move not only goes against its own mortgage agreements but was unconscionable. "When 75 percent of the mortgages in Cook County are owned by FHFA, allowing them to ignore their responsibilities to their own assets or our communities is impossible and a long-term disaster," Gainer told commissioners. "It is a disgrace and it's shameful," county commissioner John Daley, D-Chicago, said of the FHFA's lawsuit against the city. The county ordinance would apply to all areas of unincorporated Cook County, but its reach is expected to be significant because municipalities could enter into agreements with the county to enforce the ordinance within their own boundaries. Many suburban communities, faced with a growing number of derelict, abandoned homes and a shortage of funds and manpower to care for those properties, have expressed a desire to sign such agreements.
David Mekarski, Olympia Field's village manager and a representative for the 42-community South Suburban Mayors and Managers and the 22-community South Suburban Housing Collaborative, said he expects a significant number of those municipalities to opt into the ordinance. "This is the single most important tool to manage the biggest asset that we have in our community, which is our homes," Mekarski said after the hearing. "It really goes beyond managing vacant properties. It's essentially giving a tool to maintain a reasonable return on everyone's pocket. When a vacant property is in a community, it affects every neighbor up and down the block."
Among those speaking in support of the ordinance during the hearing was Rep. Karen Yarbrough, (D-Broadview), a sponsor Senate Bill 16, a foreclosure prevention measure that also sought to give municipalities more leverage in dealing with foreclosed properties. The bill failed to gain enough traction to be passed. "We need to get municipalities out of the property management game," she said. "We need to hold someone responsible, not municipalities, not counties; We need state action."
It was one of many comments in support of the measure by municipalities, consumer attorneys and community activists at a public hearing during the board's zoning and building committee. The lone mortgage servicer and lender to offer comments at the hearing, and support the measure, was JPMorgan Chase. In January, Woodstock Institute, a Chicago-based public group reported that just within the city of Chicago in September 201, there were 1,900 properties where found that just within the city of Chicago in September 2010, there were 1,900 vacant properties where foreclosure proceedings were launched by mortgage servicers but never completed, leaving the properties in limbo and likely not secured or maintained. Margaret Wooten, director of housing counseling programs at the Chicago Urban League, voiced strong support for the program, and told commissioners that foreclosure is not a problem confined to blighted neighborhoods. "It could happen right next door to you," she warned. The ordinance would not apply to buildings that are vacant but being cared for, or under construction or rehab, the subject of a probate dispute, or in an ownership dispute.
After the meeting, Cook County Board President Toni Preckwinkle noted that the Cook County State's Attorney had reviewed the ordinance before its passage. "It's regrettable, of course, that the federal government has seen fit to sue the city for the ordinance that they already have in place," Preckwinkle told reporters. "I presume of course that they will sue us as well. But we think this is smart policy. We intend to make this ordinance effective and we think the federal government will lost its suit."
Tribune reporter Erika Slife contributed.
Copyright © 2011, Chicago Tribune
]]>By
Erika Slife and Duaa Eldeib, Chicago Tribune
December
9, 2011
For
decades, Cook County's Juvenile Temporary Detention Center has been blasted as
a depot for children who were locked up in violent, unsanitary, overcrowded
conditions without much consideration given to their mental or physical
well-being.
Even
after a landmark lawsuit, child advocates say the hulking off-white building on
the Near West Side serves more as a jail than a temporary residence for youths
waiting to see a judge.Now County Board President Toni Preckwinkle is pitching
a new approach for a juvenile justice system that as recently as four years ago
was so broken, a federal judge brought in an outsider to take it
over. "I think we need to do everything we can to empty this building
out," Preckwinkle said Thursday after touring the facility.
That
means putting children in group homes, monitored home confinement and other
community-based programs where advocates say youths have better opportunities
for counseling, job training and other life-skill instruction. "What
we need to do is have a number of smaller, secure safe homes for kids scattered
around the county rather than having one huge juvenile prison,"
Preckwinkle told the Tribune. "It's a prison for kids. It's an
inappropriate setting for almost everybody who's here."
In a
way, the county that created the nation's first juvenile court is returning to
its roots. Back in 1899, county leaders pursued the progressive notion that
children were different from adults, and their legal system should focus on
reform rather than punishment. The idea was children, by their nature, were
less culpable and more amenable to rehabilitation. "It was a
significant breakthrough," said Bart Lubow, director of the Annie E. Casey
Foundation's juvenile justice strategy group, which brought a national reform effort
to the detention center in the mid-1990s. "The core notion that there
should be a different kind of jurisprudence for children who break the law was
a radical, worldwide reform."
Advocates
note vast improvements at the detention center in recent years under Earl
Dunlap, the federally appointed transitional administrator and renowned expert
in juvenile justice. Preckwinkle and Commissioner Bridget Gainer argue the wise
investment is in rehabilitation and alternative detention programs, not
imprisonment. "This is not baby jail," said Gainer, D-Chicago.
"When you're there, you see you cannot write off a 10-year-old or a
12-year-old or even a 15-year-old. The thought that the ship has sailed for
these kids is wrong." To be sure, the detention center often holds
the most dangerous and most problematic youths, from alleged murderers to
serial delinquents. Police and judges send children there for a number of
reasons, typically based on a formula that factors in the severity of their
alleged crimes, criminal history, and even home and family situations.
On
average, 300 to 350 children a day are locked up in the 498-bed detention
center, down from a peak of 800 children in the early 2000s, Dunlap
said. Ultimately, any decision made about the detention center's direction
will be up to Circuit Court Chief Judge Timothy Evans, whose office was handed
control of the center by the Illinois Legislature in 2007. Dunlap said he will
likely begin to transition the detention center back to Evans in late
2012. Evans said Preckwinkle's goals are similar to what his office has
been pursuing since it took over the detention center, encouraging juvenile
division judges to consider alternatives to detention.
"While
saving revenue is important, I have to start with the commitment to justice and
safety and stopping the cycle of violence," Evans said. "If we do
that right, the result is the savings to the taxpayer and to the county. In
that sense, I think that President Preckwinkle and I will end up in the same
place." Advocates and experts believe that up to 45 percent of the
youths housed there today -- the ones there for seven days or less, typically
for probation violations or outstanding warrants, for example -- pose no threat
to the public.
The
county estimates it costs $616 a day for a child to stay in the detention
center. That's nearly $225,000 a year, more than the cost of four years at a
private university, Preckwinkle likes to remind people. Preckwinkle said
she's making the detention center a top priority next year. She's pumping an
additional $800,000 toward alternative detention programs, which often offer
better and more affordable access to social services.
Her
budget calls for closing one of the facility's eight in-house centers, each of
which houses roughly 45 children, to shave $1.3 million from the detention
center's $45 million operating budget. Meanwhile, Gainer has worked
closely with detention center administrators to organize a book drive to fill
the shelves of the library and has initiated the idea to push back the start
time at the center's school to increase learning. This month, Gainer
successfully sponsored an ordinance to establish an advisory board tasked with
overseeing the children's transitions from the detention center back to the
real world.
"It's
the absolute stated mission of the juvenile temporary detention center to be
something in place of the parents. It's not just about punishment," Gainer
said. "There are 10-year-olds in the (center), and it's not just because
they did something wrong, but it's because the adults around them completely
failed them." Indeed, they were once called "the forgotten
children."
Conditions
at the detention center were so dreadful that in 1999, the American Civil
Liberties Union sued the county on behalf of the children. "The place
was a filthy, overcrowded, violent, chaotic mess," said Benjamin Wolf,
associate legal director for the ACLU of Illinois, who referred to the children
as forgotten. That followed a lawsuit more than a decade earlier, in which
the ACLU asserted that youths were being held at the center well after a judge
ordered their release because parents and guardians didn't claim them. Some
spent up to a year waiting. The 1999 lawsuit was a major step toward
reform, but change took years. In 2007, then-County Board President Todd
Stroger relinquished control of the center to Chief Judge Evans, and Dunlap
came in.
Dunlap
was lauded for transforming a patronage-based hiring system, bringing in more
professional staff and working to reduce the number of children detained, said
Thomas Geraghty, the court-appointed representative in the case and director of
the Bluhm Legal Clinic at Northwestern University. The staffing plan ran into a
court challenge by the Teamsters, however.
Randolph
Stone, who directs the Criminal and Juvenile Justice Project at the University
of Chicago, said more needs to be done to divert youths who shouldn't be there,
as well as to shorten the length of stay and strengthen community placement
options. "All the literature seems to say that residential
confinement is a last resort in terms of ameliorating the issues that brought
the kids in there in the first place," said Stone, a former county chief
public defender. Last year, the John Howard Association found that the detention
center's population remained "inappropriately high," some staff
members were untrained and underqualified, and there continued to be a lack of
a continuum of care. The challenges remain daunting, advocates
said. "The children that I represent who wind up there for the first
time are frightened," Geraghty said. "They're frightened of the other
kids, of the staff. ... It has to be a terrible experience for kids who are in
there for the first time or who go back and forth many, many times for that
matter." With Dunlap's temporary position nearing an end, speculation
and apprehension abound. "I think the situation (at the detention
center) was in many ways the shame of this community for many, many
years," Wolf said. "I'm hoping with the hard work that Mr. Dunlap has
done, what President Preckwinkle has said and the work of many people in the
court system, it'll be a place we can point to with pride."
During
her Thursday tour, Preckwinkle fell back into her role as a former teacher,
quizzing 19 boys and girls about government and its functions. And then she
made them a pledge. "If I were here, I would do everything in my
power never to come back," Preckwinkle said. "I'm going to do
everything in my power to see to it that as few people as possible end up in
this place. You ought to do everything in your power to see that you never come
back."
Copyright © 2011,
Chicago Tribune
o Property Tax Bills are due November 1, 2011. If they are paid after this date the homeowner will incur penalty fees.
o Property
Tax Bills increased in the City of Chicago because the Chicago Public School
District increased their tax levy by $117,000,000.
o Always double check your bill to make sure you have all qualifying exemptions deducted, i.e. Homeowners, Senior Citizen, Senior
Freeze, and Long Time Occupant Exemption. REMINDER: Seniors you must reapply for your Senior Citizen Homeowner Exemption every year.
o Homeowners have 2 Options:
1) Pay the Incorrect Amount and File for a Certificate of Error. Refunds will be issued within 100 Days.
2) Complete the exemption paperwork and take it to the 3rd floor of the County Building at 118 N. Clark St. The Assessor's office will correct your bill and issue an adjusted tax bill. This bill is still due Nov. 1 2011.
Please contact my office with any questions at 312-603-4210 or by email at Info@BridgetGainer.com
Bridget Gainer is the Cook County Board Commissioner for the 10th District of Cook County, Illinois. Cook County is the home county of the City of Chicago as well as 129 other municipalities, and with 5,194,675 residents has a larger population than the seven smallest American states put together. Gainer was initially appointed to the seat in April 2009 to replace former commissioner Mike Quigley, who won the special election to fill former Congressman Rahm Emanuel's seat when Emanuel left Congress to become President Obama's Chief of Staff.
In 2010, Gainer, a Democrat, defeated her Republican opponent in the November 2010 election with 75% of the votes and won a four year term in her own right.
By: Bridget O'Shea and
James O'Shea
July 7, 2011
Although it never shared
the notoriety of Miami, Los Angeles and Phoenix during America's foreclosure
crisis, the Chicago area now has the nation's largest inventory of foreclosed
homes because it is harder to unload troubled properties here than in most
other metropolitan areas.
According to data
compiled by RealtyTrac, a California company that tracks housing sales, Chicago
ranks first among the country's 20 largest metropolitan areas. Real estate
experts attribute the high concentration of foreclosures to numerous factors
including the strong protections built into Illinois law to protect borrowers,
the impact of the "robo-signing" investigation by the Illinois attorney
general, and the reluctance of banks to dump properties at prices far below the
value of mortgage loans on their books. As a result, banks and real estate
firms here take longer to dispose of the properties they seize when loans go
bad. The Chicago metropolitan area had 118,776 homes in May 2011 that were
either owned by banks or were in the process of being taken over by lenders
because the owners could no longer afford their monthly mortgage payments,
according to RealtyTrac. The Chicago area inventory exceeds numbers in the Los
Angeles and Miami areas, where the foreclosure crisis seemed particularly
severe, and Chicago's inventory of foreclosed homes is falling more slowly than
elsewhere, real estate and legal experts say. The stubbornly high level of
the foreclosure inventory here also seems to have a negative impact on housing
prices in neighborhoods without a large number of foreclosures. A report from
the Standard & Poor's/Case-Shiller index, a leading measure of the
health of the residential housing market, said Chicago single-family home prices
in April declined 0.4 percent from March while the service's 20-city index rose
0.7 percent, the first increase in eight months. "I don't think you can
say that a person in Lincoln Park will hold off buying a home because things
are not going well in Pullman," said Winifred Curran, an associate professor of
geography at De Paul University who has studied the foreclosure problems in
Chicago. "But there is definitely a ripple effect." That occurs, she said, when
"there is a sense that the city does not have a healthy market."
Some real estate and
foreclosure experts, like Rick Rogers of the Rogers Law Group in Bannockburn,
expressed skepticism about the numbers. Mr. Rogers said it often took far
longer to foreclose on properties in states like Florida, Nevada and Michigan.
Ms. Curran of DePaul also said the RealtyTrac numbers trended high. But
RealtyTrac says it compiles data from more than 2,200 counties throughout the
United States to create a report on the top 20 metropolitan areas that conform
to United States Census tracts. The May 2011 RealtyTrac data, in which the
foreclosure inventory here drifted lower from prior months as sales picked up
slightly, said the Los Angeles area ranked second, with 86,745 homes either
owned by banks or in the process of foreclosure. New York City ranks third with
84,600. The data, which go back to January 2008 -- when the bursting of the
years-long housing bubble was first gaining national attention -- show that the
Chicago region has consistently ranked near the top in the listings. The data
suggest that banks and real estate agents in the area do not sell foreclosed
properties as rapidly as they do in places like Miami, where home prices soared
but then fell quickly. Chicago sells fewer foreclosed homes each month than
any other major metropolitan area except New York, where state laws similar to
Illinois's offer protections that make it hard for banks to drive borrowers
from their homes. During the first five months of the year, for instance, an
average 4,004 foreclosed homes in Phoenix were sold each month. The monthly
averages were only 1,697 foreclosed-home sales in Chicago, while 762 foreclosed
properties sold in New York.
Ms. Curran at DePaul
said that the housing boom in places like Miami had been so hot that banks became
more desperate when prices plummeted and were more willing to sell at lower
prices than in the Midwest, where housing prices rose but at a much slower pace
than in other places. "I think it's the banks; they are not willing to lower
prices," said John Bouman, president of the Sargent Shriver National Center on
Poverty Law, an advocacy organization for low-income people. "So these
properties just sit there empty because they don't want to sell it at a lower
price and lose the money they have in it." Mr. Bouman, who lives in Maywood,
said the foreclosure problems had made it difficult for his family. The house
across the street from him has been vacant for more than a year, he said, and
he knows of two prospective buyers who inquired about the property but could
not get satisfactory answers from the bank. Mr. Bouman said he and his
wife had thought about selling their house and moving to a condominium in
Chicago, but the glut of foreclosures had depressed prices so much that he
could not get enough money for his house to afford one. "Sometimes I think that
it's hard to find anyone at the banks who can make a decision," Mr. Bouman
said, "so these properties just sit there." Geoff Smith, a senior vice
president at the Woodstock Institute, a nonprofit research organization that
specializes in housing issues, said one factor contributing to Chicago's slow
sales rate was that Illinois is a judicial state that requires banks to go
through a court system to foreclose on a property rather than simply filing a
notice to the borrower. Numerous consumer safeguards typically slow down the
process and cause a backlog of cases in the courts. Mr. Smith said the
"robo-signing" scandal currently under investigation by Lisa Madigan, the
Illinois attorney general, also contributed to the slower pace. "Robo-signing"
refers to the robotic generation of erroneous or fraudulent loan documents by
companies that service mortgage loans. Some foreclosures were based on fake
documents, giving homeowners an opportunity to challenge the right of financial
institutions to seize the property.
"Problems were generated
by the servicers not processing these correctly," Mr. Smith said. "This led to
government intervention. The state had to make sure its citizens were
protected." According to a study done by Nicholas Bianchi of National
People's Action, a national community rights organization, the nation's five
largest banks -- Bank of America, Wells Fargo Bank, J. P. Morgan Chase Bank,
Citibank and US Bank -- are involved in three of every five foreclosures in Cook
County. Mr. Bianchi's study says most foreclosures also occurred in black and
Latino neighborhoods. Several banks declined to comment about the reasons
for the slow pace of sales here. Daren Blomquist, the marketing and communications
director at RealtyTrac, said he thought there was a big difference between
foreclosures in the Midwest and the West, where the real estate boom drove
prices sharply higher. Foreclosures of western properties tended to be in
sought-after suburbs, he said, but in Chicago they came in older, economically
weaker neighborhoods.
"In the West, there were
a lot of foreclosures on newer properties in suburbs that might be more
desirable to someone trying to get back into the market," he said. In
contrast, Mr. Blomquist said foreclosures in the Midwest tended to be in
neighborhoods where the property might have been more vulnerable to neglect or
vandalism.
boshea@chicagonewscoop.org
joshea@chicagonewscoop.org