May 13, 2015

Unpaid property taxes total $2.5 million, but investors give delinquents time to pay

Print
Champaign County Treasurer Dan Welch by the county seal i the board room where delinquent properties are auctioned in Urbana, IL on Monday, May 4, 2015.

Darrell Hoemann/CU-CitizenAccess.org

Champaign County Treasurer Dan Welch by the county seal i the board room where delinquent properties are auctioned in Urbana, IL on Monday, May 4, 2015.

Last year Bell Sports in Rantoul had about $108,000 in unpaid property taxes.

The former Gateway Studios property in Champaign had about $104,800.

And Mennenga Construction Inc. in Urbana had about $84,200.

These properties were the top tax delinquents in Champaign County as of October 2014. In total, the county was owed $2.5 million in delinquent taxes from 987 properties.

The delinquent properties included hotels, small businesses and homeowners. Tax records from the last five years show hot spots in east Urbana near Weaver Park and in east Champaign between Douglass Park and University Avenue.

Mennenga Construction declined comment and Bell Sports did not return phone calls. Taxes on the former Gateway Studios property have not been paid since 2009. The property was taken over by the city last year and taxes were wiped clean when the deed was transferred to Kelly Dillard, owner of Dig It of Champaign.

Much of the owed taxes, however, is recovered by the county through its annual tax sale in October. That is when financial investors from across the state and country purchase most of the delinquent property taxes owed by paying the county.

In Illinois, if property taxes are still left unpaid by May of the year after the taxes are owed, property owners are given notices to pay half of the tax amount by June and the second half by September of that year.

If taxes are still unpaid the day before the annual tax sale, the taxes are auctioned off at the sale to buyers. The buyers are reimbursed by the county with interest if the taxpayer pays back the taxes within two to three years.

“A lot of people who are delinquent have figured out that it’s cheaper to have their taxes sold than to try to go get a loan from the bank,” said Sasha Green, lead tax extension specialist in Champaign County. “A lot of ours just wait until their income tax return comes.”

Dan Welch, Champaign county treasurer, said less than one percent of all property taxes in the county actually went to the tax sale in 2014 when owners failed to pay their bills. He said the tax sales are a way for the county to collect taxes they would not normally get.

However, at the end of the sale in October, there were 49 properties not sold to buyers. Many of those properties included homeowners and small businesses with bankruptcies or a history of tax delinquency. Joseph E. Meyer & Associates, which acts as the county’s tax agent, bought the remaining taxes with the maximum interest rate of 18 percent. That means the property owners would have to pay the delinquent taxes plus 18 percent interest.

Without a tax sale, Welch said the county could lose about $2 million each year from unsold taxes.

“That extra two million bucks means something to taxing districts,” he said.

Since October’s sale, some taxes have been paid. But others remain, some from years ago.

Records from the county treasurer’s office show that 68.5 percent of taxes sold in October still have not been paid off.

Green said it’s normal to see a high number of taxes from the most recent sale still unpaid. While delinquent owners have up to two to three years to pay off their back taxes, generally they are paid off within the first year, she said.

For example, 32 percent of taxes are unpaid from 2012 while only about 3 percent of the taxes remain unpaid from 2010.

If taxes are not paid, the buyer can apply for the deed to the property, although Welch said this seldom takes place.

“Very little property changes hands or is lost by a taxpayer through a tax sale,” Welch said. “The buyers aren’t interested in the property — they’re interested in the return on their investment.”

The annual tax sale

Before the sale begins, each buyer hands the treasurer a blank check to be filled out at the end of the sale. Buyers, who work for professional investment companies, begin the bidding at 18 percent. The lowest bid of interest rate pays the taxes of that particular property.

The last sale saw a weighted average interest at 1.14 percent, the lowest interest rate since 2004, according to treasurer records. Welch said this is due to competition with the number of buyers and the addition of an automated system added about six years ago.

“Each year stands on its own,” Welch said in relation to the average. “I do think there are some issues related to the economy and how well the economy is doing.”

Welch said it is not uncommon for buyers to bid zero.

“Why would anybody bid at zero? Because in the state of Illinois there’s something called subsequent taxes,” Welch explained. “In the next year if they aren’t paid, (buyers) can get (the taxes) for 12 percent.”

He added that since companies buy in volume from across the state, they would receive interest from other properties above zero percent.

While buyers last year differed in size and some worked for companies based as far as New Orleans, 58 percent of the taxes were sold to buyers in Champaign County.

Janson Investment Co. in Champaign purchased, under two names, almost 30 percent of the taxes, or roughly $630,000.

Welch said many companies sign up for the sale under several different names to be successful with their bids to buy the taxes.

Other top buyers included: Central Buyer Corp. from Evanston, Realtax Developers Ltd from

Peoria, MS Investment Group Inc. from Peoria and Scrub A Dub Inc. from Wise, Virginia.

All tax buyers declined to comment.

Welch said the biggest misconception he hears from taxpayers is that if they do not pay their taxes one year, they will lose their home or business.

“That’s not really what the sale is about. The tax sale is about giving an opportunity to have more time,” he said. “It costs you more money and the chances of losing your property are not very great, and that’s huge for people to understand.”

Locations of Unpaid Property Taxes

This interactive map shows the locations for unpaid property taxes throughout the community. Switch through layers to see more or less detail.

Choose to see the heat map or only the locations from the “Visible layers” menu at the top of the map.

Search for a specific location or feature on the map using the search bar.

Please note: if the heat map fails to load after its been turned back on, change the zoom level of the map. This is a known bug that is being fixed.