DECATUR, Ill. (NEXSTAR) — A new law closed a loophole that allowed tax buyers to profit off abandoned homes. Decatur will be one of the many cities benefiting from it.
Decatur Deputy City Manager Jon Kindseth has a backlog of abandoned homes in his city. It takes a lot of time and money to tear down a home, but the most difficult hurdle for local governments is acquiring the homes in the first place.
That’s why Kindseth, and city government officials from across Illinois, wrote a bill to fix the problem, and Governor Pritzker just signed that bill into law.
“This is probably the largest tax reform bill in Illinois in the last two decades,” Kindseth said. “It’s that significant. It not only lowered interest rates for homeowners that are delinquent on their taxes, but it ultimately reduces a lot of loopholes that tax buyers have been exploiting for the last two or three decades.”
Many blighted homes are stuck in a loop. A tax buyer purchases delinquent taxes owed by the current owner, and eventually owns the property. But in some cases, the tax buyer will never put any work into restoring the property.
Instead, they wait and let it deteriorate. Then, after a three-year period, they can go to the local government and claim a sale in error, saying there’s no way they can fix the property. Then they get their money back, plus interest.
This new law closes that loophole by drastically limiting the number of reasons someone can declare a sale in error. Now, the only acceptable reasons are ones that are completely out of the owners control, like severe weather or a natural disaster.
“Even though we didn’t entirely close all of the ability to get sale in errors, we significantly reduced it, and the most important thing is we kept the clock from restarting,” Kindseth said. “And so, once that three years is up, that property is disposed of. Oftentimes in the past, when the property wouldn’t sell at a tax auction, it would just show up at the next tax auction a year later.”
Decatur officials are thrilled about the change. Now, they feel confident they can start chipping away at their list of homes to demolish, but more importantly, work on homes before they get beyond repair.
“Hopefully, it’ll keep some homes from going on the demolition list because maybe they can be rehabbed through Habitat for Humanity or some of these other entities that are rebuilding these houses,” Decatur Mayor Julie Moore Wolfe said.
Cities across Illinois worked on this legislation, including Chicago advocates.
“The legacy property tax sale system sacrificed community development to private profits. These reforms create new opportunities to transform neighborhoods beset by decades of systemic neglect,” Andrea Sáenz, President & CEO of The Chicago Community Trust, said in a statement. “This is an important new tool for cities and counties across Illinois to spark economic development.”
The law goes into effect at the start of the year.