OVERVIEW: ANNUAL AND SCAVENGER PROPERTY TAX SALES. Office of Cook County Treasurer Maria Pappas

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1 OVERVIEW: ANNUAL AND SCAVENGER PROPERTY TAX SALES Office of Cook County Treasurer Maria Pappas October 3, 2012

2 SUMMARY Property Tax Cycle Overview Annual Tax Sale Scavenger Tax Sale 2

3 PROPERTY TAX CYCLE OVERVIEW Treasurer s Office Annual Property Tax Duties Bill 1.7 million parcels Collect $11 billion Distribute 2,200 taxing agencies Billing Cycle Taxes billed twice a year in 2 installments Taxes billed and collected in current calendar year are for prior calendar year 3

7 million parcels Collect $11 billion Distribute 2,200 taxing agencies

4 PROPERTY TAX CYCLE OVERVIEW Tax Billing Example Tax Year 2010 Billed and Collected in st Installment Due 4/1/11 2 nd Installment Due 11/1/11 Annual Tax Sale in /3/12 to 8/8/12 After Annual Tax Sale is conducted, Cook County Clerk responsible to produce any tax bill for tax year

Annual Tax Sale in 2012 8/3/12 to 8/8/12 After Annual Tax Sale is

5 ANNUAL TAX SALE Sale of delinquent taxes of most recent tax year that takes place typically is 7 to 9 months after 2 nd installment due date Tax Buyers are purchasing delinquent taxes, NOT the actual property Purchase of delinquent taxes results in a tax lien on the property which may result in the tax buyer acquiring title to the property Property owner has several opportunities to pay (redeem) sold taxes and satisfy the tax lien Typically 6 months to 2-year period before a tax buyer can file in court and be issued a deed to the property 5

property which may result in the tax buyer acquiring title to the property Property owner has several opportunities to pay (redeem) sold

6 ANNUAL TAX SALE Purpose of the Annual Tax Sale is to collect the full amount of any delinquent taxes due on the parcel for the tax year being sold for distribution to the agencies Rules of sale dictated by Illinois statute Tax Buyers must pay: Delinquent taxes due Interest on delinquent taxes Certain tax sale fees 6

distribution to the agencies Rules of sale dictated by Illinois statute Tax

7 ANNUAL TAX SALE 2010 Annual Tax Sale Timeline 11/1/11 2nd installment due date 5/30/12 Parcels published in newspapers 6/1/12 Delinquency notice to homeowner sent by certified mail 6/1/12 to 7/24/12 Tax buyer registration 8/3/12 to 8/8/12 Tax sale 7

6/1/12 Delinquency notice to homeowner sent by certified mail

8 ANNUAL TAX SALE Certain Parcels Excluded From Sale Delinquent taxes less than $100 Parcels part of a Federal bankruptcy case Parcels in the process of being purchased/acquired by another local government entity Parcels issued a certificate of error by the Cook County Assessor s Office Parcels forfeited three times in the prior three annual tax sales. Approximately 15,000 PINs per sale were removed in the 2007, 2008, 2009 annual tax sale. 8

issued a certificate of error by the Cook County Assessor s Office Parcels forfeited three times in the prior

9 ANNUAL TAX SALE Tax Sale Bidding Process Tax buyers bid a % from 18% down to 0% of what the property owner has to pay above the amount of taxes and interest due to the tax buyer Lowest bid wins (reverse auction) Tax buyers required to pay taxes purchased next day to Treasurer s Office 9

taxes and interest due to the tax buyer Lowest bid wins (reverse

10 ANNUAL TAX SALE Tax Sale Bidding Process (continued) Treasurer s Office distributes collected taxes to taxing agencies after the sale Cook County Clerk issues tax certificate to tax buyer and takes responsibility for process going forward regarding property owner redemption and interaction with tax buyer to acquire tax deed 10

issues tax certificate to tax buyer and takes responsibility for process going

11 ANNUAL TAX SALE - ONLINE Treasurer s Office implemented an online electronic tax sale at in 2008 Now the sale takes place over 4 days Previously the sale took 4 to 6 weeks Bidding conducted using online site Automated process replaced traditional open outcry auction Registration, collateral deposits and payment of taxes managed online All processes were previously done manually by staff 11

com in 2008 Now the sale takes place over 4 days Previously the sale took 4 to 6 weeks Bidding

ANNUAL TAX SALE Annual Tax Sale Statistics Tax Year Sale Date Parcels Published Parcels Offered Parcels Sold Parcels Forfeited $ Sold Parcels 2007 Aug.

12 ANNUAL TAX SALE Annual Tax Sale Statistics Tax Year Sale Date Parcels Published Parcels Offered Parcels Sold Parcels Forfeited $ Sold Parcels 2007 Aug ,728 29,787 23,848 5,939 $103.4M 2008 Sep ,181 33,114 21,399 11,715 $102.5M 2009 July ,484 37,827 20,814 17,013 $90.4M 2010 Aug ,418 49,462 16,419 33,043 $78.2M 12

2009 62,728 29,787 23,848 5,939 $103.4M 2008 Sep.

13 SCAVENGER TAX SALE Occurs every 2 years in odd numbered years. Next sale is in 2013 Sale historically takes place in December Sale of taxes where for a parcel 2 or more tax years for the past 20 years are still delinquent Typically: distressed properties, vacant lots, abandoned commercial property, small/irregular shaped parcels 13

for a parcel 2 or more tax years for the past 20 years are still delinquent

14 SCAVENGER TAX SALE Purpose of the scavenger tax sale is to sell taxes that typically are no longer generating property tax revenue that will result in a new owner acquiring a tax deed who will pay the taxes going forward resulting in tax revenue to the taxing agencies Taxes can be sold for less than total taxes and interest due Minimum bid is $250 on a parcel Example: Total amount of taxes are due for $10,000 for 5 years, taxes are sold for bid amount of $

resulting in tax revenue to the taxing agencies Taxes can be sold for less than total taxes and interest due Minimum

15 SCAVENGER TAX SALE Traditional incremental bidding process where highest bid wins Winning bid can exceed actual taxes due Sale is open outcry auction that takes typically 4 or 5 days Cook County can also obtain parcels for municipalities through the no-cash-bid program 15

open outcry auction that takes typically 4 or 5 days Cook County

16 SCAVENGER TAX SALE Property owner has opportunity to redeem taxes. In some cases tax buyer can typically go to deed in a shorter time frame 6 months for vacant land Similar to annual tax sale Treasurer s Office collects payments from tax buyers and distributes to taxing agencies Clerk s Office has responsibility over procedures for property owners to redeem and tax buyers to obtain a tax deed. 16

Similar to annual tax sale Treasurer s Office collects payments from tax buyers and distributes to

17 SCAVENGER TAX SALE 2011 Scavenger Tax Sale Timeline 11/30/11 and 12/3/11 Published PINs in Newspapers 12/2/11 to 12/22/11 Tax Buyer Registration 12/30/11 Scavenger Sale Sale conducted in 10-day span 17

18 SCAVENGER TAX SALES Scavenger Tax Sale Statistics Sale Year Sale Date Parcels Published Parcels Offered Parcels Sold $ Parcels Sold 2007 Dec ,060 4,712 1,326 $5.9M 2009 Dec ,531 9, $1.9M 2011 Dec ,258 19,285 1,112 $3.2M 18

Parcels Sold 2007 Dec. 2007 6,060 4,712 1,326 $5.9M 2009 Dec.

19 DISCUSSION 19

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