Tax Sale Limbo Shields Commercial Property Cook County

A stalled tax enforcement system is quietly giving Chicago landlords a break.

Hundreds of commercial properties — including distressed Loop office towers and downtown hotels — are sitting on tens of millions of dollars in unpaid property taxes without accruing penalties, as Illinois lawmakers delay a fix to the state’s now-unconstitutional tax sale system.

Crain’s reported that an analysis of Cook County Treasurer data found roughly $53 million in delinquent commercial tax bills — about 47 percent of the total slated for last year’s sale — are effectively frozen, with no new interest or fees piling up. The tax sale, originally scheduled for December, has now been postponed twice, most recently to August.

The pause stems from a 2023 U.S. Supreme Court ruling that found aspects of tax sales unconstitutional, specifically the practice of governments allowing investors to seize properties and retain excess equity beyond the tax debt owed. Illinois has yet to update its system, leaving Cook County in a holding pattern.

The delay was intended to shield homeowners — particularly low-income and elderly residents — from losing equity. But it’s also creating an unintended benefit for commercial owners, whose larger tax bills would otherwise rack up steep monthly interest, according to the publication.

That’s no small perk. Delinquent taxes in Cook County typically accrue interest at 0.75 percent per month until a tax sale, when the county auctions off the debt to private buyers. The threat of that sale has long been the county’s most effective collection tool, the outlet reported.

“It’s the threat of the sale and the eventual loss of the property that gets people to pay,” Treasurer’s Office policy director Justin Kirvan told the outlet.

Without that pressure, some high-profile properties are in limbo. The Burnham Center at 111 West Washington Street carries the largest outstanding bill, according to the outlet, at about $5.1 million, tied up in a foreclosure that recently handed control to a venture led by developer Mike Reschke and investor Igor Gabal.

In the West Loop, loft offices at 820 and 850 West Jackson Boulevard have nearly $2 million in unpaid taxes. as their ownership navigates a bankruptcy and recapitalization. Along the Magnificent Mile, the Drake Hotel is sitting on a $2.6 million bill, while the nearby Whitehall Hotel owes about $760,000.

Even non-distressed assets are caught in the freeze. MHub, the manufacturing incubator backed by public subsidies, has held off on paying an $810,000 bill while pursuing a tax exemption.

The total $113 million in delinquent taxes tied to the postponed sale is small compared to the $18.3 billion billed countywide. In 2024, property owners paid $48.2 million after receiving tax sale notices, far outpacing the $35.5 million generated from the auction itself.

— Eric Weilbacher