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What’s behind Chicago’s Vacant Buildings Ordinance?

by Joe Zekas on 8/9/11

We recently featured the 1st Ward Alderman’s blast at lenders who disagree with his position on the recently-passed Vacant Buildings Ordinance, which will treat property lenders as owners and require them to maintain vacant buildings in foreclosure.

For several years there’s been a trend for lenders to abandon the foreclosure process on properties that have little or no economic value – that’s the situation with 1,000s of properties on Chicago’s South and West sides. The owner has walked away and the lender declines to complete the foreclosure process and take title, leaving no one in practical control of the property.

Electing not to complete a foreclosure is, of course, the lender’s right. But we’re in Chicago, where exercising your rights, or even mentioning that you have them, is often perceived as disrespecting the powers that be. Witness Ald. Moreno’s snarl that it would be “outrageous” for a lender to factor its costs of doing business in Chicago into the price it charges for loans in Chicago, or simply forgo doing business in Chicago, as would be its theoretical right.

The City Council of Chicago, like J.P. Morgan, typically has two reasons for what it does: a good reason, and the real reason.

What’s the real reason for the Vacant Buildings Ordinance?

Chicago has ceased being the city that works and become the city that fines. Is this another way to generate city revenue from fines? Is the City Council trying to encourage more donations of land to the city or to the legion of churches that exist only to park land off the tax rolls? More bulldozing business for favored contractors? More inventory for the city’s Adjacent Neighbors Land Acquisition Program, which requires a letter of support from the local alderman? None of the foregoing, some or all of them, or …?

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{ 8 comments… read them below or add one }

JM August 13, 2011 at 12:23 AM

This is corporate Propaganda at it’s worst.

These banks are using a loophole to allow these homes to sit vacant instead of spending the money to sell them on the Free Market. The reason they don’t want to file foreclosure proceedings is in the hope that the land/home will eventually recover it’s value, but a vacant house drags ALL the values of the other homes around it WAY DOWN, by at least 5-10%

I am a real estate appraiser and the banks are doing this same thing ACROSS THE NATION. Abandoning properties where they evicted the owners who were taking care of the property, then letting the home sit empty.

They are saying, “It’s OURS you CAN’T HAVE IT! AND NOBODY ELSE CAN EITHER!”

They MUST be forced to pay for it’s maintenance and upkeep (all over the US) or these homes will continue to devalue the ENTIRE US real estate market.

Reply

Joe Zekas August 13, 2011 at 1:50 PM

JM,

Your response is anti-corporate paranoia at its worst.

Reply

Dee August 17, 2011 at 10:03 AM

Wow, what a corporate ass kissing article. Who wrote this dumb blurb – the tea party? Banks are decimating entire neighborhoods and after their billion – almost trillion dollar bailout you are feeling sorry for the banks. What a tool you are.

Reply

Joe Zekas August 17, 2011 at 10:44 AM

Thanks for your thoughtful, tightly-reasoned analysis of this complex issue.

Reply

Daniel Ehrman October 26, 2011 at 6:58 PM

Yikes. Strong opinions all around. I’m not sure what good the blame game is going to be for any of us. If blighted neighborhoods ever improve it will be to the benefit of both the banks and the politicians. There are about 8,000 churches in the Chicago area and I would suggest the vast majority of them provide far more value to their communities than the lost tax revenue might provide. Sure there are those using their exempt status as a land tax dodge, but that’s more for the businesses they’re running under the umbrella of their 501c3. (“Community” non-profits soliciting the donation of property that is appraised at a low value, repackaged and appraised at a high value and sold to unsuspecting constituents is a far bigger issue that reinforces disenfranchisement and isolation.)

I would suggest the politicians really do have a generally good intent with this legislation. There are those banks that have zero good intentions and are simply trying to maximize profits. But there are also those lending institutions that truly want to see communities grow and prosper, working towards win-win agreements, bringing capital opportunities to those who have only experienced disenfranchisement.

As a collective city it would be amazing to experience redevelopment in the south side communities. I would suggest this doesn’t start with money, education or jobs. It starts with virtues taught in the churches: integrity, serving your neighbor, loving others, etc. Only from a foundation based on more than sinking sand can a community experience holistic development from which your word is your bond and a contract is a contract, laws are enforced fairly and justly, and opportunities for jobs and education and eventually money arise up from a basis from which they might be earned. Otherwise we read that: “The dog returns to its own vomit, and the sow, after washing herself, returns to wallow in the mire.”

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Joe Zekas October 26, 2011 at 7:49 PM

Daniel Ehrman,

Reading your comment and looking at your website I have only one reaction: talk to an attorney about fair housing laws.

My take is that your invitation on your website to “submit your name, church name, church address, and your position at church” for access to info is a blatant violation of the letter and spirit of fair housing laws.

YoChicago does not tolerate any use of this site to further discrimination and will delete any future comments you make along those lines.

You have a legal obligation as a real estate licensee to keep religion out of your online solicitations.

Reply

Daniel Ehrman October 27, 2011 at 11:51 AM

Hi Mr. Zekas -
Thanks for your constructive feedback regarding our website. I’ve adjusted the language you reference according to your advice. Thanks for checking out our site.
All the best to you in your new efforts.
Sincerely,
Daniel Ehrman

Reply

Joe Zekas October 27, 2011 at 3:55 PM

Daniel,

From what I can see you’ve done no such thing. The language I see today is identical to what I quoted yesterday.

I’ve deleted the links to your website so that our readers can no longer click on your name and visit a site that fosters discrimination. Any future links you enter will be deleted.

Reply

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