COOK COUNTY, Ill. (WBBM NEWSRADIO) -- The Cook County Treasurer says a study finds that hedge funds, private equity firms and others are exploiting a loophole in state property tax law to make millions in profits at the expense of black and Latino communities.
“Investors from all over the country are drawn to the tax sale like it was the California Gold Rush," said Cook County Treasurer Maria Pappas.
“They’re getting rich from struggling communities. The money they make from the law they helped rewrite should be going to schools, parks, police departments and other government agencies.”
Tax buyers pay the delinquent taxes of property owners.
If the property owners pay it back with steep interest, they get their property back. If they don’t, the tax buyer has an out and Pappas said they’re exploiting it and have been since the law was changed.
They can get their investment returned with interest if they can show there was an error and that can be a small thing.
For example, a property is listed as not having air conditioning when in reality it does or its listed as stucco and is really brick or there’s a mistake in the square footage.
"The money goes back to the taxpayer and the property goes back on the rolls and the taxpayer walks out of the county building with up to 54% interest," Pappas explained.
The government in on the hook for repayment, with interest. Pappas said it has cost $280 million over the past seven years.
She’s recommending changing the law and she said the loophole will be removed.
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