Cook County’s $1 million tax bust
The county wiped out a vacant warehouse’s unpaid taxes to get someone to buy it. Three years later, it’s still vacant, and taxpayers are out even more money on the failed deal.
For years, nobody wanted the abandoned warehouse in the west suburbs.
A big reason: The building — an old perfume factory in Bellwood — had unpaid property taxes topping $1 million that anyone who bought it would have to pay.
To try to get the property once again bringing in taxes, the Cook County Land Bank Authority stepped in.
The county government agency was established in 2011 to do that very sort of thing and given an unusual power to help make it happen: It can wipe out any unpaid taxes on vacant property so prospective buyers won’t have that added financial burden. All they have to do is fix up the property, and they get a bargain. And the county gets property taxes once again coming in to support schools and other government functions.
That’s how it’s supposed to work.
But it didn’t in Bellwood. The building is still vacant, nearly three more years of taxes have gone unpaid, a court fight’s underway, and taxpayers are likely to end up being out even more money on the whole thing.
The failed deal has become a $1 million tax bust for the county land bank authority, which has come under scrutiny and been the subject of two critical audits since the Chicago Sun-Times reported in November 2019 on an insider deal involving Chester Wilson, chief of staff to Ald. Carrie Austin (34th). Wilson donated a dilapidated building to the land bank, which wiped out his unpaid property taxes, penalties and interest — more than $200,000 — and, at Wilson’s recommendation, sold the building to his onetime business partner.
Just one bidder was interested in the Bellwood property. It paid the county $250,000 for the warehouse in 2017, with plans to convert the 27,000-square-foot building into a not-for-profit urban farm and culinary school.
That rehab hasn’t happened because the new owner, Urban Transformation Enterprises, says it shouldn’t have to pay any taxes on the warehouse property because it’s a not-for-profit charity. The state has signed off on that, but the final decision rests with the Cook County assessor’s office, which says it hasn’t seen evidence to justify removing the property from the tax rolls.
Land bank officials aren’t happy about the delay. They’re suing to take back the warehouse and keep all of the money Urban Transformation paid for the property, saying it violated the terms of its deal by not rehabilitating the place within two years.
“Every homeowner in Cook County knows they have a legal obligation to pay property taxes,” says Tarrah Cooper-Wright, a spokeswoman for the land bank. “The current owner is out of compliance with the legally binding agreement because he failed to complete the rehab within the agreed-upon rehab period.”
Cooper-Wright says taxpayers aren’t losing any money on the warehouse because, given that “the property was vacant for 10 years, that $1 million is likely at this point not to be paid.”
Urban Transformation president Donald Patterson and his lawyer say they haven’t been able to do the rehab because the village of Bellwood — which wants somebody paying taxes to move in — won’t give them building permits.
Now, Urban Transformation has dropped its plans to turn the warehouse into a farm where people, including some coming out of prison, would get valuable job training.
But, rather than let the county take back the property and lose what it paid Patterson wants to do one of two things:
- Lease the warehouse for $10,000 a month to Perry Mandera, a clout-heavy businessman who’s awaiting a license from the state of Illinois to grow marijuana there — a process that’s been delayed by the COVID-19 pandemic.
- Or sell the property for $350,000 to a neighboring business that wants to expand its rug importing company — if the assessor approves its application for an industrial tax break that would cut the real estate taxes by 60% over the next decade.
“We’re preparing to sell it,” Patterson says. “I didn’t buy it to sell it. But I don’t have a choice. Robert Rose is trying to take it.”
Rose is the land bank’s executive director. Records show he initially supported Patterson’s plan to grow produce inside the warehouse.
But the Nov. 10, 2016, sales agreement and a letter he sent Bellwood officials on June 27, 2018, indicate that his understanding was that Urban Transformation intended to seek only the industrial tax break of 60% on its property taxes.
The letter came weeks after Urban Transformation announced that, as a not-for-profit organization, it actually was seeking a complete exemption from the taxes.
About a year later, Rose emailed Bellwood Mayor Andre Harvey: “We are in the process of taking 2821 W. Grant back from Don Patterson so that we can find a more suitable buyer.”
Now, the whole mess is in court, where Cook County Circuit Judge Anna Loftus has scheduled a hearing on the land bank’s lawsuit for Nov. 12.
Records show the Bellwood warehouse is one of 25 properties on which property taxes haven’t been paid since the land bank sold them to new owners.
That’s 3% of the 1,068 properties the land bank says it has sold. It says the rest of the owners are current, and the land bank says they have paid a combined total of more than $100 million in property taxes.
After the Sun-Times report last year on the deal involving Wilson, Cook County Board President Toni Preckwinkle ordered an outside audit of the agency created by Cook County Commissioner Bridget Gainer with the aim of redeveloping abandoned buildings in distressed neighborhoods. The auditors’ recommendations included requiring the land bank to document that it has vetted potential buyers of the properties that it’s bought or seized for failure to pay property tax.
In a separate audit, issued Oct. 29, Cook County Inspector General Patrick Blanchard also criticized the land bank for poor record-keeping.
The land bank is one of six government agencies that have a role in the future of the one-story warehouse on Grant Avenue in Bellwood, which for now remains an eyesore riddled with mold and broken windows.
Solo Laboratories once owned three warehouses on Grant Avenue, including the one at 2821 Grant Ave. that Urban Transformation now owns. Solo walked away from the properties in 2016, essentially donating them to the land bank rather than pay the $1 million-plus it owed in taxes.
The land bank sold one of the warehouses to a rug importer, another to a printing supplier and the third to Urban Transformation.
Patterson — who also runs a tax-preparation service in North Lawndale and unsuccessfully ran for 24th Ward alderman in 2007 — started Urban Transformation in 2015 with grants from four West Side churches. He later reported also getting grants from the U.S. Department of Agriculture.
Patterson put in his bid to buy the warehouse weeks before being notified in November 2016 by the Internal Revenue Service that Urban Transformation would be certified as a tax-exempt charity.
He later started another company, Urban Transformation Farms, to raise money for the charity. It recently sold more than $8 million in COVID-related protective clothing to the state of Illinois, which he says is part of that effort.
After the land bank’s board of directors approved the sale in late March 2017, Patterson took possession of the warehouse in May 2017. Some highlights of what’s happened since:
June 3, 2017 — Patterson signed a contract with an architect.
Feb. 1, 2018 — The architect applied for a building permit to redo the electrical system, bathrooms and other interior work. The village denied it, saying it needed more information.
Feb. 6, 2018 — Bellwood’s zoning administrator emailed the mayor and chief buildings inspector with concerns: “Mr. Patterson did not have a clear idea of what he wanted to do, nor could he tell us what they do. He said he wasn’t the right person for that… [The buildings inspector] also says that the Village prefers the property to be a taxable entity versus not for profit.”
Patterson’s attorney Lester Barclay says, “We thought we were doing some good in the ’hood. Then, we got into, ‘You need to sell this.’ We don’t want to sell this. Then, it was, ‘You’re not going to get a permit.’
“We hit a brick wall. We thought we would buy the facility, refurbish the facility and train people to work in restaurants. We needed to create a kitchen, a work environment that made sense for the training program we were going to do. You want to play by the rules. We’re not going to build out something without full authority from the village. We couldn’t get that. You’re caught in the middle of somebody’s political game.”
May 1, 2018 — Urban Transformation notified Bellwood it had asked the Illinois Department of Revenue to certify it as exempt from paying property taxes.
“We told him it couldn’t be tax-exempt because we don’t do tax-exempt,” Mayor Andre Harvey says. “All those taxes go back on the taxpayers, which is not something we really want to do. When we talk about economic development, we want to do things to help the village grow, not to take properties back off the tax rolls.”
June 27, 2018 — Rose wrote to Bellwood, citing what he described as Urban Transformation’s plans for a partial tax break on the warehouse “for growing fresh produce, packaging and canning processes,” by employing former prison inmates he called “returning citizens and other hard-to-employ members of the community.”
Dec. 20, 2018 — The state rejected Urban Transformation’s request to exempt the warehouse from property taxes because the vacant building wasn’t being used for tax-exempt purposes.
June 5, 2019 — Rose emailed the mayor: “We are in the process of taking 2821 W. Grant back from Don Patterson so that we can find a more suitable buyer.”
Sept. 23, 2019 — Reversing its earlier decision, the state decided Patterson shouldn’t have to pay property taxes on the warehouse after all — as long as it’s used for a tax-exempt purpose.
Sept. 25, 2019 — The land bank sued Urban Transformation to get the warehouse back, also saying it should forfeit all of the money it paid for the building.
“We paid a quarter of a million dollars,” says Barclay, Patterson’s lawyer. “We own the property outright. But now you’re going to take our property without just compensation? There’s something sinister about that.”
Dec. 9, 2019 — Weeks before recreational marijuana became legal in Illinois, Bellwood village trustees approved the creation of six cannabis business licenses.
March 10, 2020 — The Herbal Care Center, owned by Perry Mandera, submitted a zoning application, seeking Bellwood’s permission to grow marijuana in Patterson’s warehouse.
March 29 — Mandera notified the Illinois Department of Agriculture he had agreed to rent Patterson’s warehouse for $10,000 a month if the state approves his grower’s application.
May 6 — As part of the state’s coronavirus response, the Illinois Emergency Management Agency paid $2.5 million for 500,000 isolation gowns from Urban Transformation Farms, which operates from Patterson’s tax-prep office. Its registered agent is Victor B. Dickson, president and chief executive officer of the Safer Foundation, which finds jobs for people who have criminal records. A week later, Urban Transformation Farms sold another $6 million of “coveralls for COVID19 response.”
“We purchased product, and the state purchased it from us,” Patterson says. “The purpose is to sell product and put money into the nonprofit. It’s another funding source to put people to work.”
May 30 — MDA Rug co-owner Miltjadh Iljadhi agreed to buy Patterson’s warehouse for $350,000 — if Bellwood and the assessor grant him a tax break that would slash the property taxes by 60% for 10 years. The sale also depends on getting the land bank’s OK. The village board has since given its approval.
Whatever’s decided in court about the vacant warehouse in Bellwood, the Cook County treasurer’s office says Donald Patterson owes $308,363.84 in property taxes to cover the period since he bought it from the land bank, plus penalties and interest.
If the county succeeds in its effort to take back the property, it likely would have to once again wipe out the unpaid taxes to find another buyer.