Cook County must fix the problem of unpaid leasehold taxes

The number of businesses that are getting away with not paying the Cook County property taxes they owe keeps growing — and for the sake of our schools, parks and other entities that rely on that tax revenue, county officials have got to find a way to fix the problem.

Because of cracks in the system regarding leasehold taxes, businesses have failed to pay almost $90 million due to Cook County, according to a Sun-Times Watchdogs investigation.

The latest example of how the system is failing involves a Montessori preschool and a salon and spa that leased property from the University of Illinois Chicago and together owe over $1.2 million in unpaid taxes, as Watchdogs reporters Tim Novak and Lauren FitzPatrick reported Sunday.

That’s part of the $89.7 million figure the two reported back in June, when we called for a crackdown on delinquent businesses and for fixes to the longstanding problem.

Governmental agencies and nonprofits, like hospitals, are exempt from Cook County property taxes. But if they lease out part of their property to a for-profit business, that business is supposed to pay. Too often, those taxes go uncollected.

“It’s one of the frayed edges of the property tax system that does not get much attention,” one person familiar with the system told us back in June.

That “frayed edge” needs to be repaired.

‘Not the university’s job’

Since 2012, the University of Illinois Chicago has leased storefront property at University Village Maxwell Street to a Montessori school — and by state law, UIC is required to report any new tenants to the Cook County assessor’s office within 90 days.

Which of course makes sense — besides being the law — because how else would the assessor’s office know who’s supposed to get a property tax bill?

That didn’t happen, the Sun-Times found. So Cook County never sent the preschool owner a tax bill until three years ago — and then for only one of the three storefronts the school occupies. Instead, Cook County kept sending tax bills to the previous occupant, who now owns a salon in LaGrange.

“I’m a pretty good law-abiding citizen that pays all of her taxes,” the preschool owner told the Sun-Times.“I have never not paid a tax before that I have been assessed.”

To make matters worse, the salon owner also owed unpaid leasehold taxes of some $400,000, the Sun-Times found.

There’s room for every institution involved in the leasehold system to tighten ship. In the case of the Montessori school, the assessor’s office admits it missed chances to notice, during the administration of the owner’s tax appeal case, that the preschool occupied three storefronts, not one, and that the bills for the other two were being sent erroneously to the former tenant.

Delinquent businesses have to pay up, too. Last year, tax bills went to 1,220 leasehold properties that owed a collective $88 million — but one in four of those leaseholders didn’t pay up.

Leaseholder properties make up only a small percentage of the 1.8 million properties in Cook County — but their revenue is essential.

They have to pay up, like everyone else.

(Correction: A previous version of this editorial incorrectly stated that the $1.2 million in unpaid leaseholder taxes owed to Cook County by two University of Illinois Chicago tenants was in addition to $89.7 million previously reported. The $1.2 million is part of the $89.7 million.)

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