Nearly eight months after bills were due, Cook County is still awaiting close to $200 million of its commercial property tax collections for the second half of 2019 as COVID-19 keeps strangling economic activity.
According to data from Cook County Treasurer Maria Pappas, landlords have yet to pay about 6 percent of commercial property taxes that were originally due last August, with late fees waived through Oct. 1. And with those payments still owed, another $1.1 billion is outstanding for 2020 property tax bills that were due in early March—more than one-third of the total amount billed—though property owners can still pay those without penalty before May 3.
The delinquencies highlight the pain still afflicting major commercial properties more than a year into a pandemic that has devastated many commercial landlords. Those that haven’t paid either of the past two bills also give some clues about owners that may be giving up their fight to weather the storm and hold onto their properties, choosing perhaps to let their lenders or other parties deal with them down the road.
Among the prominent downtown properties whose owners have not paid their 2020 bill and are still delinquent on their 2019 second installment: The Hilton Chicago Downtown hotel on Michigan Avenue and the W Hotel on Lake Shore Drive, as well as the Drake hotel on the Mag Mile and a property at 330 E. Wacker Drive owned by GEMS World Academy, a Dubai-based international school.
In the suburbs, owners of the River Oaks Center mall in Calumet City and the defunct Lincoln Mall in Matteson are on the list of landlords with both bills outstanding.
As a comparison, about 7 percent of 2019 first installment commercial property tax bills weren’t paid on time—or roughly the same share that is still outstanding for the 2019 second installment eight months later.
That shows how bad things are for commercial landlords and the daunting recovery ahead for downtown, said Pappas, who laments the number of vacant storefronts on high-profile corridors like Michigan Avenue and State Street.
"There are a number of commercial buildings that (could) go into foreclosure, and for me, where I sit, that is a sad scenario," she said. "I spent 52 years working to build this city and watching it go into a downward spiral is sad to say the least. I look at it and I say, ‘how many more years will it take for this to come back?’ "
Pappas’ data spotlights the rough past 12 months for hoteliers, with travel crushed by the pandemic and many owners facing possible foreclosure after missing loan payments. At the 1,544-room Hilton Chicago and the W Hotel on Lake Shore Drive combined, Tysons, Va.-based owner Park Hotels & Resorts still owes more than $6.1 million for its 2019 tax bill on top of what it owes so far for 2020. Chicago-based Lodging Capital Partners, which is part of the joint venture that owns the Drake, hasn’t paid that property’s $1.3 million tax bill for the second half of 2019 or its $1.6 million 2020 bill, according to the data.
Neither company responded to a request for comment. Nor did a spokesman for the pandemic-stung mall owner Namdar Realty Group, which still owes 2019 taxes for River Oaks.
Some properties under distress are unsurprisingly on the list of 2019 delinquent bills, such as the Pittsfield Building at 55 E. Washington St., which is in receivership and also delinquent on its 2017 and 2018 tax bills, county records show. A 41-story Loop office tower at 105 W. Adams St., where the owner of most of the property and its lender are battling in court, also has an outstanding 2019 bill.
The non-payment total for the 2019 second installments has dramatically shrunk since the original Aug. 3 due date, when roughly one-third of the $3.3 billion the county billed for that period was outstanding. The county has collected about $3.4 million in late fees for those, as taxpayers are subject to an interest penalty of 1.5 percent of their bill for every month they are late.
But now owners of some of the area’s best-known properties are once again taking advantage of the two-month grace period for the 2020 first installment bills.
That list includes Willis Tower, where private equity firm Blackstone Group still owes nearly $19.3 million in property taxes for its first 2020 installment, and Woodfield Mall, where Indianapolis-based mall giant Simon Property Group has nearly $10.8 million outstanding. Other properties with outstanding 2020 bills include the office towers at 300 N. LaSalle St., 70 W. Madison St. and 1 N. Wacker Drive; as well as Northbrook Court, Old Orchard, Orland Square and Chicago Ridge malls.
Some investors argue landlords are practicing sound financial management holding onto cash as long as they can without penalty, but Pappas rebuked any taxpayers that are able to pay but choosing not to until just before late fees are assessed.
"This was designed for those in need due to COVID," she said citing commercial property owners "with great financial statements" who didn’t pay. "What they’re doing by not paying is putting stress on a taxing district that would have otherwise gotten that money…. That’s not what the (waived late fee) ordinance was intended to do."
The two-month extension on late fees will also apply to the property tax bills due this August, but Pappas said she plans to encourage the county board to issue a statement promoting the honor system for paying by the deadline.
"If you can pay, pay," she said. "And the people who don’t, I’ll just publish the list. I’m not going to police them, I’ll just embarrass them."
via Crain’s Chicago Business https://ift.tt/1mywUHL
March 31, 2021 at 09:03PM