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IL State Govt. Follows Chicago’s Lead With Vacant Property Ordinance

by Chicago Agent

A new bill working its way through the Illinois state government would allow cities to impose Chicago-style fees on vacant homes.

The Illinois House is taking a page out of the city of Chicago’s textbook and considering a vacant property ordinance based on new fees and regulations.

Due for a House vote soon, the bill will provide local governments with the authority to fine property holders as much as $1,000 for every six months a residential building is vacant, according to a Chicago Real Estate Daily article on the legislation.

The bill is based on Chicago’s ordinance from last fall, which requires the owners of vacant properties to perform regular maintenance beginning within 60 days of the property’s default and pay a $500 registration fee. Owners need to board windows, shovel snow, trim the grass and perform other tasks to uphold the property’s – and neighborhood’s – value and esteem, along with fighting the spread of crime (vacant properties have been hot beds for criminal activity) and salvaging county’s falling tax revenues.

The FHFA, however, took immediate difference to the ordinance, filing a lawsuit against Chicago that alleged it was unfair for Fannie Mae and Freddie Mac, the GSEs the FHFA regulates, to pay for properties before they technically foreclose and own them. The FHFA has been extremely aggressive in its legal response, even asking for a summary judgment in the case to dismiss the ordinance not before it went to trial, but before the city presented its legal defense against the charges (and still, the case is far from over).

Such legal gymnastics, though, have done little to sway state lawmakers, said Sen. Jacqueline Collins, a Democrat representing Chicago. Collins said that though the bill did not have the vacant housing measures when originally passed by the senate in April, Chicago’s law motivated the House to include such details.

“I think the impetus the city placed on passing that ordinance gave us the groundwork,” Collins told Chicago Real Estate Daily. “Everybody is facing an economic downturn and we cannot afford for our municipalities to incur these costs.”

Interestingly, though the bill does place burdens on lenders similar to Chicago’s ordinance, four major banks in the area have already agreed to a compromise with Karen Yarbrough, a Democrat from Broadview, that quickens the foreclosure process by allowing mortgage holders to receive foreclosure judgments from circuit courts if the borrowers to now respond to initial summons within 30 days.

Of course, as with Chicago’s law, there are detractors to the state’s direction, especially from smaller community banks that fear the contraction of credit the law could inspire.

“The whole reason any municipality would want to do this would be to raise money,” said Kraig Lounsberry, senior vice president of governmental relations for the Community Bankers Association of Illinois, which represents 480 Illinois financial institutions, in the article. “Community banks would certainly take this new law into consideration in their underwriting standards when they’re considering loans in municipalities that would have such an ordinance.”

The article also notes that regardless of when the bill passes the House, it will need to be voted on again by the Senate to approve the new amendments.

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