What Chicago hoped would be a clean break from one of its most notorious landowners has instead turned into another courtroom fight, with city lawyers now suing the company that ran a bulk auction of hundreds of derelict lots that mostly failed to move.
City goes after the auction manager and law firms
This week, the city filed suit against the firm that handled the mass sale and roped in four law firms on related claims, alleging negligence, inflated valuations and improper transfers tied to the bankruptcy auction. The complaints say the auction manager and attorneys got paid even while an injunction was in place that blocked certain transactions, according to the Illinois Answers Project.
Big expectations, thin bids
The bulk auction covered roughly 800 vacant parcels and was billed as a way to turn a long trail of delinquent properties into cash for cleanup and unpaid debts. In practice, buyers were scarce. Only about one third of the lots sold, bringing in around $3.4 million, which left hundreds of parcels untouched and many blocks looking exactly the same. The numbers also showed sales bunching up in relatively stronger micro markets, while deeply disinvested streets attracted almost no interest, according to The Real Deal.
Appraisals, fees and a missing windfall
In court filings cited by city attorneys, an appraisal pegged the whole portfolio at about $17.8 million. City lawyers now argue that estimate glossed over the glut of similar vacant land sitting nearby, and that the high number helped sell officials on a payday that never materialized. The lawsuit says most of the cash that did come in was eaten up by administrative costs and that the auction manager - which collected a $300,000 up front fee plus a commission starting at 7% - failed to produce the kind of financial return the city was led to expect, according to the Illinois Answers Project.
Who scooped up the lots that did sell
The buyers who did bite were a mix of nearby residents formalizing side yards, city agencies and speculative investors. Many of the parcels went for cut-rate prices, roughly $5,000 each, with most of the activity clustered in relatively hotter areas such as Garfield Park and South Chicago. That mix of bargain hunters and ongoing legal fallout, including the city’s push to hold people accountable for the failed cleanup, was outlined by The Real Deal, which quoted the city’s corporation counsel saying officials intend to keep pressing the case.
What it means for neighbors and what comes next
City lawyers say the new lawsuits are another shot at clawing back money and keeping the lots from sliding right back into the same old neglect. ABC7 reported that the legal action follows earlier digging by Block Club Chicago and the Illinois Answers Project that first laid out the staggering backlog of fines and tickets tied to the properties. For now, a tangle of litigation and bankruptcy proceedings will decide who ultimately controls the unsold parcels and whether any recovered funds end up paying for cleanup, redevelopment or city programs aimed at tackling blight on the South and West sides.
