Property-tax delinquencies up sharply in St. Louis CountyWilliam Kaper’s name was all over the newspaper on June 24, and for a wealthy businessman who’d prefer to avoid the limelight, it wasn’t a good thing.
By: John Myers, Duluth News Tribune
William Kaper’s name was all over the newspaper on June 24, and for a wealthy businessman who’d prefer to avoid the limelight, it wasn’t a good thing.
Kaper wasn’t in any news story. His name appeared dozens of times in a yearly St. Louis County legal notice published in the News Tribune listing property owners who haven’t paid their taxes.
A real-estate speculator and self-described “hustler” who lives in suburban Chicago, Kaper has been buying and selling properties in northern Minnesota for five decades. But like many other property owners, he found himself short on cash when the Great Recession hit and real-estate values plummeted. And, like many others, he didn’t pay his property taxes.
“I’m a buyer and a seller, but things aren’t selling right now down here (in Illinois),” Kaper told the News Tribune. “I lost $14 million last year … not on paper; that was on my tax return.”
Kaper holds the distinction of having the most parcels with unpaid taxes in St. Louis County — 225 — and the third-highest amount owed; nearly $170,000, including this year’s taxes. Only two bankrupt companies owe more. But he’s far from alone.
The legal notice last month listed 919 parcels, owned by hundreds of people, as required by state law under what’s called a Notice of Expiration of Redemption. It’s the longest delinquency list in years — up from 775 parcels last year and nearly double those in 2010.
County officials say it reflects the economic downturn that hit in 2007, with more people unable, or unwilling, to pay their taxes on time.
State law requires five years of nonpayment of taxes before the county starts the delinquency process in the sixth year. These aren’t people who simply forgot to pay their first-half taxes; this year’s list includes properties for which taxes have been unpaid since at least 2008.
“There’s definitely more parcels that are going to the Notice of Non-Redemption stage” of delinquency, said St. Louis County Auditor Don Dicklich. “We don’t know why these (parcels) end up on the list. But obviously it lines up with the economy.”
In addition to the newspaper listing, property owners were sent letters last month notifying them that their grace period for nonpayment is nearing an end.
This month, sheriff’s deputies are hand-delivering notices to people who live on the delinquent property, another step required by state statute. If no one lives there, a notice is pasted to the doorway.
In December, the parcels will be handed over to the county Lands and Minerals Department to be put on the long list of officially tax-forfeited parcels. That means the county officially owns the property which, in most cases, will be put up for sale to the highest bidder.
But there’s still time for Kaper and others to pay up. Nov. 30 is the deadline, and St. Louis County offers even the most delinquent taxpayers the option of a payment plan if they can’t foot the entire bill at once.
“They really have been great to work with in your county. It’s not at all like Illinois,” Kaper said.
Even after the property becomes officially forfeited in December, the old owner gets one more chance to pay back taxes and penalties before the property can be sold. That right of first refusal lasts a year for bare land and never expires for a homestead.
“We don’t send out the eviction notices until about May,” which amounts to the seventh year of nonpayment, said Karen Zeisler of the St. Louis County Lands and Minerals Department. “That spurs a lot of them to pay up.”
Even then, after forfeiture, the county allows people to put 10 percent down of what they owe and start a payment plan, although at that point the county holds the deed to the property until all the taxes are paid.
“We really don’t want to force anyone out of their homes. But the taxes do have to be paid at some point,” she said, adding the county rarely lists a parcel for sale until the October land auction during the seventh year of nonpayment.
Using the county ‘like a bank’
While the list of overdue taxes has grown much longer in recent years, county officials note that the number of properties that actually are forfeited has remained relatively flat. Even after not paying their taxes for nearly six years, most people eventually pay up, and the majority of parcels are retained by their owners.
Of the 775 parcels listed as long-delinquent last year, only 246 actually were forfeited. The other two-thirds were rescued at the last minute when owners paid back taxes, penalties and interest — or at least started a payment plan — by the Nov. 30 deadline. Dicklich said he expects the vast majority of this year’s 919 parcels to be retained by their owners as well.
Because state law leans toward protecting property owners, the system allows five, six, even seven years or more of nonpayment of taxes before forfeiture and eviction. That compares to banks and other lenders who likely would foreclose after a matter of months if you stop paying your mortgage.
“Some people know the system. They know they have time,” Dicklich said.
But it’s not a free lunch. There’s a 10 percent penalty for missing the first year’s property-tax payment for residential properties. From the second year on, 10 percent interest is charged yearly on the unpaid balance. That can add up fast for owners of hundreds of parcels such as those owned by Kaper, who owes St. Louis County nearly $170,000. (He owed more than $200,000 in back taxes until a few days ago, when he sold 26 parcels and the back taxes on those were paid up.)
The long grace period before actual forfeiture also allows property owners to use the county as a sort of safety valve when finances aren’t good.
Kaper is a millionaire who lives on a 7-acre estate in Barrington Hills, Ill. The website Chicago BlockShopper said the home was valued at $30 million and that Kaper was his county’s largest residential taxpayer in 2010 at $121,235. He told the News Tribune he owns millions of dollars’ worth of property in multiple states.
But when his cash flow dipped and he found himself holding properties worth less than what he paid, Kaper said he opted not to pay some of his property taxes.
Kaper said his Illinois property deals have dried up. Land he owns once estimated at $600,000 per acre as a potential shopping mall now is worth about $60,000, he says, and even then it isn’t selling.
“Essentially, I used the county tax office like my bank,” Kaper said. “But now that loan is coming due and I have to pay up.”
Kaper said he will pay his entire overdue tax bill in coming weeks to rescue his St. Louis County land holdings and pass them on to his grandson. Kaper said he owns property across northern Minnesota, and he’s also listed on Pine County’s tax-delinquency list published this year, owing more than $17,000 there.
Kaper said others should know about the county’s willingness to set up payment plans so they don’t succumb to bad decisions.
“I’ve had people, one who literally called himself a bottom feeder, call me in the past few weeks and offer to buy me out for penny’s on the dollar,” Kaper said, noting the “bottom feeder” saw his name in the newspaper. “But why should I deal with them and have to give up my land when I can pay 10 percent down and get a 10-year loan (payment plan) with the state? Everyone who thinks they have to forfeit their land should know about this. The state is really the good guy on this. You don’t have to lose your land.”
Who is William Kaper Jr.?
Kaper, 75, said he grew up in an orphanage on Chicago’s South Side where he later learned to make deals at flea markets. He received a law degree from DePaul University but practiced only briefly, saying he much preferred the rush from real estate wheeling and dealing. He remains a registered attorney in Illinois, records show.
His name doesn’t show up in a search of archived Minnesota news stories, and only a few times in Illinois, despite real estate deals worth tens of millions of dollars that led to major suburban Chicago developments.
He’s also a collector and trader of fine art and antiques. He now owns the opera glasses that Abraham Lincoln used on the night he was assassinated at Ford’s Theater.
“I bought them from Malcolm Forbes for $500,000 through Christie’s. I had them for sale in an ad for $5 million,” Kaper said, noting they still haven’t sold. “I had one offer for $2.8 million (in 2008) and turned it down.”
Kaper now says he wishes he’d taken that offer.
“I told the guy back then it was an insult. … I called him back recently and asked him to insult me again, but he had just filed Chapter 11,” he said with a laugh.
Published reports said Kaper purchased an original painting of the Madonna by Giovanni Battista Salvi il Sassaferrato for $519.75 and later sold it for $240,000.
Kaper once filed suit in an attempt to recoup a $98,000 engagement ring from his former fiancee, who also was his ex-wife — but that’s another story. The suit made headlines in Chicago newspapers for Kaper’s unabashed gall to ask for the ring back. Still, the suit worked. The ex returned ring, which Kaper said he then sold it for $185,000.
“I won’t ever retire. I like making deals,” he said. “I’m still on top of my game. … I still date women in their 40s.”
In the late 1960s (he says he can’t recall the exact year) Kaper said he went on a fishing trip with several guys on some lake near Duluth (he can’t recall the exact lake). But he got terribly seasick. He said he has an inner-ear disease that gives him vertigo, and he couldn’t go back out in the boat. While waiting for his flight to return to Chicago, Kaper said he wandered into the St. Louis County Courthouse in Duluth by chance during a real-estate auction being held for tax-forfeited land.
“I asked them, ‘Is this all titled land, is it legitimate?’ They showed me … and I started buying land that day,” Kaper said. “The land was going for almost nothing, $4 per acre. I think I bought 20,000 acres that day.”
Since then, he’s bought and sold thousands of acres of rural forestland and urban parcels across northern Minnesota. According to county officials, most of the parcels Kaper owns now are blocks of undeveloped land inside the city of Duluth that he purchased a few years ago.
Kaper says for decades Minnesotans didn’t know the deals they had, with land values a fraction of what they were back in Illinois. He said he knew land values would eventually rise in northern Minnesota, and he was right. Now, he’s hoping they will rise even more.
“I lived up there for about a year, in a house on Cook Lake, I belonged to Northland Country Club. I loved it, I had great times,” he said. “I’d really like to buy another home up there,” he said. “You people don’t realize what you have. It’s a great area.”