History
The Chicago scavenger rebate program started on January 1st, 1995. It started when a savvy condominium owner noticed that each unit owner was being billed for refuse removal on their real estate tax bill. However, the City of Chicago did not provide garbage pick-up for buildings with over 4 units. The City Ordinance passed by the City Council paid condominium associations the lesser of their actual refuse removal invoices or $75 per unit. The amount of the rebate can be significant. For example, if the association has 600 units the amount would be $45,000! Because of there are so many condominium associations in the city the amount of the rebate claims became a very large burden on the City’s budget. This caused a delay in the payment of claims. Some associations were receiving their rebates 3 or 4 years after the date of filing for the rebate.
The Change
Then approximately two years ago the City Counsel decided to catch up on the past due claims and also passed a very important addendum. They required that all claims must to be filed within 1 year after the year for which the claim was being made. So for example, if you are filing for the 2006 rebate your association has until December 31, 2007 to file the rebate.
The Problem
After that change in the law, we have been finding an astounding number of associations that are losing rebates. On the audits we perform for city of Chicago Associations, the percentage of lost rebates is reaching approximately 60% of these associations. We have even offered a low cost service to file the rebates for the associations however, most of the management companies feel that it is part of the managers job.
Reasons for Lost Rebates
There are many different reasons for the lost rebates. Some of which are as follows:
- A new manager that is not familiar with the Rebate or the Rebate application process.
- A change in management companies where the old and new management company thinks the other would be responsible for the filing.
- Multiple changes in on-site managers which causes changes in filing systems and lost applications.
- Developers that do not know about the rebate and then upon turnover of the association the new management company realizes it is too late to file for the Developer controlled time period.
- Lost applications within the aldermen’s offices where they are initially filed.
- Lost applications within the City’s Scavenger Rebate Department.
The Possible Solutions
Here are some suggestions to follow in order to prevent lost rebates in the future:
- All rebates should be filed with certified mail return receipt requested. Other delivery methods would be acceptable if they provide proof of filing.
- Annually, before the year end, we would encourage all managers to call the City Scavenger rebate department to verify that the scavenger rebate claim for their association is on file. Ph. # 312-744-3332.
- At this point, most management firms make it the responsibility of the on-site manager to file the rebate properly. We would recommend that the responsibility be centralized. A designated person at the management company’s main office keep a master list of their Chicago managed associations. They then can either prepare all the applications or at least receive a copy of the filings by each manager including the proof of filing that is so important to dealing with a lost application.
Lost Scavenger Rebates are a very serious problem for Chicago condominium community. It is money that can be very helpful in keeping assessment increases under control. We had an audit client that was an extreme case but had over $130,000 in lost rebates. I just hope this article gives you some ideas on how to ensure your association(s) are protected from losing rebates that they are entitled to.
Brad L. Schneider CPA
Certified Fraud Examiner
CondoCPA
Certified Public Accountants
977 N. Oaklawn Avenue, Suite 109
Elmhurst, IL 60126
