Chicago's deadbeat migrant shelter landlords get millions from City Hall despite tax troubles, government debts

The city of Chicago has spent $28 million to shelter migrants at two buildings owned by Remo Polselli, a Michigan landlord who went to prison for cheating on his federal taxes — and has continued to face tax problems with the IRS, records obtained by the Chicago Sun-Times show.Polselli’s companies own the Inn of Chicago and the old Standard Club, both being used by the city as migrant shelters.In 2003, he pleaded guilty to federal tax charges that — while running a hotel in suburban Detroit — he “deducted and collected” nearly $2.5 million in withholding and Social Security taxes from his employees but didn’t turn the money over to the IRS, records show.Polselli, who also pleaded guilty to failing to file federal income tax returns in 1995 and 1996, was sentenced to more than two years in prison. Then in February 2023, the IRS filed a separate federal tax lien against him, saying Polselli owed $1.4 million for his 2018 personal income taxes.The IRS action came as City Hall began paying to house migrants in two Polselli buildings in Chicago, records show: the Inn of Chicago, 162 E. Ohio St., and the former Standard Club, 320 S. Plymouth Court.The old Standard Club, 320 S. Plymouth Court, where the city of Chicago has a migrant shelter.Pat Nabong / Sun-TimesHe’s one of two Chicago migrant shelter landlords getting taxpayer money while behind in paying debts they owe to the government, the Sun-Times found.Polselli’s and his wife’s battles with the IRS went on for years, including a case that went to the U.S. Supreme Court last year. In September, he began paying the IRS $22,000 a month to resolve his debt, according to his lawyer. Those payments are to continue until the debt is paid, according to an order from the U.S. Tax Court.“I’ve paid the IRS over $5 million over the last few years,” Polselli says. “It’s a dispute that’s been resolved.”City Hall has spent more money to lease Polselli’s buildings for migrant shelters than it has for any others, according to city records. It began leasing those buildings in early 2022 under Mayor Lori Lightfoot and has continued to lease them under Polselli says he has enough empty beds to house more migrants if Texas Gov. Greg Abbott, a Republican, follows through on his threats to bus more asylum-seekers to Chicago to try to disrupt the Democratic National Convention, which begins Monday.“There is available bed space at both properties,” Polselli says, declining to discuss the terms of his migrant housing deals.Johnson aides and others familiar with the situation say City Hall didn’t pick or push for Polselli or any of the other landlords who have leased their properties as housing for thousands of migrants sent to Chicago from the Mexico border. Many of the arrivals have come over the last year or so amid turmoil in their native countries.People gather outside a migrant shelter at the Inn of Chicago, 162 E. Ohio St.Pat Nabong / Sun-TimesCity Hall had a contract with Equitable Social Solutions when it also tapped the Louisville, Kentucky, social services company to help as the migrant crisis grew worse. Equitable subcontracted with ReloShare Inc., a Chicago company, to find property managers who could provide shelter for the new arrivals.None of the landlords the city of Chicago is using has a contract with City Hall. They’re paid by one or both of those private companies using taxpayer money from City Hall. Much of those taxpayer dollars comes from the city, Cook County and the state of Illinois, some ultimately from the federal government, officials say. City records show the landlords are paid for each bed regardless of whether those beds are occupied.As of May, the city had spent more than $28 million since February 2023 to lease Polselli’s buildings, records show. It’s unclear how much Polselli has gotten from that.Besides his unpaid income taxes, Polselli also is behind on his property taxes, records show, owing $660,840 in property taxes on the old Standard Club.Once the is over, Polselli says he expects to resume his plans to renovate the hotel and convert the Standard Club into residences.City Hall also spent $12.3 million between September and May to lease three buildings co-owned by developer Scott Goodman. More recent figures weren’t available. The Sun-Times previously reported that for a West Loop building where his companies operate. The CTA also was seeking $15 million in late fees.Officials say Goodman has been making payments toward his debt to the CTA, but still owes more than $1 million in leasehold taxes on those CTA offices at Racine Avenue and Randolph Street. He has been subleasing some of that CTA space to the Democratic National Convention’s host committee. Leasehold taxes are paid by businesses that lease property from government agencies.Goodman’s businesses also own three buildings that have been leased to shelter migrants: 1308 N. Elston Ave., 2241 S. Halsted St. and 344 N. Ogden Ave.Those three facilities have a total 4,300 beds, making Goodman the city’s biggest migrant shelter landlord.Goodman and a partner, Arthur Hollis, didn’t make payments on an $11.5 million mortgage on the Ogden property for several months, according to a lawsuit their lender filed in May that accuses Goodman and Hollis of fraud, saying they used the money to convert the building to migrant housing instead of offices. Goodman and Hollis have denied any wrongdoing.Scott Goodman.Mitchell Armentrout / Sun-TimesCourt documents show ReloShare is paying Goodman and Hollis $150,000 a month under a lease that’s set to expire Dec. 31. They owe $123,376 in property taxes on the Ogden property, records show.A year ago, Steve Pearlman, Goodman’s lawyer, sought a property tax break on the Elston property, arguing that it was mostly vacant. Cook County Assessor Fritz Kaegi declined to lower the property assessment, but the Cook County Board of Review slashed Kaegi’s assessment, which resulted in Goodman paying $53,321 less than he did the prior year. Those tax savings came as he began collecting rent for the migrants.Goodman didn’t return calls seeking comment.A building that’s being used as a migrant shelter at 1640 W. Walnut St.Peyton Reich / Sun-TimesCity Hall also leases these other buildings for migrant shelters through Equitable Solutions and ReloShare: