With holiday shopping getting into full swing, things may be hopping at Linens N Things, Ann Taylor Lofts and Panera Bread, all anchors of the River Forest Town Center Two retail mall. But that won’t stop the Taxman Corporation, owner of the mall, from appealing its property tax bill to the Illinois Property Tax Appeal Board as it seeks a $101,000 Christmas present.
Linking forces for the first time, the River Forest village government, District 90 elementary schools and District 200 high school district are fighting back with their own attorneys.
That response will become increasingly common as large retail and industrial property owners across the state have learned in recent years to use tax appeals to substantially lower their property tax bills. Their success has had cash strapped school districts writing substantial tax refund checks to property owners.
According to papers filed with the Illinois Property Tax Appeal Board in October, the Taxman Corp, which owns and operates the property, has asked for a $610,000 reduction in its equalized assessed valuation, from $3.8 million to $3.2 million. If successful, the appeal would ultimately result in a refund from the village and its two school districts to the Taxman Group of at least $101,000 for the 2003 tax year.
The District 90 and the village government first became aware of the situation after officials at the high school district notified them in October. Under Illinois law, boards of review are required to send copies to all local taxing bodies affected by property tax appeals seeking a reduction of assessed valuation more than $100,000.
“There’s a fair amount at stake here,” said Ares Dalianis, an attorney for Franzcek, Sullivan, the law firm representing District 200. “If they get everything they’re asking for, the (school) districts would have to pay refunds for the current (2003 tax year) collections,” said Dalianis.
Dalianis noted that after land acquisition and construction costs, real estate taxes are usually a property owner’s largest predictable expense. Tax appeals are becoming a common occurrence for commercial and industrial property owners, he said.
Taxman Corp. President Tim Hague said Monday that the process was indeed standard procedure for his company and other commercial landlords.
“We retain attorneys, as most commercial landlords do,” said Hague, “to monitor the real estate dollars that we pay to determine whether they’re commensurate with similar properties in the surrounding area.”
Hague said that while he was unsure of the exact amount of the reduction Taxman was seeking, a 15 or 16 per cent reduction “sounds about right.”
Dalianis said Monday that his firm has only received notice of Taxman’s appeal, but hasn’t received any evidentiary material yet. The evidence gathering process, he said, will take a number of months to be completed. PTAB staffer Catherine Paddy said Monday that the board has a significant backlog of cases, and is still dealing with 2002 tax appeals.
According to District 90 Supt. Marlene Kamm, this is the first time that the elementary school board has intervened in a tax appeal. In past years, she said, the board has taken the village’s recommendation to not intervene in appeals by Taxman Corp. This year, she said, “The developer overstepped their boundaries.”
District 200 Chief Financial Officer Cheryl Witham noted that such practices have been increasing since 2001, and that school districts have just begun to develop strategies for responding.
“It’s just recently that taxing bodies have begun to say, ‘wait a minute,'” she said.
OPRF, said Witham, now forwards all assessment appeals over $100,000 to its attorneys, who then determine which ones bear closer scrutiny.
Dalianis said that of some 220,000 appeals of property tax bills for the 2003 fiscal year, “maybe 10,000 to 15,000 will go before the Illinois Property Tax Appeal Board.” While the PTAB website states that it is “considered by many to be a ‘poor man’s court,’ where a taxpayer can get a fair hearing without hiring an attorney or paying filing fees,” the process, say others, has been increasingly used to benefit primarily large property owners.
“As a practical matter, it’s almost exclusively done by the big property owners,” said Oak Park Township Assessor Ali ElSaffar.
Since many of those properties pay hundreds of thousands of dollars in real estate taxes, the stakes are huge, and the consequences of not opposing appeals fiscally devastating. Kamm discovered that painfully during her previous tenure at District 65 in Skokie, which has a huge industrial tax base. Several years ago, one large industrial concern won a large tax appeal.
“In one fell swoop, we lost $3 million,” said Kamm. “It can devastate a district.”
All told, in the 2001 and 2002 fiscal years school districts in Cook County lost some $250 million in revenues through such refunds, according to a 2003 Chicago Tribune article. ElSaffar puts the total loss in revenue to school districts since PTAB began hearing Cook County appeals 1996 at “over $1 billion.”
The phenomenon will continue, say ElSaffar, until legislation is passed that compensates for the effects of PTAB decisions.
“You could resolve this,” he said. “Just let (school districts) pass supplemental levies to recover their losses.”
Legislation to allow school districts to do that was defeated in the Illinois legislature last spring.