The village of River Forest recently filed a motion to throw out a lawsuit by a nonprofit private school, contending Keystone Montessori School’s complaint is untimely and that the school entered a voluntary, binding and rational agreement with the village to pay property taxes in November 1998.

Keystone filed its lawsuit against the village on March 6 in the Cook County Circuit Court, alleging River Forest officials said they would only approve the school’s zoning permit if Keystone agreed never to seek a property tax exemption. The lawsuit claims its agreement with the village contravenes public policy and constitutes unconstitutional condition, illegal contract zoning, illegal perpetual contract, and equal protection violation. The school is asking for reimbursement for attorneys’ fees, $1.1 million in property taxes they said they paid over two decades, and an end to its agreement with the village.

In the motion to dismiss, filed March 20 in the federal district court in the Northern District of Illinois, the village argues the school’s two federal complaints are subject to a two-year statute of limitations and its three contract claims are subject to a five-year statute of limitations. Therefore all of Keystone’s charges are untimely, the motion said. 

If the court chooses not to throw out the case because of timeliness, the motion also asserted that charges should be thrown out because Keystone knowingly signed an agreement to contract away its rights. In the lawsuit, Keystone argues its agreement with the village violates the Illinois tax code, which states “all property of schools, not sold or leased or otherwise used with a view to profit, is exempt [from property taxes].”

The village motion contends, “While it is true that the Illinois property tax code regulates exemptions from property taxes in Illinois, the code does not provide that it is the public policy in Illinois to prohibit parties from contracting away their right to property tax exemptions. Instead the law provides that statutory rights, such as the right to property tax exemptions, can be knowingly waived or contracted away.”

River Forest argues that Keystone had a right, and voluntarily agreed, to contract away its right to seek exemption from property taxes, according to the motion. It also argues that the village rationally sought to ask Keystone to waive its ability to seek property tax exemption, which explains why Keystone, of the three other private, nonprofit schools in River Forest, Keystone Montessori is the only one that pays property taxes.

River Forest is “disheartened by Keystone’s lawsuit, given our contractual relationship for the last 20 years and given that Keystone has chosen not to pay their property taxes, which shifts their property tax burden onto all of our residents and business owners in the village,” Village President Cathy Adduci said in a statement.

Keystone, 7401 North Ave., was incorporated as a nonprofit in 1994, and educates children from infancy to eighth grade, according to the lawsuit.

Over the years, the lawsuit states, Keystone made at least five formal requests to the village to reduce its tax burden. In a statement, the village noted it has assisted Keystone at least three times in issuing and refinancing $2.5 million in bonds for Keystone’s benefit by using the village’s tax-exempt government bonding authority.

In a statement, Keystone said it was “pleased that the judge has scheduled what we consider an expedited ruling for June 22.”

CONTACT: ntepper@wjinc.com

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