A federal judge dismissed a nonprofit private school’s suit against the village of River Forest on July 17, ruling that River Forest has treated Keystone Montessori School no differently than other nonprofits and that its right to seek tax-exempt status is rooted in the state tax law, not the Constitution.
The lawsuit, which was originally filed on March 6 in the Cook County Circuit Court, has been remanded to the circuit court.
“While I express no opinion on the merits of Keystone’s contracts claims, I do question the wisdom of the village’s apparent insistence upon strict compliance with such a patently one-sided agreement,” Judge Elaine E. Bucklo wrote in a federal motion to dismiss.
In September 1998, Keystone began leasing 7415 W. North Ave. and renovating the commercial space to better suit the needs of the school. That October, Keystone claims the village said it would only offer Keystone zoning relief if the nonprofit signed an agreement to never seek a property tax exemption.
Under pressure because classes were already in session and renovations were underway, Keystone signed the agreement that November. In Keystone’s original complaint, the school alleges the village discriminated against it by forcing it to pay property taxes, while other nonprofits in River Forest were able to seek tax-exempt status.
“By granting the permit, the village actually singled out Keystone for favorable treatment, authorizing it to operate at a location where it was otherwise prohibited,” Bucklo wrote in her opinion on the village’s motion to dismiss. “The fundamental flaw in Keystone’s theory is that the right it claims it was coerced into giving up — the right to seek a tax exemption — is not derived from the Constitution. As Keystone explains, that right is rooted in the Illinois property tax code.”
In a statement, River Forest President Cathy Adduci said the village was pleased the lawsuit was dismissed from federal court.
“The village has and will continue to be resolute in its defense of its lawful actions in this matter and in defending the legality of the agreement in question,” Adduci said in a statement. “At the same time, the village stands ready and willing to work with Keystone Montessori School in evaluating possible options to relocate its school to a more feasible site.”
In the statement, she said the village has offered to help Keystone find another location several times, but that the school has turned River Forest down.
Over the years, Keystone said it has made six formal requests to the village to reduce its tax burden, each time being denied by River Forest. The village has said it 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.
Keystone’s attorney, John Mauck, said he feels vindicated the case has been sent back to circuit court.
“It was wasting taxpayer money in federal court, something that is no big deal for the village,” he said in a statement.
The village said there is no immediate timeline for when the Circuit Court of Cook County will hear the case. Keystone seeks $1.1 million in reimbursement for property taxes it paid for two decades, and an end to its agreement with the village.
The school is now late on paying taxes for two years, and the property is now in foreclosure. On July 13, it issued a statement urging community members to support it by following the “Support Keystone Montessori” Facebook page and contacting village trustees.
“Keystone has successfully served the families of River Forest for more than 20 years, and we want to continue to do so,” Vicki Shea, director of Keystone, said in a July 13 statement. “But this situation has made the future of our school uncertain.”