After nearly a year of debate, a judge granted Keystone Montessori School tax exempt status on April 2, ruling that the village’s agreement to offer zoning relief in exchange for tax dollars was never valid.
The “court ruling was a long-awaited and wonderful validation of Keystone’s real estate tax exemption status,” Vicki Shea, director of Keystone, said in a statement. “We are a school and, as any school, we contribute to the community’s well-being by re-enforcing the importance of education by providing a diversity of educational approaches for local residents.”
In March 2018, Keystone took the village to court, alleging that 20-years ago River Forest officials said they would only approve the school’s zoning permit for an existing commercial building on North Avenue if Keystone agreed never to seek a property tax exemption. Because the state guarantees schools a property tax exemption, Keystone argued that the agreement with River Forest was not valid. The school asked the village for reimbursement of attorneys’ fees, $1.1 million in property taxes it said it has paid over two decades, and an end to the agreement. Its complaint was filed just weeks before Busey Bank moved to foreclose on the school’s more than $2 million mortgage.
“I would hope that the village has the decency to reimburse the school for taxes that it shouldn’t have had to pay,” said John Mauck, an attorney for the Chicago-based Mauck & Baker law firm that represented Keystone.
He added that Keystone has applied for a refund for taxes it paid over the last three years from the Cook County Assessor, the longest amount of time the assessor will refund. In December 2018, the Illinois Department of Revenue granted Keystone property tax exemption for the 2017 tax year, but the village appealed the decision.
“So, again, we would hope that they would have the great decency to drop that appeal,” Mauck said. “Sometimes a good court decision can change hearts.”
He estimated that the Department of Revenue will make a decision on the village’s appeal sometime in the next 30 days and that he expects the state to affirm the court ruling.
“We expect that not having to pay real estate taxes, the school can operate in the black and save River Forest residents many thousands of dollars every year because these students do not have to be educated at the public’s expense,” Mauck said.
In a statement, the village said it disagrees with the court’s decision, and that it was “unlikely” a long past village board would have ever entered into an agreement with Keystone “had it known that they would have retracted on their promise” to always pay taxes. The village pointed to the fact that 50 percent of River Forest land is inhabited by institutions that are tax exempt as proof that the village supports schools and nonprofits.
“Keystone Montessori operates on a valuable piece of property in our commercial corridor that would otherwise be taxable and provide property tax relief to our residents,” the village said in a statement.
River Forest recently certified a new tax increment financing (TIF) district along the school’s location on North Avenue, in an effort to spur development.
“It is unfortunate that Keystone Montessori has chosen to fight the village instead of working together in earnest to find a way to relocate to an appropriate location where Keystone Montessori can continue to educate,” the village said in a statement.
Mauck said Keystone always said it would move if there was an appropriate, affordable building available.
“It’s one thing to say, ‘Oh we want you to move.’ It’s another thing to say, ‘Here’s a spot that works and is not going to put students on the street,” Mauck said. “They want to stay in River Forest, and that’s part of the problem, because River Forest seems to want to get its hand on its property.”
He said he believed the case set a precedent by clarifying to municipalities that zoning was not conditional to “waiving tax exemptions. You can’t do that to groups that are entitled to exemption, period. Whether it’s schools, hospitals, churches, or something like that.”