The long-running and litigious battle between the village of River Forest and Keystone Montessori School reached a notable but split decision in June as an Illinois appellate court ruled that the school on North Avenue could claim tax exempt property tax status as a nonprofit but that it could not reclaim the $31,585.68 in recently paid property taxes it was seeking.
The issue dates back a quarter century to when the Montessori school relocated into a commercial property – a large bridal salon – on North Avenue. An agreement was made at the time between the village government and the school that it could move in if it agreed to pay property taxes and to not appeal that decision in the future.
The First District Appellate Court of Illinois ruled that the original contract between Keystone Montessori School, 7415 W. North Ave., and the village of River Forest is void, according to a June 25 press release from the school’s attorneys, Mauck & Baker, LLC.
According to the press release, Keystone will now work to reclaim its nonprofit real estate tax exemption, suspended after the village appealed the Illinois Department of Revenue’s decision granting one to the school. Keystone attorneys predict appeal proceedings will be successful for the school.
The village, however, won’t have to reimburse the school for any of the property taxes Keystone says it was forced illegally to pay over the years. In this most recent battle, Keystone was asking only for $31,585.68 to be returned to them, though previously they they had sought damages of $1.1 million for property taxes paid.
In a statement, River Forest President Cathy Adduci said they are “pleased” the request for reimbursement was dismissed but expressed dissatisfaction with the decision regarding the contract.
“The village is disappointed with the appellate court’s decision invalidating Keystone Montessori School’s property tax agreement, and the unfair tax burden it now puts squarely on all River Forest taxpayers,” said Adduci in the statement. “Nearly 25 years ago, school officials willingly and knowingly entered into an agreement with the village promising to pay property taxes on the North Avenue location they are in, prior to moving into this important commercial corridor. It is disheartening that the school has put such substantial financial resources into court battles, when the village has consistently offered to help the school find an alternate location where they could appropriately seek tax exempt status.”
At the heart of the bitter legal battle between the village and Keystone is the original contract between the two entities, a contract that led to Keystone suing River Forest in Cook County Circuit Court in 2018. Keystone’s claim was that the school’s original zoning approval, which they accepted at the time, included an agreement that the school would never seek a property tax exemption. But Illinois tax code states that “all property of schools, not sold or leased or otherwise used with a view to profit, is exempt” from property taxes.
The lawsuit claimed that the original agreement regarding property taxes, which the school entered into willingly, was unconstitutional and illegal. Keystone Montessori asked for reimbursement for attorneys’ fees, an end to the original agreement with the village, and reimbursement of property taxes they say they should never have paid.
In December 2018, the Illinois Department of Revenue granted Keystone a property tax exemption, but the village appealed that ruling.
In 2019, the school faced foreclosure, which they blamed on the village’s alleged illegal insistence on the payment of property taxes. At that time, an anonymous donor stepped in and bought the school’s mortgage bonds.
In the June 25 press release, John Mauck, attorney for Keystone, said, “The obstinate insistence by the Village of River Forest to enforce an illegal contract has harmed many. But Keystone is certainly gratified that the appellate court has confirmed the opinion of the circuit judge that a real estate tax exemption is a ‘quintessential right’ for schools.”
“As far as next steps,” Adduci said, “the village will continue to weigh its options, as our fiduciary responsibility is to represent and to protect all River Forest taxpayers.”
This article was edited on July 12 to reflect the fact that in the most recent legal battle, Keystone was asking only for $31,585.68 from the village, according to Keystone attorneys, not $1.1 million as they had in the past.