By Jeffrey A. Brown

As Published in Real Estate Chicago, November 2000

 

Lower levels of assessments for Cook County commercial property owners?  It’s a possibility, if three recent decisions by the Illinois Property Tax Appeal Board (PTAB) are upheld by the Illinois courts.

The PTAB was created in 1967 by the Illinois General Assembly to provide property taxpayers with a state-level administrative forum in which to challenge local property tax assessments.  Any taxpayer or taxing district unhappy with an assessment decision of a local county board of review was thus able to file an appeal with the PTAB, as an alternative to the only previous remedy, a tax objection lawsuit in the Illinois circuit court.

Before 1995, however, the PTAB’s jurisdiction was limited to Illinois counties outside of Cook County.  An act of the General Assembly changed that to include Cook County, precipitating the three PTAB decisions discussed below, which have set the stage for potentially reduced commercial property tax assessments in Cook County.

In Corporate Lakes of Matteson LLC, Docket Nos. 97-202780-C-3 through 97-20286-C-3 (March 10, 2000), the PTAB held that the appropritae level of assessment for vacant land in Cook County is 11.97% of its fair market value, rather than 22%, the level at which vacant land in Cook County had been previously assessed.

In Robert Bosch Corporation, Docket Nos. 97-22106-I-3 and 97-22107-I-3 (March 10, 2000), the PTAB held that the appropriate level of assessment for industrial properties in Cook County is 34.47%, as opposed to the previous figure of 36%.  Even more recently, in Advantage Bank FSB, Docket No. 97-21731-C-1 (June 1, 2000), the PTAB once again changed the level of assessment, this time for commercial properties (primarily office buildings, hotels, shopping centers and other retail properties, all of which historically have been the most heavily taxed properties in Cook County) to 31.03% of their fair market value, a staggering decline from the previous level for commercial properties – 38%.

How did the board come to these remarkable decisions?  In each case, the PTAB’s assessment reduction stemmed from the way in which it calculated the tax assessment, once it had determined the appropriate fair market value for the property.  Rather than applying the customary ordinance levels of assessment found in the Cook County Classification Ordinance (22% of fair market value for vacant land, 36% for industrial property and 38% for commercial property), the PTAB instead chose to apply percentages derived from the Illinois Department of Revenue’s sales ration studies for these classes of property.  The DOR’s studies indicated significantly lower assessment levels than the percentages contained in the Classification Ordinance – the figures that the PTAB ultimately used – of 11.97% for vacant land, 34.34% for industrial property and 31.03% for commercial property.

The PTAB’s modification of the level of assessment amounts to a 46% reduction in the tax assessment imposed on vacant land in Cook County.  More importantly, it amounts to almost a 20% decrease in the level of assessment for the much larger portion of the Cook County tax base derived from the downtown Chicago office buildings, city and suburban hotels and shopping centers, and the huge number of other commercial properties located throughout Chicago and suburban Cook County.  Although the decrease in tax assessment for industrial properties is a somewhat less dramatic 4.25%, the reduced tax burden would be substantial in terms of hard dollars for larger industrial facilities.

If upheld by the Illinois courts, these PTAB decisions would greatly reduce the property tax burden on the owners of commercial, industrial and vacant land parcels in Cook County.

Because of the tremendous potential for revenue loss to Cook County and its taxing districts resulting from the PTAB’s decisions, the Cook County Board of Review has filed appeals of each of these decisions with the Illinois Court of Appeals.  Given its significance, the issue could well go all the way to the Illinois Supreme Court.