APPEAL from the Circuit Court of Cook County; the Hon. ROBERT
J. DEMPSEY, Judge, presiding.
MR. JUSTICE BUCKLEY DELIVERED THE OPINION OF THE COURT:
This case involves objector's "complaint" filed in answer to the county collector's complaint for tax judgment levied against 12 parcels of real estate located on the City of Chicago's north side. The circuit court found objector's evidence to be insufficient to sustain their complaint regarding the assessment ratio applied to rental residential properties by the assessor. Objector brought this appeal.
There are three issues in the instant case: (1) whether in 1972, the Cook County assessor possessed authority to classify real property for the purposes of taxation; (2) whether that power was properly exercised in the form of the quadrennial assessment against objector's property; and (3) whether the assessment invidiously discriminated against objector in violation of the Federal or State guarantees of equal protection of the laws.
Mid-Continental Realty Company owned 12 high-rise apartment buildings which were subject to real estate taxation in 1972 and which were the subject of a specific objection to the collector's application for sale of delinquent 1972 real estate taxes. All are located in North and Lakeview Townships in the City of Chicago. The 1972 quadrennial assessments of 11 of the parcels that have been the subject of prolonged litigation were raised in the aggregate $4,044,773 over their prior 1968 quadrennial assessments, an increase of about 26%.
Prior to initiating the proceeding at bar, objector filed an action for injunctive relief in the Chancery Division of the Circuit Court of Cook County to have the increased 1972 quadrennial assessments declared unlawful and void as constructively fraudulent and rendered in violation of various Federal and State constitutional provisions. After the evidence at trial was taken, proofs closed, and the matter set for decision, the trial court ruled in accordance with the newly published decision in Clarendon Associates v. Korzen (1973), 56 Ill.2d 101, 306 N.E.2d 299, that it was without jurisdiction to proceed because objector had an adequate remedy at law by way of payment of taxes under protest and an action at law to recover them. The cause was dismissed without prejudice to objector's right to bring the action at law.
Objector paid in full the 1972 real estate taxes levied upon the 12 parcels and simultaneously delivered written protests to the Cook County collector (Ill. Rev. Stat. 1973, ch. 120, pars. 675, 716), which set forth the amount of taxes paid and alleged that the tax rates and assessed valuation upon which they were based were illegal and void. Pursuant to the Illinois Revenue Act of 1939, objector brought suit by properly filing objections with the Circuit Court of Cook County. See People ex rel. Thompson v. Clark (1975), 34 Ill. App.3d 228, 233, 338 N.E.2d 408, 410.
By stipulation of the parties, the testimony taken in the prior proceeding before the chancery court, together with additional proofs, were presented to the court for decision. In 1972, for taxation purposes, the county assessor assessed on high-rise apartment properties such as Mid-Continental Realty's at a rate of 40% of full fair market value. Such assessed valuation amounted to $22,526,997 for all 12 buildings. It thus appeared that the assessor using the 40% rate of assessment, determined the full fair market value of the properties at approximately $56,000,000.
The objector contested this valuation amount and presented appraisers Enright and Strobeck who testified that the properties were worth substantially less. The appraisers used substantially the same capitalization rate and viewed the same raw documentation as to income and expenses. Appraiser Enright gave his opinion as to the value of 11 of the 12 buildings. Enright included as an expense substantial ground rent payments attributed to the objector's properties at four of the 12 locations. Appraiser Strobeck likewise included ground rent payments as an expense.
The trial court found that the inclusion of such ground rent expenses improperly reduced the amount of net income which, under the income approach to valuation, is capitalized in order to gain the present worth of the projected future income flow generated by the property. The trial court also found that the appraisers had "in effect * * * claimed 14 months tax expenses as a deduction against one year's income." The appraisals put forward by the objector thus substantially underestimated the value of the properties because of the inclusion of improper expenses.
The trial court quantified such errors in a table which accompanied its opinion. These "revised appraisals" which reflect the inclusion of the amount of valuation excluded by the objector's appraisers, show an increase of approximately $4.5 million in value. When this addition is added to the base valuations shown for the objector's appraisers Enright and Strobeck, the aggregate value of the properties is at least $50 to $51 million according to the objector's own evidence. The trial court thus found that there was insufficient evidence of either overvaluation or constructive fraud.
The court rejected objector's arguments that the assessment ratio applied to rental residential properties by the county assessor, and the classification scheme upon which that ratio was based, invidiously discriminated against objector and apartment dwellers generally in violation of the equal protection clauses of the Federal and State constitutions, and the reasonable classification and uniformity provisions contained in article IX, section 4 of the Illinois Constitution of 1970. The court additionally held that the methods used by the county assessor in determining the assessed values of objector's properties were not arbitrary and capricious, and that the assessed valuations were thus not constructively fraudulent as alleged by objector. Therefore, the court ruled that Mid-Continental's evidence was insufficient to sustain their complaint against the collector and entered judgment for the collector. Mid-Continental Realty Corporation brings this appeal from the judgment of the circuit court.
• 1 Mid-Continental Realty initially contends that the classification system employed by the assessor in 1972 was "de facto classification" totally lacking in legal effect. However, in 1972 the Cook County Assessor, without first securing authority from the County Board, possessed the power to classify real property for the purposes of taxation, absent enabling legislation passed by the General Assembly. (Ill. Const. 1970, art. IX, § 4(b).) In La Salle National Bank v. County of Cook (1974), 57 Ill.2d 318, 312 N.E.2d 252, a similar argument was raised and rejected. The court looked to section 4(b) of article IX of the 1970 Constitution providing:
"Subject to such limitations as the General Assembly may hereafter prescribe by law, counties with a population of more than 200,000 may classify or to continue to classify real property for purposes of taxation." (Emphasis added.) (Ill. Const. 1970, art. IX, § 4(b).)
The italicized language was construed by the supreme court as authorizing the continuance of classification by the assessor in Cook County. The authority is, however, subject to such limitations as the General Assembly may prescribe by law. The General Assembly prescribed limitations on this ...