APPELLATE COURT OF ILLINOIS, FIRST DISTRICT, FIRST DIVISION
541 N.E.2d 1166, 185 Ill. App. 3d 797, 133 Ill. Dec. 728
Appeal from the Circuit Court of Cook County; the Hon. Joseph M. Wosik, Judge, presiding. 1989.IL.994
JUSTICE O'CONNOR delivered the opinion of the court. MANNING, P.J., and CAMPBELL, J., concur.
DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE O'CONNOR
This is an appeal from a declaratory judgment entered in favor of plaintiff, Design Studio International, Inc. (Design Studio). The trial court held that Design Studio's obligation under its lease to pay a portion of any real estate tax increases paid by its lessor, Helene Curtis, should be based on the building as it existed prior to the improvements made by Helene Curtis. We affirm.
On February 16, 1979, plaintiff, Design Studio, executed a lease and rider with L.I.R. Associates, as agents for Michigan Avenue National Bank, as trustee under trust No. 1158.
The lease was for a term of five years from June 1, 1979, through May 31, 1984, and covered a store and basement premises in what was then known as the Exhibitors Building at 331-35 North Wells Street, Chicago, Illinois. The building was a 70-year-old, nine-story brick building with a small lobby housing some 30 to 40 tenants who exhibited home furnishings for sale to retailers or the public.
Howard Galler (Galler), the president of Design Studio, negotiated the lease directly with Daniel Comroe (Comroe), the then owner of the Exhibitors Building. The provisions of the lease which were the subject of this declaratory judgment action are paragraphs 23and 24of the rider. Paragraph 23provided:
"Lessee agrees to pay as additional rental hereafter for each calendar year succeeding 1978, the 'base year,' during the remainder of the term, including any extensions or renewals thereof, a portion of any increase in the real estate taxes paid by lessor during the 'base year.' Said proportion shall be such fraction as the number of square feet of rental space of the leased premises bears to the total rental space in the said building.
Said additional rental shall be payable in a lump sum on the first day of June of each calendar year for which the additional rent is payable, but only after Lessor renders a Statement to Lessee thereof."
"2. 'Building Area' in Building means all of the office and store area.
3. 'Occupancy Factor' is 5% (.05) which is the ratio of the premises to the total Building area in the Building."
In October of 1981, Helene Curtis purchased the property in which Design Studio's premises were located for about $2 million. Title was taken by Helene Curtis in the name of Chicago Title & Trust Company, as trustee under trust No. 41080664. Helene Curtis terminated the leases of every tenant in the Exhibitors Building with the exception of Design Studio, which could not be terminated because of the renewal provisions in its lease.
Between 1982 and 1984, Helene Curtis spent approximately $20 million renovating the building which it renamed the Helene Curtis Building. The building was gutted and two new floors were added. The building was rewired, and new plumbing, heating, air-conditioning, ventilation and windows were installed. The building is now used exclusively by Helene Curtis with the exception of the portion leased by Design Studio. The area leased by Design Studio was left essentially unchanged except for some work on the heating and sprinkler systems. Defendant does not dispute that Design Studio has no access to, nor is it allowed to make any use of, the new building.
In 1982, the Exhibitors Building had an assessed value of $631,975, real estate taxes were $81,977.79, and Design Studio's proportionate share of the real estate tax was $2,133. Design Studio paid its tax bill for 1981, 1982 and 1983 based on the above assessed value. In 1984, Helene Curtis received the first real estate tax bill based on the value of the new building as determined by the quadrennial reassessment. The assessed value of the property after renovation was ...