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July 20, 1994




The opinion of the court was delivered by: Scariano

JUSTICE SCARIANO delivered the opinion of the court:

Plaintiff Soo Line Railroad Co. filed a complaint in circuit court, seeking to enjoin defendant Cook County Assessor Thomas C. Hynes from assessing four parcels of real estate it owned which were situated in Cook County, maintaining that they were subject to being assessed only by the State Department of Revenue. It joined other county officials as defendants, namely the county clerk and the county treasurer as well, in order to prevent them from collecting the taxes which it argued would be unlawfully levied pursuant to the illegal assessments.

It grounded its alleged entitlement to injunctive relief in what was then sections 79 through 90 of the Revenue Act of 1939, which was repealed and reenacted as sections 11-70 through 11-125 of the Property Tax Code (Ill. Rev. Stat. 1987, ch. 120, pars. 560-571 now codified at 35 ILCS 200/11-70-200/11-125 (West Supp. 1993)), and which governs the assessment of the property owned or controlled by a railroad company. Under the Act, any realty which qualifies as "operating property" is to be assessed by the Illinois Department of Revenue, which in turn distributes the equalized assessed value of the taxable property of every railroad to the respective taxing districts entitled to it "in the proportion that the length of all the track owned or used in such taxing district bears to the whole length of all the track owned or used" in Illinois, except for buildings having an original cost exceeding $1000. Ill. Rev. Stat. 1987, ch. 120, pars. 560(2), 567 now codified at 35 ILCS 200/11-70(b), 11-110 (West Supp. 1993).

The Act distinguishes between the operating property which is to be assessed by the State, and "non-carrier real estate" which is simply realty owned by a railroad but which is not used for the purpose of operating a train, nor held by it for such a use in the future; non-carrier realty is to be locally assessed. (Ill. Rev. Stat. 1987, ch. 120, pars. 560(2) & (4) now codified at 35 ILCS 200/11-70(b) & (d) (West Supp. 1993).) The Act obligates the railroad to provide to the Department each year a schedule of all of the realty it holds for right-of-way, either owned or leased, the size of the parcels, any improvements made thereupon, and its original purchase price. (Ill. Rev. Stat. 1987, ch. 120, par. 562 now codified at 35 ILCS 200/11-85 (West Supp. 1993).) The railroad must also provide the department with a list of all of its non-carrier real estate, including therewith its current assessed value, as well as its estimated true value, and this information is required to be forwarded by the department to the assessing official in the county where the realty is situated in order that the non-carrier realty may be assessed "in the manner as similar locally assessed property belonging to individuals * * *." Ill. Rev. Stat. 1987, ch. 120, par. 564 now codified at 35 ILCS 200/11-95 (West Supp. 1993).

In order to facilitate the goals of the Act, it authorizes the department to promulgate rules and regulations, which have the same force and effect as the statute so long as they are not inconsistent with it. (Ill. Rev. Stat. 1987, ch. 120, par. 561 now codified at 35 ILCS 200/11-125 (West Supp. 1993).) Pursuant to this authority, the department adopted the regulations contained in sections 110.105 and 110.145 of title 86 of the Illinois Administrative Code. (86 Ill. Admin. Code §§ 110.105, 110.145 (1986).) Section 110.105 provides that once the railroad submits its annual schedule of non-carrier property to the department, it will transmit copies of the forms to the clerk of the county in which the property is situated. The regulation then directs that official to send the forms to his or her county's assessing official. *fn1 That office is granted 30 days from the date of transmittal by the department to verify that the list contains all of the railroad-owned realty in the county which fits within the rubric of "non-carrier real estate," and if it does not, to register its objections with the department regarding the mischaracterization of the disputed properties. Section 110.145 sets forth the procedure by which the department is to determine whether the railroad has properly identified its real estate either as State-assessed operating property or locally-assessed non-carrier real estate.

Prior to 1987, the Assessor's office in Cook County had never challenged a railroad's characterization of its owned or controlled property. In 1987, however, because his office grew concerned with a loss of potential revenue for the county, the Assessor created a Railroad Task Force to scrutinize more closely the railroad companies' classification of the realty they owned or controlled in Cook County. The task force was responsible for ensuring that the property which railroads had described as operating property in their submitted schedules to the department did not actually fall within the category of non-carrier real estate. It attempted to coordinate its efforts with the department in order to establish a double layer of auditing of the schedules, thereby securing accurate taxation of railroad property situated in Cook County.

In late August or early September 1987, Paul Wiley, the deputy director of the department's Property Tax Administration Bureau held Discussions with Cook County's First Assistant Assessor and the general counsel to the Assessor. At this meeting, the officials informed Wiley that the Assessor planned to object to the characterization of many Cook County-situated parcels which the railroads had described as operating property, but they were not confident that the office could comply with the 30-day deadline provided in section 110.145 of the department's administrative regulations. (86 Ill. Admin. Code § 110.145 (1986).) Wiley instructed them to file their objections, even if belated, and gave assurances that the department would not enforce the deadline; he further advised that the Assessor could locally assess the disputed parcels.

As provided in its regulations, the department transmitted to the Clerk of Cook County the railroads' listings of non-carrier property in the county, but it did so in two batches. The first was sent on August 7, 1987, under cover of a memorandum which was misdated August 7, 1986, and which was time-stamped as having been received by the clerk's office on August 10, 1987. The second delivery of the schedules was sent on a date not apparent from the record, with the same misdated memorandum, but was marked as being received by the clerk as of September 15, 1987. *fn2

On September 10, 1987, 34 days after the department transmitted the first set of schedules to the Cook County Clerk's office, the Assessor registered 409 objections to the classification of over 800 parcels of railroad property in Cook County in order to redesignate those parcels as locally-assessable non-carrier real estate. The department took no action regarding the objections for some time because the official who reviewed such challenges was on leave from the office and was not expected back until after January 1, 1988. Consequently, relying on the representations of Deputy Director Wiley, the Assessor's office proceeded on the assumption that its objections would be sustained. Accordingly, it sent assessment notices to the railroads that owned the disputed parcels, in the belief that those assessments would be subject to later corrections after the department adjudicated the issue.

The department finally scheduled hearings on the Assessor's objections, which were to commence soon after June 1, 1988. The notification of the intent to hold hearings on the matter was met by the railroads' challenges to the validity of the objections on the ground that they were null and void since they were filed beyond the 30-day time limit imposed by the department's rules. Plaintiff, which owned three parcels in Schaumburg Township, as well as one in Leyden Township, all of which had been subjected to the Assessor's objection, raised similar claims with the department. It also refused to pay the local property taxes levied on the property for that year.

On July 1, 1988, Rodger D. Sweet, who was then the director of the department, advised the Assessor that notwithstanding the earlier representations of Deputy Director Wiley, all of its objections filed on September 10, 1987, were untimely; thus, in conformance with department rules, the railroad's realty would be classified for assessment purposes as it was described in the railroad-submitted schedules. Sweet informed the Assessor that it could seek a departmental hearing on this issue by filing a formal request for one within 20 days of the mailing of the director's decision, or until July 21, 1988. The Assessor made a timely request for a hearing on the issue, but the record is silent as to whether such a hearing was held or, if it was held, the result thereof.

For the tax year 1988, the Assessor timely registered the very same objections to the various railroads' classification of realty as it had for the previous tax year, including plaintiff's four parcels. In its response dated October 7, 1988, the department overruled the objections, finding that the parcels in question were properly defined as operating property. The Assessor thereafter asked for a hearing on its objections, but once again, the record is ...

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