APPEAL FROM THE CIRCUIT COURT OF COOK COUNTY. THE HONORABLE EARL J. ARKISS, JUDGE PRESIDING.
Released for Publication March 21, 1995. As Corrected March 15, 1995.
Presiding Justice Scariano delivered the opinion of the court: DiVITO and McCORMICK, JJ., concur.
The opinion of the court was delivered by: Scariano
PRESIDING JUSTICE SCARIANO delivered the opinion of the court:
The action before us, which is actually the consolidation of 15 separate appeals, stems from an initiative of the Cook County Assessor in 1987, when he formed a "Railroad Task Force" and charged it with the responsibility of ensuring that all property owned by railroads and situated in Cook County which were required to be assessed by his office were in fact being so assessed. The impetus for the formation of the task force can be ascribed to the complex statutory and regulatory scheme for the assessment and taxation of realty owned or controlled by railroads contained in what were then sections 79 through 90 of the Revenue Act of 1939, which were repealed and reenacted as sections 11-70 through 11-125 of the Property Tax Code (Ill.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)) (the Act), and sections of Title 86 of the Illinois Administrative Code. 86 Ill. Admin. Code §§ 110.105, 110.145 (1986).
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 operating property 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, in contra-distinction to operating property, 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 realty it holds for right-of-way, either owned or leased. (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 non-carrier real estate it owns, 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 same manner as similar property belonging to individuals ***." Ill. Rev. Stat. 1987, ch. 120, par. 564 (now, as amended, 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 are to 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. 571 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 after the railroad submits its annual schedule of non-carrier property to the Department, that agency will transmit copies of the forms to the clerk of the county in which the property is situated. The regulation then directs the clerk to send the forms to his or her county's assessing official. *fn1
That officer is granted 30 days from the date of transmittal by the Department to give her or him the opportunity to ascertain whether the list contains all railroad-owned realty in the county which qualifies as "non-carrier real estate," and if it does not, to register his or her 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 realty.
The creation of the task force marked a change in the policy of the Assessor's office, as before 1987, it had never challenged any railroad's characterization of its realty. For the 1987 tax year and thereafter, however, the task force intended to ensure that all of the realty situated in Cook County, and which the railroads described as operating property in their schedules submitted to the Department, were properly categorized.
As required by its regulations, the Department transmitted to the Cook County clerk the railroad-submitted schedules for the 1987 tax year, sending them in two separate batches. The first group was sent on August 7, 1987, under cover of a memorandum misdated August 7, 1986. The second, although presumably sent later, was accompanied by the same misdated letter. The clerk's time-date stamp showed that the first batch was received by that office on August 10, 1987, and the second installment arrived on September 15, 1987. *fn2
Faced with the challenge of investigating some 800 parcels of realty, the task force soon concluded that it would not be able to seek verification of the character of all of the property involved and still meet the 30-day deadline for the filing of objections imposed by section 110.105 of the Department regulations. (86 Ill. Admin. Code §§ 110.105, 110.145 (1986).) To head off any potential problems, officials from the Assessor's office met with Paul Wiley, who was then the Deputy Director of the Department's Property Tax Administration Bureau, and secured from him assurances that the Department would excuse a late filing of objections by the Assessor. Wiley also advised the Assessor that he could begin assessing locally any parcels to which he objected, subject to later correction, if need be, depending upon the outcome of the Department's hearing on the objections.
On September 10, 1987, 34 days after the schedules were sent to him by the Department, the Assessor filed 409 objections to the railroads' classification of realty situated in Cook County. In the meantime, while awaiting a decision on the objections by the Department, the Assessor proceeded as advised by Wiley and began to assess the disputed property as though it were non-carrier realty. The Assessor mailed to the railroads in November 1987 his notices of proposed assessment on the parcels which they had listed in their submitted schedules as "operating property," but to which characterization he objected.
That same month, the Department certified the railroads' property schedules to the local taxing bodies and distributed to them the equalized assessed value of the property in accordance with the pertinent provisions 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).) The Department's assessments did not take into account the co-existent assessments made by the Assessor on the parcels as to which he registered his objections, notwithstanding the assurances of Wiley to the contrary. When the railroads learned of the late-filed objections, as well as the double assessment they produced, they protested to the Department that it should declare them null and void.
In a letter dated July 1, 1988, the director of the Department, defendant Roger Sweet, informed the Assessor of the Department's decision to reject his objections for tax year 1987 because of the untimeliness of their filing. The director concluded that since the 30-day requirement of the regulation was mandatory, the Department had no jurisdiction to entertain his complaints. He also advised him that under Department regulations, the Assessor could apply, within 20 days of the rejection, for a hearing on the Department's disposition of his objections. On July 20, 1988, the Assessor made his formal request for a hearing and urged the Department to re-evaluate the sudden reversal of its position regarding the 30-day deadline.
The Department set September 19, 1988 as the date upon which it would review its determination that it could not consider untimely objections. But, since this date was more than 35 days after the original July 1, 1988 rejection of his objections, the Assessor assumed, incorrectly it turns out, that if he waited for the Department's review of that decision, it would foreclose his bringing an action to seek judicial review of the July 1, 1988 ruling. Consequently, on August 8, 1988, the Assessor filed a petition under the Administrative Review Act, contesting the July 1, 1988 ruling in which the Department found that the 30-day limit on filing was a jurisdictional prerequisite to its consideration of objections by local assessors to the railroads' classification of their realty either as "operating property" or as "non-carrier realty." Thus, the issue as to the consideration of untimely objections remained pending before the Department.
Meanwhile, six railroads, some of whose realty had been the subject of the Assessor's objections, filed four different complaints in circuit court during the month of August 1988. In these suits, they sought declaratory and injunctive relief to prevent the Assessor from assessing the disputed parcels for the 1987 tax year, and to prevent the other Cook County officials from levying or attempting to collect the tax on the property at issue. Each plaintiff also named as a defendant Roger Sweet in his capacity as director of the Department of Revenue, seeking to enjoin him and his Department from holding the hearing which had been set for September 19, 1988. On motion of defendant Sweet, the court consolidated the railroads' actions with the Assessor's pending petition for administrative review only as to the identical issues involving either Sweet or the Department.
Each plaintiff moved for summary judgment on the objections for the 1987 tax year. On February 25, 1992, the circuit court granted their motions, holding that the Assessor's objections for that year were filed too late. This ruling meant that the disputed parcels were to be classified as operating property, which the statute prescribes as assessable only by the State; and as a consequence thereof, the court held that the levy which had been based on the illegal assessment by the Assessor was also illegal and therefore void. It therefore ordered the defendant county officials to refund to the railroads the monies which had been previously paid into a tax escrow account created by order of ...