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12/08/95 COUNTY DU PAGE AND DU PAGE COUNTY BOARD

December 8, 1995

THE COUNTY OF DU PAGE AND THE DU PAGE COUNTY BOARD OF REVIEW, PETITIONERS--APPELLANTS,
v.
THE PROPERTY TAX APPEAL BOARD; SAKS FIFTH AVENUE, INC.; AND M. WARD FLEMING, YORK TOWNSHIP ASSESSOR, RESPONDENTS--APPELLEES. THE COUNTY OF DU PAGE AND THE DU PAGE COUNTY BOARD OF REVIEW, PETITIONERS--APPELLANTS, V. THE PROPERTY TAX APPEAL BOARD; NEIMAN MARCUS; AND M. WARD FLEMING, YORK TOWNSHIP ASSESSOR, RESPONDENTS--APPELLEES.



Petition for review of Order of the State of Illinois Property Tax Appeal Board. Docket No. 91-3443-C-3. Petition for review of Order of the Illinois Property Tax Appeal Board. Docket No. 91-2725-C-3.

Rehearing Denied February 22, 1996. Released for Publication February 22, 1996.

The Honorable Justice Doyle delivered the opinion of the court: Geiger and Hutchinson, JJ., concur.

The opinion of the court was delivered by: Doyle

The Honorable Justice DOYLE delivered the opinion of the court:

In these consolidated appeals, petitioners, Du Page County and the Du Page County Board of Review (the county), seek direct review of orders of the Property Tax Appeal Board (the Board) which reduced the assessments of property owned by respondents, Saks Fifth Avenue (Saks) and Neiman Marcus. The critical issue in each case is the same: whether the Board erred as a matter of law by allocating the value of the right to use parking and other common areas to parcels other than the subject parcels.

Respondents Saks and Neiman Marcus own and operate department stores at the Oak Brook Mall. The stores are freestanding structures, not connected to any other mall buildings, and occupy parcels with PINs ending in -031 and -041. The parties agree that these PINs are "pad parcels," consisting essentially of the buildings' footprints. The Saks store contains an 88,993-square-foot building on a pad site of 30,972 square feet. The Neiman Marcus store contains 112,099 square feet on a 49,658-foot pad site.

Pursuant to agreements with JMB Corporation, which owns most of the mall tracts, Saks and Neiman Marcus have the right to use certain common areas of the mall, including parking lots and pedestrian walkways. These areas are located on separate parcels which are assessed and taxed separately. The parties agree that these areas are necessary for the functional utility of the stores and also to meet applicable zoning requirements.

Technically, Saks leases its space from JMB. The lease gives Saks the right to use the common areas. Neiman Marcus purchased its site from JMB in 1982 for $7,150,000. The transfer declaration describes the property conveyed in fee simple as Parcel I, and also includes Parcel II, described as "the rights and easements appurtenant to and benefiting Parcel No. I over and across" certain defined parcels.

For the year 1991, the York Township assessor valued Saks at $4,736,904 and Neiman Marcus at $6,505,221. Both respondents filed appeals with the Board, alleging overvaluation of the parcels by the Du Page County Board of Review.

At a hearing before the board, each side presented the testimony of an appraiser. Michael MaRous and Bill Hall testified for the Board of Review and Michael Kelly testified on behalf of both respondents.

Each appraiser valued the parcels according to each of the three accepted appraisal methods: the reproduction cost method, the income capitalization method, and the comparable sales method. Each appraiser valued the Neiman Marcus tract at approximately $6,000,000 and the Saks tract at approximately $4,500,000. However, Kelly made further adjustments to the values of the parcels.

Kelly determined that the Oak Brook Mall had a total land-to-building ratio of 3.26 to 1. Curiously, he then apparently multiplied the square footage of all floors of the Saks' building, 88,993, by 3.26. Kelly concluded, therefore, that, if the Saks parcel were assigned its pro rata share of the common-area facilities, it would have a total area of 290,117 square feet.

Kelly concluded that the fair market value of the subject property containing 290,117 square feet was $4,850,000. He then ...


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