Petition for Review of an Order of the Property Tax Appeal Board. No. 93--1281--R--1.
Rule 23 Order Redesignated Opinion and Ordered Published July 31, 1997. Released for Publication August 29, 1997.
The Honorable Justice Inglis delivered the opinion of the court. McLAREN and Hutchinson, JJ., concur.
The opinion of the court was delivered by: Inglis
The Honorable Justice INGLIS delivered the opinion of the court:
Petitioner, Techalloy Company, Inc., appeals the decision of respondent, Illinois Property Tax Appeal Board (PTAB), denying petitioner's request to reduce the assessed value of its property to zero for taxation purposes. We affirm.
Petitioner is a wire products manufacturer. Its manufacturing facility, consisting of several masonry, steel, and wood buildings totaling 107,600 square feet, is located on a 41.38 acre parcel of land in Union, Illinois. For the tax year 1993, the Coral Township assessor assessed petitioner's property at $731,220, reflecting a fair market value of $2,193,660. Petitioner appealed the assessment to the McHenry County Board of Review (Board of Review). The Board of Review denied petitioner's appeal. On March 16, 1994, petitioner appealed the Board of Review's decision with the PTAB.
In its appeal to the PTAB, petitioner filed an appraisal of its property asserting that the correct assessment for its property was $0, reflecting a fair market value of $0 due to the costs to remove contamination caused by pollution. Petitioner's appraisal also indicated that the fair market value of the property in the absence of the pollution was $1,360,000 and that cleanup monitoring costs were $1,710,000, which, when subtracted from the fair market value, resulted in a negative market value.
Respondents, Marengo-Union Consolidated School District No. 165, Marengo Community High School District No. 154, and Marengo Fire Protection District (intervenors), requested leave to intervene in petitioner's appeal based on their interest as taxing districts. Intervenors filed their own appraisal of petitioner's property which determined that, assuming no environmental contamination, the property had a fair market value of $1,600,000. Intervenors' appraisal specifically noted that the impact of environmental contamination was not included in the analysis of the property. It also noted that petitioner had not given intervenors any information concerning the severity of the environmental contamination or the cost of curing it.
The matter proceeded to a hearing before the PTAB on March 20, 1996. The parties stipulated that the correct tax assessment, excluding contamination, was $493,333, reflecting a fair market value of $1,480,000. The only issues before the PTAB were whether the alleged contamination warranted a reduction in the fair market value and tax assessment of the facility and, if so, the amount of the reductions.
Petitioner called Carlos Serna (Serna), a hydrogeologist, as its first witness. Intervenors objected to Serna's testimony because petitioner had not provided the intervenors' appraisers with any information regarding contamination despite the appraisers' repeated attempts to obtain the information to use in preparing their appraisal. The PTAB hearing officer reserved his ruling and permitted Serna to testify.
Serna testified that he was employed by Weston Corporation (Weston), an environmental consulting firm. Serna first became involved with petitioner in 1989 when Weston was hired to study petitioner's problem. Serna's responsibility was solving the problem of groundwater contamination, his area of expertise as a hydrogeologist.
Serna's first task was to close certain "RCRA units" at petitioner's facility. RCRA (an acronym for the federal Resource Conservation and Recovery Act (42 U.S.C. § 6921 et seq. (1988))) is a regulatory process by which the federal government and the state control the management and disposal of hazardous waste. Serna recounted that petitioner's property had previously been used as a hazardous waste treatment facility. He estimated that the contamination began during the 1950s and probably stopped during the mid-1970s. Serna stated that petitioner had no immediate intention to close the facility, which had been fully operational since 1989. He indicated that only one residential property had been affected by the groundwater contamination; no other properties had been affected, and petitioner installed a deep well for the affected homeowner. Serna noted that petitioner's property was not listed in the CERCLA (the federal Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (42 U.S.C. § 9601 et seq. (1988))) database, but was listed as an RCRA corrective action facility. While petitioner's property was no longer used to treat hazardous waste, according to federal procedures, it was required to close certain hazardous waste treatment units of the facility. Serna's own involvement began with the closure of the treatment units regulated by the Illinois Environmental Protection Agency.
During the process of closing the RCRA units, Weston identified the extent of the groundwater contamination problems by performing on- and off-site studies. After closing the RCRA units, the United States Environmental Protection Agency (USEPA) became involved in an enforcement action against petitioner resulting in the entry of a 50-page consent order requiring petitioner to investigate and remedy the groundwater and soil contamination.
Serna's testimony turned to five pages from reports he had prepared and which petitioner's appraiser used in his determination of the fair market value of the facility. The first two pages contained a map showing concentrations of various groundwater contaminants taken from various sampling sites on and off the facility and a legend explaining the symbols on the map. Serna testified that, from the sampling sites, boundary lines had been drawn on the map indicating the areas in which the ...