Petition for Review of Order of the Property Tax Appeal Board. PTAB Docket Nos. 93--03465--C--3 94--03275--C--3 95--03359--C--3
The opinion of the court was delivered by: Justice Geiger
In this consolidated appeal, the petitioners, the County of Du Page and the Du Page County Board of Review (collectively the county), seek direct review of two orders of the Property Tax Appeal Board (the Tax Appeal Board) reducing the assessed valuation of a piece of property leased by the respondent, Jewel Companies, Inc. (Jewel). On appeal, the county argues that the Tax Appeal Board's assessed valuation of the property fails to take into account the amount that the property's market value has been increased as a result of Jewel's right to use certain parking facilities on an adjacent parcel.
Jewel leases a store at the Danada Square West Shopping Center (shopping center) in Wheaton. The shopping center is 1,222,416 square feet and was constructed in 1987. When it was first constructed, the entire shopping center constituted one tax parcel. In 1992, Jewel filed an assessment plat that created a separate tax parcel for Jewel's store, identified as PIN 05--28--300--027 (parcel 027). All the other commercial buildings in the shopping center, along with the sidewalks and the parking lot, remained together on one large parcel identified as PIN 05--28--300--028 (parcel 028).
The parties agree that parcel 027 is a "pad parcel," consisting essentially of the Jewel store's "footprint." Specifically, the Jewel store contains 62,998 square feet on a pad site of 84,384 square feet.
Pursuant to the terms of Jewel's lease agreement with the owner of the shopping center, Jewel has the right to use certain common areas of the shopping center, including the parking lots and sidewalks found on parcel 028. The parties agree that use of these common areas is necessary to maintain the functional utility of the Jewel store and to meet applicable zoning requirements.
For the 1993 real estate tax year, the Milton Township Assessor (assessor) placed an assessed value of $2,245,600 on parcel 027, reflecting a fair cash value of approximately $6,735,000. For the 1994 and 1995 tax years, the assessor placed an assessed value of $2,503,220 on parcel 027, reflecting a fair cash value of approximately $7,510,000. The Du Page County Board of Review held a hearing and confirmed the assessments. Jewel filed an appeal with the Tax Appeal Board, alleging overvaluation of the parcel during tax years 1993-1995.
At the hearing before the Tax Appeal Board, each side presented the testimony of an appraiser. Each appraiser valued the parcels according to three accepted appraisal methods: the reproduction cost method, the income capitalization method, and the comparable sales method.
The county's appraiser, Michael MaRous, testified that the fair cash value for parcel 027 was $4,700,000 for tax years 1993, 1994, and 1995. MaRous testified that this appraisal amount did not include the value of Jewel's right to use the parking facilities on parcel 028. MaRous opined that an additional 117,750 square feet in parking facilities were required for Jewel to conform to the applicable zoning requirements. MaRous estimated that the 117,750 square feet in parking space used by Jewel on parcel 028 had a fair cash value of $1,060,000. Adding this contributory value, MaRous concluded that the fair cash value of parcel 027 for the tax years in question would be $5,760,000.
Jewel's appraiser, Michael Kelly, determined that the fair cash value for parcel 027 was $4,531,752 for tax year 1993 and $4,700,000 for tax years 1994 and 1995. Kelly explained that this valuation reflected the enhanced value of the property resulting from Jewel's rights to use the parking and common elements contained in parcel 028. Kelly acknowledged that, without the rights to the parking, Jewel would cease to be a functional store and its value would decrease significantly. Kelly nonetheless testified that it was improper to include the parking facilities in the appraisal of parcel 027 because these facilities were not physically contained on the parcel. Kelly estimated that the fair cash value of the portion of the parking facilities contained in parcel 028 that were being used by Jewel was approximately $1,320,000 for 1993 and $1,330,000 for 1994 and 1995. Subtracting these amounts from the fair cash value of the parcel, and taking other factors into account, Kelly arrived at estimated value of $3,370,000 for each of the tax years.
The manager of property tax for Jewel Stores, Marc Johnson, testified that Jewel paid the landlord of the shopping center approximately $41,000 each year for tax years 1993, 1994, and 1995. This amount apparently represented Jewel's pro rata share of the property taxes for the parking facilities on parcel 028.
In its findings, the Tax Appeal Board specifically found that MaRous's appraisals were "inferior" because he did not utilize actual market values in determining depreciation and did not take into account rental income on comparable market sales. The Tax Appeal Board found that parcel 027 could not be assessed for the value of the parking facilities contained on parcel 028 and concluded that it was proper to subtract the contributory value of this land, which was on another parcel. The Tax Appeal Board therefore found that, for the tax years in question, parcel 027 had an assessed value of $1,222,210, reflecting approximately 33 1/3 % of $3,370,000. In essence, the Tax Appeal Board adopted Kelly's valuations.
The county appealed the Tax Appeal Board's orders pursuant to section 16--195 of the Property Tax Code (35 ILCS 200/16--195 (West 1996)), and this court consolidated the appeals. The county argues that the Tax Appeal Board erred by subtracting the value attributable to the parking facilities and common area easements from the assessed value of parcel 027. The county contends that the value of these rights is inherent in the value of parcel 027 and should be included in its valuation.
Our review of this case is governed by the Administrative Review Law (735 ILCS 5/3--101 et seq. (West 1996)). As in other administrative review actions, the Tax Appeal Board's findings and Conclusions on question of fact are deemed prima facie true and correct. Kankakee County Board of Review v. Property Tax Appeal Board, 131 Ill. 2d 1, 14 (1989). This court will not disturb the Tax Appeal Board's findings where there exists simply a difference of opinion regarding the actual value of property. Kankakee County, 131 Ill. 2d at 14. However, where an improper method of valuation is used, reviewing courts will actively intervene. See Kankakee County, 131 Ill. 2d at 14.
Section 9/145(a) ofthe Property Tax Code (the Code) provides that each tract shall be assessed at 33 1/3 % of its fair cash value. 35 ILCS 200/9--145(a) (West 1996). Fair cash value, or fair market value, is defined as the price at which ready, willing, and able ...