Petition from the Property Tax Appeal Board 97-24242-C-3 and 98-26195-C-3
The opinion of the court was delivered by: Justice Cahill
We address a Cook County Board of Review (the Board) appeal challenging a decision by the Illinois Property Tax Appeal Board (PTAB). The main question we consider is whether PTAB has the authority to expand the scope of a taxpayer's appeal to include issues never raised by the taxpayer before the Cook County Board of Review. In this case, PTAB ruled that responsive pleadings of the Board on appeal raised issues PTAB was empowered to address. We conclude that, under the Administrative Review Law (735 ILCS 5/3-101 et seq. (West 2000)) and PTAB's own rules, the scope of PTAB's review and the relief it may grant is limited to the relief sought by a taxpayer before the Board. We reverse the order of PTAB applying a 25% level of assessment to the taxpayer's property and remand with directions to PTAB to apply the 38% level of assessment mandated by the Cook County Real Property Assessment Ordinance (Cook County ordinance) (Cook County Real Property Assessment Classification Ordinance, Ord. No. 80-0-14 (amended November 6, 1997)).
The taxpayer, the Lurie Company, owner of commercial 5A property, filed an appeal with PTAB following an unsuccessful appeal before the Board. PTAB entered an order adjusting the fair market value of the property to $14,450,000. PTAB then applied a 25% level of assessment instead of the 38% applied to commercial 5A property mandated by the Cook County ordinance. The Board did not appeal PTAB's reduction of the fair market value of the property. PTAB's deviation from the Cook County ordinance was based on PTAB's review of sales ratio studies purporting to establish an underassessment trend in Cook County residential property, and on PTAB's reading of the 2 ½ :1 ratio limitation of the Illinois Constitution (Ill. Const. 1970, art. IX §4(b)). This limitation prohibits the assessment level of the highest classification in a county from exceeding 2 ½ times the level applied to the lowest classification in that county.
It is undisputed that the taxpayer challenged before the Board only the fair market value assigned to its property. The taxpayer did not raise a uniformity claim before the Board based on a disparate assessment level. The Board's decision upheld the fair market value assigned by the assessor and applied the statutory 38% assessment level mandated by the Cook County ordinance. The taxpayer then appealed to PTAB, again challenging only the fair market valuation. The only materials the taxpayer submitted were appraisal reports supporting the taxpayer's claim that the fair market value of the property was less than that assigned by the assessor and affirmed by the Board.
We conclude as we did in Cook County Board of Review v. Property Tax Appeal Board, 339 Ill App. 3d 529, 791 N.E.2d 8 (2002) (hereinafter Bosch), that the scope of PTAB's review should have been confined to a consideration of the Board's fair market value determination. But as in Bosch, PTAB addressed and decided a new issue here. How that happened and our reasoning in rejecting PTAB's authority to do so is addressed in the balance of this opinion. Although we dispose of this appeal on the grounds that the contested issue of uniformity was not properly before PTAB, we address the arguments in support of PTAB's analysis of the uniformity issue. Our discussion of these issues is partly dicta within the context of this case. But we address the uniformity arguments because the discussion provides a context for our disposition of this appeal. We note that the discussion is based on our resolution of these issues in Bosch, where they were properly raised in two cases.
The Board's materials filed with PTAB included not only appraisal reports designed to rebut the taxpayer's fair market value evidence, but also a copy of the Cook County ordinance, case law relating to the use of sales ratio studies, a report critiquing the sales ratio studies, and a copy of the "Review of the Assessment Sales Ratio Study Program for the Illinois Department of Revenue" by the International Assessing Officers.
Based on the Board's submissions, the taxpayer then asked PTAB to take judicial notice of the sales ratio studies for the years 1992-95, copies of which the taxpayer then submitted. The taxpayer also asked PTAB to take judicial notice of "any official studies subsequent to 1995 which have relevance to this appeal." The taxpayer conceded that it "did not make any claims to any particular assessment level or sales ratio study findings" in the initial appeal before the Board. But the taxpayer maintained before PTAB that the Board's submissions "have now placed the assessment level into controversy." The taxpayer also asked PTAB to take judicial notice of sales ratio studies for Class 2 residential properties. The taxpayer claimed that these studies established that residential property in Cook County was assessed at 10%, rather than the 16% required by the Cook County ordinance. The taxpayer then reasoned that, based on this 10% level of assessment for residential property, commercial property could not constitutionally be assessed at more than 25% of the fair market value.
The taxpayer renewed its request that PTAB take judicial notice of the sales ratio studies at a hearing on September 20, 2000. The Board objected, claiming that it had not been made aware of the taxpayer's request for judicial notice. The Board also objected because the sales ratio evidence was not certified.
The hearing officer declined to take judicial notice of the sales ratio studies. But, the hearing officer then ruled that the Board had placed uniformity at issue by its "voluminous" submission of documents relating to sales ratio studies. The hearing officer characterized the taxpayer's submission's as "rebuttal" evidence that "was timely submitted." The hearing officer then stated that the uniformity issue was now at issue and judicial notice was unnecessary. He said:
"[T]he issue of sales ratios has already been entered
without a checkmark on the petition that's already an issue,
which this Board [PTAB] will consider. This Board has
accepted evidence by both parties on that issue; and,
therefore, I see no need at this juncture to take judicial
notice of it. It's an issue in evidence."
We reject at the outset PTAB's and the taxpayer's argument that the uniformity issue was timely raised. The hearing officer proceeded on a theory that the Board's submissions raised the issue, allowing the taxpayer to submit rebuttal evidence. The argument also assumes that PTAB is empowered under its statutory mandate to address issues never before raised. This view overlooks PTAB's own rules and the Illinois Administrative Review Law (735 ILCS 5/3-101 et seq. (West 2000)).
The taxpayer, as a contesting party, bears the burden to submit substantive evidence to establish a lack of uniformity. 86 Ill. Adm. Code 1910.63(b) (Conway Greene CD-ROM 2002). The burden of proof does not shift unless and until the taxpayer meets its burden of going forward with substantive evidence. 86 Ill. Adm. Code 1910.63(c) (Conway Greene CD-ROM 2002). Nor can the sales ratio studies qualify as rebuttal evidence as suggested by the PTAB hearing officer. 86 Ill. Adm. Code 1910.66(b) (Conway Greene CD-ROM 2002) (rebuttal evidence shall not consist of new evidence and a party is precluded from submitting its case in chief under the guise of rebuttal evidence).
We addressed procedurally similar facts in Bosch. Bosch was a consolidated appeal in which we reviewed PTAB orders in eight tax appeals. Bosch, 339 Ill App. 3d at 533. An issue in Bosch was PTAB's authority, if any, to deviate from assessment levels set out in the Cook County ordinance to remedy a uniformity challenge based on an interpretation of sales ratio studies generated by the Department of Revenue (the Department). We held that we could not reach this issue because the taxpayers in six of the eight cases had not timely raised it. We found that, although timely raised in two cases, the evidence was insufficient ...