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Board of Education of Gibson City-Melvin-Sibley Community Unit School District No. 5 v. Illinois Property Tax Appeal Board

January 4, 2005

THE BOARD OF EDUCATION OF GIBSON CITY-MELVIN-SIBLEY COMMUNITY UNIT SCHOOL DISTRICT NO. 5, PETITIONER-APPELLANT,
v.
THE ILLINOIS PROPERTY TAX APPEAL BOARD, AMEREN ENERGY GENERATING COMPANY, AND FORD COUNTY BOARD OF REVIEW, RESPONDENTS-APPELLEES.



Direct Administrative Review of the Illinois Property Tax Appeal Board. Nos. 00-00275. 001-I-3 & 01-01242.001-I-3.

The opinion of the court was delivered by: Justice Steigmann

PUBLISHED

In 2000 and 2001, petitioner, the Board of Education of Gibson City-Melvin-Sibley Community Unit School District No. 5, appealed to respondent Ford County Board of Review the 2000 and 2001 property-tax assessments of a Gibson City power station owned by respondent Ameren Energy Generating Company, alleging that the Ford County supervisor of assessments failed to classify the power station's permanently affixed machinery and equipment as real property, thereby exempting it from taxation. In both years, the Board of Review denied the School District's appeals, and the School District appealed those decisions to respondent the Property Tax Appeal Board (PTAB).

In May 2003, the PTAB conducted a consolidated hearing on the 2000 and 2001 assessments of the power station. In February 2004, the PTAB issued a 43-page decision in which it (1) upheld the Board of Review's assessment of the power station and (2) concluded that section 24-5 of the Property Tax Code (35 ILCS 200/24-5 (West 2000)) precluded the assessment of the power-station equipment as real estate.

The School District appeals, arguing that (1) the PTAB's finding that Ford County had a general practice of not assessing permanently affixed machinery and equipment as real estate was against the manifest weight of the evidence and (2) the PTAB's conclusion that section 24-5 of the Code precludes assessment of the power station's permanently affixed equipment as real property was erroneous as a matter of law. We disagree and affirm.

I. BACKGROUND

A. Illinois Tax Law

Article IX, section 5(c), of the Illinois Constitution of 1970 provides as follows:

"On or before January 1, 1979, the General Assembly by law shall abolish all ad valorem personal property taxes and concurrently therewith and thereafter shall replace all revenue lost by units of local government and school districts as a result of the abolition of ad valorem personal property taxes subsequent to January 2, 1971." Ill. Const. 1970, art. IX, §5(c).

In 1979, to (1) effectuate the intent of this section of the Illinois Constitution and (2) prevent the reclassification of personal property as real property, the General Assembly enacted section 18.1 of the Code (the Freeze Act) (Ill. Rev. Stat. 1979, ch. 120, par. 499.1 (now 35 ILCS 200/24-5 (West 2000))), which barred reclassification of personal property that existed before 1979. In 1982, the legislature amended the Freeze Act to prohibit taxation of "like kind" property acquired after January 1, 1979. The Freeze Act now provides, in pertinent part, as follows:

"Ad valorem personal property taxes shall not be levied on any personal property having tax situs in this State. *** No property lawfully assessed and taxed as personal property prior to January 1, 1979, or property of like kind acquired or placed in use after January 1, 1979, shall be classified as real property subject to assessment and taxation." 35 ILCS 200/24-5 (West 2000).

B. The May 2003 PTAB Hearing

Because the parties are familiar with the evidence presented at the May 2003 hearing, we review it only to the extent necessary to put the School District's arguments in context.

Evidence showed that the power station is a 234-megawatt power-generation facility that operates during peak usage periods to supplement electricity generated by "base load stations" when demand is high. (Such facilities are referred to as "peaker plants.") The power-station equipment at issue consists of two Siemens Westinghouse model W501D5A simple-cycle gas turbine generators and a transformer. The gas turbines are approximately 10 feet in diameter and 20 feet long. Each generator weighs over 400,000 pounds. The turbines each weigh over 300,000 pounds and generate over 88 tons of torque when rotating. Each generator is bolted to a raft foundation, which is a freestanding ...


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