Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Peterson Plaza Preservation, L.P. v. The City of Chicago Department of Finance

Court of Appeals of Illinois, First District, Fifth Division

June 21, 2019

PETERSON PLAZA PRESERVATION, L.P.; RELATED BLOOMINGDALE, L.L.C.; MARSHALL FIELD PRESERVATION, L.P.; RELATED VAN BUREN, L.L.C., Plaintiffs-Appellants,
v.
THE CITY OF CHICAGO DEPARTMENT OF FINANCE and THE CITY OF CHICAGO DEPARTMENT OF ADMINISTRATIVE HEARINGS, Defendants-Appellees.

          Appeal from the Circuit Court of Cook County. 2017 L 050922 2017 L 05092 2017 L 050924 2017 L 050925, cons. Honorable Carl Anthony Walker, Judge, presiding.

          PRESIDING JUSTICE ROCHFORD delivered the judgment of the court, with opinion. Justices Hoffm an and Hall concurred in the judgment and opinion.

          OPINION

          ROCHFORD PRESIDING JUSTICE

         ¶ 1 Plaintiffs, Peterson Plaza Preservation, L.P. (Peterson Plaza), Related Bloomingdale, L.L.C. (Bloomingdale), Marshall Field Preservation, L.P. (Marshall Field), and Related Van Buren, L.L.C. (Van Buren), appeal from an order of the circuit court on administrative review upholding the determination of defendants, City of Chicago Department of Finance and City of Chicago Department of Administrative Hearings, that plaintiffs were not entitled to real property transfer tax exemptions under section 3-33-060(L) of the Chicago Municipal Code (Chicago Municipal Code § 3-33-060(L) (amended May 8, 2013)) for the transfer of title to certain federally funded residential apartment buildings inside of enterprise zones. On appeal, plaintiffs argue that they were entitled to the exemptions because they satisfied all the conditions necessary to qualify therefor. We affirm.

         ¶ 2 I. Relevant Law

         ¶ 3 Chapter 3-33 of the Chicago Municipal Code (Municipal Code) imposes the Chicago real property transfer tax (transfer tax) on "the privilege of transferring title to, or beneficial interest in, real property located in the city." Chicago Municipal Code § 3-33-030(A) (amended Nov. 11, 2011). The buyer of the property must pay the tax, which is $3.75 per $500 of the transfer price of the property. Id. The Municipal Code provides an exemption for "[t]ransfers of title to, or beneficial interest in, real property used primarily for commercial or industrial purposes located in an enterprise zone, as defined in Chapter 16-12 of this Code." Chicago Municipal Code § 3-33-060(L) (amended May 8, 2013). An enterprise zone is a depressed area of the city that has been designated a "proposed enterprise zone" by the city council and approved and certified by the proper state or federal authorities as an enterprise zone. Chicago Municipal Code § 16-12-020 (amended Nov. 26, 2013).

         ¶ 4 In December 1998, the Chicago Department of Revenue issued Real Property Transfer Tax Ruling No. 2, section 5 and section 7, effective January 4, 1999, [1] which defines when a property is used primarily for commercial purposes in an enterprise zone so as to qualify for a tax exemption under section 3-33-060(L) of the Municipal Code:

"Section 5. Property which is used primarily for commercial purposes is property used primarily for buying or selling of goods and services, or for otherwise providing goods and services, including any real estate used for hotel or motel purposes. [Citation.]"
Section 7. For property to be 'primarily used for commercial or industrial purposes,' more than 50 percent of the property must be used for either commercial or industrial purposes." Chicago Department of Revenue Real Property Transfer Tax Ruling No. 2, §§ 5, 7 (eff. June 1, 2004), https://www.chicago.gov/content/dam/city/depts/rev/ supp_info/TaxRulingsandRegulations/RPTTRuling2.pdf [https://perma.cc/ZTU5-6RKU] (hereinafter Tax Ruling No. 2).

         ¶ 5 II. Background Facts

         ¶ 6 Plaintiffs each purchased a property in a Chicago enterprise zone with the intent to continue operating it as affordable housing under section 8 of the United States Housing Act of 1937 (42 U.S.C. § 1437f (2012)) (hereinafter Section 8 program). Under the Section 8 program, tenants pay no more than 30% of their income toward rent; the United States Department of Housing and Urban Development (HUD) compensates the developer for the remaining balance. See id. §§ 1437a(a), 1437f(c). Following their acquisition of the properties, plaintiffs each paid thousands of dollars in transfer taxes.

         ¶ 7 Specifically, with respect to each individual plaintiff: Peterson Plaza purchased a federally funded housing complex consisting of 189 units located at 5969 North Ravenswood Avenue in Chicago, for which it paid $161, 250 in transfer taxes; Bloomingdale purchased a 111-unit complex located at 1755 North Keystone Avenue, for which it paid $52, 500 in transfer taxes; Marshall Field purchased a 628-unit complex located at 1448 North Sedgwick Street, for which it paid $648, 750 in transfer taxes; and Van Buren purchased a 299-unit complex located at 2045 West Jackson Boulevard, for which it paid $135, 750 in transfer taxes.

         ¶ 8 After each of the acquisitions, plaintiffs continued to rent units in the properties to qualifying tenants under the Section 8 program. Between 87% and 100% of each of the properties was used for tenant living space. Plaintiffs performed extensive renovations at each of the properties, employed management and maintenance staff at each of the properties, and offered various services to the tenants such as general equivalency diploma (GED) classes, literacy programs, health screenings, and job training. All of the services are free to the tenants and are not available to the general public.

         ¶ 9 On November 12, 2015, plaintiffs filed with the Department of Finance (Department) claims for refunds of the transfer taxes based on the exemption in Municipal Code section 3-33-060(L) for transfers of title to real property used primarily for commercial purposes in an enterprise zone. On November 20, 2015, the Department denied all four refund claims because it determined that the properties were not being used for commercial purposes within the enterprise zones.

         ¶ 10 On December 28, 2015, plaintiffs filed petitions with the Department protesting the denial of their refunds and requesting administrative hearings thereon. The parties submitted cross-motions for summary judgment, and hearings were held on the motions before an administrative law judge (ALJ). On September 20, 2017, the ALJ issued decisions granting summary judgment in favor of the Department in all four cases, upholding the denial of plaintiffs' refunds based on their failure to qualify for the transfer tax exemption.

         ¶ 11 Plaintiffs filed complaints for administrative review in the circuit court. On the Department's motion, the court consolidated the cases. On June 14, 2018, the circuit court confirmed the administrative decisions, again upholding the denial of plaintiffs' refunds. Plaintiffs filed this timely appeal on July 12, 2018.

         ¶ 12 III. Analysis

         ¶ 13 In reviewing the final decision under the Administrative Review Law (735 ILCS 5/3-101 et seq. (West 2016)) in this case, we review the administrative decision granting the Department's summary judgment motions and not the circuit court's judgment. West Belmont, L.L.C. v. City of Chicago, 349 Ill.App.3d 46, 49 (2004). Summary judgment is appropriate where the pleadings, depositions, and admissions on file together with any affidavits, when viewed in the light most favorable to the nonmoving party, show that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law. Pielet v. Pielet, 2012 IL 112064, ¶ 29. Review is de novo. Id. ¶ 30. Where, as here, parties file cross-motions for summary judgment, they agree that only a question of law is involved and invite the court to decide the issues based on the record. Id. ¶ 28.

         ¶ 14 Here, plaintiffs contend that they are exempt from paying the transfer tax because they satisfied all the conditions in section 3-33-060(L) of the Municipal Code to qualify for the exemption. Specifically, plaintiffs argue that they obtained a transfer of title to the properties, the properties were used primarily for commercial purposes after the transfer, and each of the properties was located in an enterprise zone. Defendants concede that each of the properties was located in an enterprise zone but argue that they were used for residential purposes for low-income families under the Section 8 program, not for commercial purposes, and therefore their transfers are not exempt from taxation under section 3-33-060(L).

         ¶ 15 A taxpayer bears the burden of proving by clear and convincing evidence that he is entitled to an exemption. Metro Developers, LLC v. City of Chicago Department of Revenue, 377 Ill.App.3d 395, 397 (2007); Streeterville Corp. v. Department of Revenue, 186 Ill.2d 534, 538-39 (1999). The burden is a challenging one because municipal ordinances exempting the transfer of property from taxation are to be strictly construed in favor of taxation (Metro Developers, LLC, 377 Ill.App.3d at 397), and all ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.