five in this case at issue here is whether the p t a have erred as a matter of law when it adopted the value of an illinois supportive living facility that it was it minutely based upon below market contract rents and not based upon a market value for the subject property of the piece had the property tax appeal board in this case found that the subject property a supportive living facility has monthly rent that dictated by the illinois supportive living program and that for that reason the subject should be based upon those rental rates although the subject property actually earns much much more money than those rates and total revenue starting per for this case is the valuation of supportive living facilities under thirty five dollars tense last three dash ninety of the property tax code property that section the property tax code simply to dictates that a local assessment officer must use the income capitalization approach when valuing the support of living facility that is not a provision of the property tax code that provides a preferential assessment that would dictate a below market value for a supportive living facility under the income capitalization approach appraisers who was supposed to take information from the market and data that reflect the considerations of a typical investor in a property and then take that information and put it together in a formula that will ultimately result in a fair cash value for the subject property the t here took two different approaches to an income capitalization approach the school district hired a print an appraiser mr marut mr marut took rates from the market place he found he went out and found in the locality and comparable localities the best data available to arrive at a value that supported the county's assessment for the subject property that was about five million dollars in total farecast value the taxpayer on the other hand took rates that were it minutely below market contract rates dictated they were the rates that were provided to him by the department of health care and family services that were rates that were supplemental social security attributable to a medicaid resident although the subject property is not a medicaid only facility it simply is certified to take medicaid residence and only seventy and only twenty five percent of the rooms for the facility need to be medicaid eligible so in essence the taxpayer characterized the subject property and mr horner in his appraisal which is the taxpayers appraiser can i right can i bet you up quick if the private pay residents pay the same as the medicaid residents then there is no minimum requirements but if medicare ok so here and heritage well you could have one person that's medica eligible and everybody else could be charged since twenty from up in theory in here and have one person that's medicaid eligible and everybody else has high social security or their private a but if they want still i'm the book you assess are allocated six hundred and twenty dollars they would go towards that would be what the owner of the property eligible and forty five percent being private prez events thank you very much you're very welcome so in this situation that we have a medic facility that's a full service facility had to take medicaid patients and when you have medicaid patients or medicaid residents you have to follow these dictates but the subject property itself is not low income housing subject property is a facility that has a mix and there's just this one specific section of the code so the issue at trial was whether the local assessment official must use that six hundred and twenty dollars rate or whether they were supposed to derive their rates from the market place  and there was really notice at the hearing there was really no dispute between the tax payer and the and mr morris as to what the issue was we both agreed you know this is why this when we got an order asking us to clarify why this was an issue a lot because there was no dispute i don't think there's a dispute in the taxpayers in the school districts breit as to whether this rate should be market derived rates or contract rates and so the only real issue from the trial was whether this owner was entitled to receive a preferential assessment much lower than the market value because of this set aside for medicaid has to take this portion of rents even though they're actually charging much much more for the unit you know i and the result of the p taps decision therefore is that every support of living facility in the state of illinois and there's about one hundred and fifty dollars of them and about a rd of those are owned by the same owner here is that under this ruling those rates are going to dictate however what the rental rate is for each of these facilities no matter where it's located it no matter whether the whether the no matter how big the rooms are no matter whether it's a one bedroom or two bedroom or three bedroom it's it's all going to be the same thing it's going to be whatever this s s i rate is it's going to be a uniform assessment for all supported living facilities whether they be in illinois downtown chicago d illinois and that was you know that's again not in dispute that was the questioning at the hearing we asked fraser mr horner so if you take this approach if you take this property and put it in where nec illinois one of the richest suburbs in the country this would be six hundred and twenty dollars a month and that's what the property tax value is going to be yes and mr hunter said yes and so if you take that same one you bring it to downtown chicago and put in the loop again six hundred and twenty dollars a month yes and that was how he read the statute now again if you look at the statute it doesn't say that it says appraisers must or the local assessment of this all must apply the income capitalization approach now there's a subsection b one that states that the income capitalization approach under illinois you may not consider payments for services when such services are attributable to services and not real estate well you know and this was something the piece have addressed in their prior decision of the peterson healthcare case in multi county where the peach had found that simply clarifies that you're not supposed to include revenue for services when you're doing an income capitalization approach that is how mr morris wrote it that's how we read it and the tax and forty five percent of the private pays were medicaid eligible then their services would be capped at i say two thousand one hundred dollars roughly what the medicaid payment would be so to me it seems inconsistent to rent but not to cap ex or service excuse me services because that allows for some hidden income here because i'm i understand the record that everybody gets exactly the same services somebody's private pay was living next door to low income they get the same services but the guy in the higher income bracket allegedly paints more for the very same services correct they're entitled to charge more yes i'm sorry go ahead when mr honegger testified in evergrey he factored in forty percent for the higher income customers and that was based on a higher rate that the syllabi evergreen charged paper for the higher income resident now i'm presuming that practice has changed at heritage woods and there is no difference between the bill that private pays and the bill that high income and they're also twenty nine is is that correct well this was this question was presented to mr horner and mr mitchell the owner of a hearing and we asked him what happens when an attendant a potential tenant asked about the price he told them we're going to quote you the entire total package price and the total package price is going to be something between three thousand five hundred and fifty five one hundred dollars and it makes no difference to the resident themselves how the owner allocates the revenue what you're studio they're paying three hundred and twenty five dollars more we asked him directly what are they paying for he said the real estate and we said so all those men that shell is affiliated with heritage what's perhaps you've representative of the owner he's the correct and mr honegger testified that he never looked beyond those numbers he never investigated if those numbers were market supported or anything other than the numbers provided by him suppliants to give him an income tax property tax valu and the appraiser air force private purposes restricted use reports are not supposed to be used in the property tax appeal board proceedings whether there's an actual rule on that i can't quote you one but i can tell you that in general this is a situation where appraisers the custom is to use a summary narrative report that provides the backup data showing where you received the information in the st peterson case the one that went to points just straight i think mr appraisal in general i know i can only speak from my personal experience of practicing before the property tax appeal board for about ten years and the custom is to use a summary narrative report that provides the backup data and in the appraisal industry under the uniform standards of professional appraisals practice or use pap as what they call its restricted use reports are not to be filed with with public agencies there you know that they are by definition reports that are for the client based upon private information or information that's not that's the public information know light has come up and i take you know a lot of your time that's ok appreciate the questions and you know and in general we just want to point out that in addition to the issue of law that arises from this from this case just you know all the different ways that this decision lead to an absurd result where six hundred and twenty being a uniform assessment for all properties in the state of all the support of living facilities in the state of illinois no matter how they're operated no matter how they're occupied is just clearly not what the statute intended the statute intended income capitalization approach that the illinois legislature knows how to do a preferential assessment they know how to do uniform assessments we have examples of that in the property tax code we do that with win turbines we do that with other we do that with certain types of low income housing we do that with farmland this is not a situation where the property tax code in any way calls for uniform assessment or preferential low value based upon humans i have read a lot of the p t a piece prior decisions and they right now are becoming a low model in my praying although i have a spreadsheet meet later there was one that involved him comparison was the most reliable way to measure rental income for the private people but imploded and was an independent living facility and so i'm wondering what your position is on piece decision to rely on numbers from an independent living facility for purposes of comparison and that case but to reject most is testimony because he relied on independent living this at least in this case i feel like it's an inconsistent result and it leaves assessment officials and appraisers without direct knowledge without clear direction as to how they are supposed to value these properties the support of living facility is you know i think the testimony bore out that it's basically an assisted living facility that has a medicaid certification they're not really different setups there was talk about different amenities but we never really did that i think it's up to the appraisers in the assessment i mean mitchell did go into that because he said he made it very clear that people who pay less don't get less service right and the reverse is true people who get paid more don't get more service i think that  when the subject to support of living facility but what the record doesn't really bear out is what the difference between those are just as there are differences but it doesn't you know it's art not only can francis the method of paying for our medicaid on you would go to the market you would get the most comparable properties in the locality or similar localities and that's where you would derive your valuation and i feel like that's what mr morris did that's not what mr horner did and then the question becomes how are you supposed to value these properties these think it's inconsistent for mr haneke there to rely on section forty two properties in terms of comparisons and p t a be relying on that but rejecting an analysis based on comparables with independent living facilities to me section forty two property is a great example of an independent living facility where no services are elect know like this which is like a hotel where you walk in and you have all your services more like a full service thing these are really section forty two with a completely different structure it's you have your own apartment you walk in from the outside you have your own parking spot you walk in and you walk out it's it's really you know more it's not it doesn't have the amenities support of living facility like a beauty salon and a recreational area and a commercial kitchen and a dining hall and you know they're completely different there in that section forty two really is independent living because there are no services provided to those residents they don't most of them probably don't need correct that's right well you balance your my question be clear on behalf of the property tax appeal board in light of what i just heard i would like to point out that it was not merely mr honaker who testified that six hundred and twenty dollars is market rate rent everywhere the school districts own expert mr dost he also admitted that that rental rate is market everywhere so there was evidence to support low income residents that it's that it's all based on people social security payments current low income residents yet the market based where that and there was not an evergreen there were some different rates try to high social security level people or private hates it just so dollars rental rate is the rate everywhere for all of these facilities and that's why section forty two dollars is actually a fairly good compared to here your honor because section forty two dollars is only low income housing they charge about maybe five dollars to six hundred dollars rent but it's housing it's not independent living in any way that's what made it the comparative because you don't have the issue of what services are involved it simply goes as a comparison to the real estate now i think we all agree that the standard of review here is manifest weight because we're both parties use the same valuation approached the issue on appeal involves a difference of opinion as to fair market value which is a question of fact and here the statute mandates and the parties agree that the income capitalization methodology is the only approach from hallum supported living facilities which are heavily regulated restricted use special property special use properties that re stricted in what they need charge for rent and the parties here different soley in the pieces of evidence that they selected and the calculations that they used to arrive at their respective appraisal opinions and  anything else because the majority of units at heritage woods are those one bedrooms you know forty four dollars of those one bedroom apartments i believe it was you're not going to find that late what mr mitchell testified to that throughout these facilities it's about a three to four percent double occupancy rate which makes sense around it because this is targeted at low income people who need some kind of medicaid eligible services the likelihood of finding a married couple that both qualifies for that to go into a one bedroom is kind of going to be rare it's and you're not a laser not in that case what would happen in one of those medicaid eligible wouldn't they be charged rent at six hundred and twenty dollars plus that capped medicaid services and the nd the nd person could be paying the highest rate possible for services if they were eligible if you don't if you don't need the services you're not going to be you're not to be accepted into one of these what if they dearly well there's a lot of private pay people that are assisted living that might not need the services that are just plain old are there but those no no to this just special supported living facilities are special used to sleaze they are medicaid certified and they only for people who need medicaid type services be those people already on medicaid or the other part of the population this is targeted at is those people who right now have too many assets to qualify for medicaid but cannot afford ten or five or even two years in a market level independent living facility the beauty of a silly like this is they can go in at private pay reduce their helps we know one thing we know about medicaid payments is they are low they generally do not reflect the true cost of services in recent testimony in the record about the true cost of services it's very minimal being able to take some private show how imbalanced the rates charged to the private pay and high social security income residents what's but by by regulation on or anything the facility receives over six hundred and twenty dollars for the room and board is required to be allocated to services and for the medicaid patients it functions as an offset so if someone has i think the examples your seven hundred and fifty dollars social security income extension it goes to rent regulations you know that go to medicaid because it goes to offset medicaid payments it reduces the department of health care and family services payment that they make so it doesn't go to the facility it's some kind of extra gravy it goes to offset the medica is i would like to address the peterson case and the issue of summary restricted use i've had appeals in the past where a restricted use appraisal was used it simply goes to the weight as it did here and it was like a supplemental thing on how many cases the property tax bill board has accepted as evidence of restricted use report i would be very happy to supply that in this case the restricted use report is the only ing the final an illustrated decision in this case it based decision on the very extensive and explicit testimony about the nature and the mandates and the requirements of the supported living supportive of the program the prior administr n decisions are going to dictate the outcome in this case and in fact in peterson there was absolutely no mention of the d h as rental rate at all but peterson is interesting your honor for two reasons st both the tax payer and the board of review chose to present market rate independent nonsupport of living facilities as compared to what's there now that was the taxpayer's choice your honor it's not the board's role to say you know if you want to reduction maybe that's not the best evidence you could be providing  testimony about the restrictions on support of living facilities as there was in this case in tejas peterson is interesting for two reasons one is that choice of evidence or choice on behalf of the taxpayer and the other heritage woods i think in this matter and let me start by syrian i would agree with that position and they  directed by the own oil legislature to establish and provide oversight for a program of supporting living facilities that seek to promote resident independence dignity respect and wellbeing in the most cost effective supporting living program is controlled by the l annoyed ministry to cope and in order to participate in that program supported living ministry of code and i believe all the parties agree that heritage woods is an eighty seven dollars unit certified s l f with a maximum occupancy which has come up earlier today of one hundred and thirty seven dollars and once you're a certified s l a then you're to be valued by the special section ten what the percentage is required for low income residents or is there one let me just say this i think if mitchell's testimony was that there's very few that aren't but  the code in the ministry of code provides that if you charge the medicare and the private pay the same for room and board then there has to be at least twenty five percent reserved for medicaid people and if you don't do that if you do that it's st come st serve if you don't so all right thank you so but what i've not heard mentioned by anybody is the things in the administrative code which pretty much controls this it also sets what the rent room and board rates going to be which i think has been touched upon but that comes from the administrative code and that's the s s i minus ninety dollars which came out and but that's not just a number pulling out of the air and i think was mentioned earlier by someone if somebody is in their size more than the minimum then that money does not go to private pay people charge room and board the same as in the this facility and this was testimony from david mitchell is just there charge the exact same room and board as the medicaid people if that's the purpose of having a supportive maybe i can answer that i think i can tell you i don't know you know what the demand is but some of the private care people come in it's my understanding and i think maybe mr mitchell testified to this maybe someone mentioned it earlier today that some of the private care people come in because they know that their friends are going to be gone and within a short period of time or reasonably short period of time they're going to need to be in the facility where they get the medicaid services well then eventually there would be one hundred percent low income  it got to realise there's quite a bit of turnover in these things i understand i understand it more they move in they're going to stay twenty years i don't think that wouldn't be the norm i understand i understand and in with as many low income people as they have and then the open room go to private what was that policy i'm not sure i understand the question that the vacancy rate is in this comes a somewhat in a section forty two dollars properties which came up is mr honegger in in his calculation to come up with the expenses because the expenses were services in regular expenses or so called medical he can't really figure it out he looks at section forty two properties which don't have services but have you know meals and that sort of thing and looks at the expenses of those and compares them and that's where the forty two dollars properties come in as far as a vacancy rate goes  think you know he's not medicaid eligible what what is the rate i want to compare your rate to the facility in one what was told what would i be told that they would give him a rate and you know i can't tell you what the number would be but it would include the room and board and the eight million dollars facility in peterson there was a reduction but it was only half a one million dollars four hundred thousand dollars and evergreen there was no reduction whatsoever and that included mr h at the hearing so they didn't want any higher assessed days than what they had assigned to it that they were not i even asked for what webster was asking for so i'm trying to figure out in my brain why there's such a difference between these three cases peterson evergreen and nancy you know which were decided within a relatively short time span of several years i looked to see sometimes our court is inconsistent in decision making because the make up a kind of shift to the way a case will go on occasion but their decisions and in that the make up of the p t a be the members that signed off on all three of these decisions are essentially the same can you were looking at the chart to sit put out you know annually for the monthly breakdown by the department and they sent it they came in on the word in the chart estimates the monthly revenue and what the problem was i saw in that case was that the word estimate used because they didn't have any testimony like we had with mr mitchell that explained if there's money over and above the room and board honegger not considering private pay rates of services that all is that he factory now that income that private pay people are pain above what medicaid would have been think that's going to services well i think great heritage woods labels it is services but our task here in looking at the methodology is to decide whether they are truly services or whether it's a component that mr mitchell conceded is present in the medicate rate so you know well we'll sort all this out but i just wanted to get your input on the difference between evergreen right and this case seems to me to be a matter of bookkeeping that in evergreen there were private pay residents that were charged on the books i think it was a one thousand and forty dollars per month for  up here and correct me if i wrong i think the bookkeeping is just different for heritage woods because now everybody shows on the books for purposes this restricted use appraisal i think if they get extra services and it's medicaid and the resident pays it and if it would have been a resident were i mean i think mr a minute it is the services they receive would have been paid by medicare they're not talking about the amount just as they would have been paid well aren't we required to talk about the amount because there's no way medicaid is going to pay for services in the amount of four thousand dollars services if those services are exactly what medicaid pays for two thousand one hundred dollars why isn't there seven hundred dollars additional income that heritage woods is keeping for private paying re because the statute says that's attributable to services and not to the real estate ok because you call them services then you take them out of the equation and i understand your argument what's based on seventy five percent private pay would be significant korat you know yeah if that were if i knew that was the case she sure so isn't it so what backwards rather than encouraging these low income people to have a place to live doesn't hear it gets what's this well keep being actually end up in that rebirth situation where your client benefits more by having private pay people and keeping the low income numbers that could be but you've got to remember that the reason this thing was set up was i know i understand so so let me give you the answer the answer is it's the change should come from the legislature and i understand your argument you know this there's a program that was set up and if you're not going to follow the chart you're not going to follow the stats you know why do we even have the program and why do we have the chart and so why do we have the certification by this facility they go back to medicaid or to back to the department of health care and family services that are in excess of some sort of that's a new fact in the record to my knowledge and i'm pretty knowledgeable in the code in the record in the statute i have never heard of a payback if i misunderstood i'm not trying to mislead the court it's just my understanding of how this works and my understanding is that they take any money in excess of six hundred and twenty dollars and for bookkeeping purposes they call it services and even if it's attributable to real estate they call it services so that less i see miss when jumping up and down in s s virtually jumping up and down let's assume she's right the issue here is not medica but to the other point whether the benefit to heritage woods of having more attractive to their making facilities that's more attractive to private pay by having one hundred and thirty seven dollars person capacity facility configured for eighty seven residents or eighty seven dollars apartments meaning they get larger rooms more space they can market private pay residents in a manner that's comparable to a non medicaid facility and they are less they have less eligible medicaid eligible people and this is not a fire code regulation this is from the same code that they've been quoting to us the entire upon must be for one single and double occupancy facilities the same code that provides the the service requirements and the structural requirements so you know if it's true they are trying to have a facility that's attractive to private pay but make it you know but try to get the benefits of a low income housing which i don't think this is low income housing and you know we talked a lot about the the requirements of taking and anything in excess of that going to the services but that is strictly for medicaid every time that is stated in the code it says for medicaid residents only there is no regulation on the private what they charge for the private  and this goes back to the statute which states that the valuation is based on the income capitalization approach period there's no special method of determining the capital income capitalization approach based upon mr one of his reading of the code and  that it says that payments for medicaid or services when such payments constitute income that your tribute a bill to services and not attributable to real estate well here we have income that's attributable to real estate and the knowledgeable untypical investor would operate this property and they would look at what a comparable facility would do and arrive at a value based upon and that's why we call the potential gross income that's what we're talking about here is what is the potential approach which we think it's ten dash three hundred and ninety dollars supports it's going to be the potential gross income for a facility that uses market approach to arriving at rental incomes and that's why i think you may have  the overly literal or literal approach that he's taken here that he should have been one hundred and thirty seven and not eighty seven because eighty seven is the business decision of this owner that has nothing to do with the property taxes and they're using that configur