Title: Walsh v. Illinois Property Tax Appeal Bd.

State: illinois

Issuer: Illinois Supreme Court

Document:

Walsh v. PTAB, No. 83072 (2/20/98) 
 
            Docket No. 83072--Agenda 15--November 1997. 
     RICHARD T. WALSH et al., Appellees, v. THE PROPERTY TAX APPEAL 
                     BOARD et al., Appellants. 
                  Opinion filed February 20, 1998. 
 
          JUSTICE HEIPLE delivered the opinion of the court: 
               "His horse went dead, and his mule went lame, 
               And he lost six cows in a poker game; 
               Then a hurricane came on a summer day, 
               And blew the house where he lived away; 
               An earthquake came when that was gone, 
               And swallowed the land that the house stood on; 
               And then the tax collector came around, 
               And charged him up with the hole in the ground." [fn1] 
          In this case we consider the practice of the tax collector, in the person of 
     the Tazewell County board of review, of calculating assessed values for like 
     properties on different bases: to wit, as a percentage of recent sales price as 
     opposed to the so-called "mass appraisal method." Specifically, we allowed the 
     instant petition for leave to appeal by plaintiffs Richard T. Walsh and Barbara J. 
     Welsch (166 Ill. 2d R. 315) to consider whether the appellate court erred in 
     invalidating the revised assessment of plaintiffs' jointly owned Tazewell County 
     property, known as the Herget House. The appellate court held that the Tazewell 
     County board of review violated the uniformity clause of the Illinois Constitution 
     when it raised the assessed valuation of the Herget House, along with some 39 
     other properties, based upon the property's recent sales price when virtually all 
     other parcels of property in the county were assessed using the mass appraisal 
     method. 286 Ill. App. 3d 895. For the reasons expressed below, we affirm. 
 
                           BACKGROUND 
          To facilitate the uniformity of taxation compelled by acticle IX, section 4, 
     of the Illinois Constitution 1970, the General Assembly has enacted the Property 
     Tax Code to govern, inter alia, the basis upon which real property is valued for 
     purposes of collecting property tax revenue. Ill. Const. 1970, art. IX, sec. 4(a); 35 
     ILCS 200/1--1 et seq. (West 1996). The Property Tax Code provides that, in 
     general assessment years, each assessor s office "shall actually view and determine 
     as near as practicable the [fair cash] value of each property" as of January 1 of 
     each general assessment year. 35 ILCS 200/9--155 (West 1996). Fair cash value 
     is defined as "[t]he amount for which a property can be sold in the due course of 
     business and trade, not under duress, between a willing buyer and a willing seller." 
     35 ILCS 200/1--50 (West 1996). Fair cash value is synonymous with fair market 
     value and, as such, an arms-length sales transaction is the best evidence thereof. 
     Once fair cash value determinations are made, each property receives an assessed 
     valuation based upon 33% of the fair cash value. 35 ILCS 200/9--155 (West 
     1996). General assessment years in counties with less than 3 million persons, such 
     as Tazewell County, shall take place quadrennially. 35 ILCS 200/9--215 (West 
     1996). 
          Contrary to the Property Tax Code's mandate, there has not been an 
     "actual viewing to determine the fair cash value" of any Tazewell County property 
     since the 1957 general assessment year. In each ensuing general assessment year, 
     Tazewell County has applied what is known as the "mass appraisal method" for 
     determining the fair cash value for all Tazewell County properties. The mass 
     appraisal method supplants fair cash valuations by on-site viewings with fair cash 
     valuations based upon the assessment-sales ratio statistics compiled by the Illinois 
     Department of Revenue, which are gathered for the entirely different purpose of 
     equalizing assessments on an intercounty basis. See 35 ILCS 200/17--5 (West 
     1996). The Department of Revenue annually determines assessment-sales ratios 
     for each county by comparing the fair cash value determinations of the local 
     assessors with the value of properties as evidenced by, inter alia, an average of 
     recent arms-length sales prices in the county or township at issue. Simply put, the 
     assessment-sales ratio is tantamount to an average rate of appreciation for a given 
     township or county. The mass appraisal method of property assessment simply 
     adds the Department of Revenue's sales-assessment ratios for the three years 
     preceding the general assessment year to arrive at an average rate of appreciation 
     for properties in the county. Each property therein is then assigned a new fair cash 
     value equal to the previous assessed valuation multiplied by this factor. 
          In Tazewell County's Pekin Township, where the Herget House is located, 
     the Department of Revenue's assessment-sales ratios totaled 11.7% for the three 
     years preceding the 1992 general assessment year. Thus, the Pekin Township 
     assessor, as in every other general assessment year since 1957, raised the fair cash 
     value of Pekin Township properties by the sales-assessment ratio factor. As a 
     result, the assessor increased the assessed valuation of the Herget House 11.7% 
     to $40,850. 
          Plaintiffs did not contest the assessor's assessed valuation of the Herget 
     House. Rather, various other Pekin residents complained to the Tazewell County 
     board of review that the Herget House had been underassessed given its recent 
     sales price of $355,000. Observing that the Property Tax Code sets the assessed 
     value of property at 33% of fair cash value, they argued that the Herget House 
     should have received an assessed value of $118,333, some $77,000 more than the 
     Pekin assessor's $40,850 assessed valuation. 35 ILCS 200/9--155 (West 1996). In 
     response to these complaints, the Tazewell County board of review exercised its 
     statutory prerogative (35 ILCS 200/16--30 (West 1996)) and raised the assessed 
     valuation of the Herget House and some 39 other properties in the vicinity to 
     reflect 33% of the true fair cash value, as evidenced by their recent sales prices. 
     Accordingly, the board of review raised the assessed value of the Herget House 
     from $40,850 to $100,000, which raised the property tax bill from $3,830.46 to 
     $9,441.40.     The plaintiffs appealed the revised assessment to the Property Tax 
     Appeal Board, arguing that the revised assessment violated the uniformity clause 
     of the Illinois Constitution of 1970 (Ill. Const. 1970, art. IX, sec. 4(a)). 
     Specifically, plaintiffs contended that basing the Herget House's assessed value 
     on the true fair cash value as evidenced by its recent sales price resulted in the 
     property's being taxed at a different proportion of its true value than Tazewell 
     properties which had been assessed using the mass appraisal method. In support, 
     the plaintiffs pointed to evidence that the assessed value of other Pekin Township 
     properties recently sold ranged from 7% to 68% of their true fair cash value as 
     indicated by their recent sales prices. 
          The Property Tax Appeal Board found that the plaintiffs had not shown by 
     clear and convincing evidence that the Herget House had been overassessed or that 
     the revised assessment violated the Illinois Constitution's uniformity clause or the 
     United States Constitution's equal protection clause. In support, the Property Tax 
     Appeal Board noted that the assessed value of the Herget House was slightly less 
     than 33% of the fair cash value as evidenced by the sales price, and thus was not 
     excessive. As for the constitutional arguments, the Property Tax Appeal Board 
     found that neither the Illinois nor the United States Constitution was violated 
     because the sales-assessment ratio for the Herget House, slightly lower than 33%, 
     was well within the 7% to 68% range for other Pekin properties. Moreover, the 
     Property Tax Appeal Board found plaintiffs' comparisons to other Tazewell 
     County properties unpersuasive given the unique history, location and size of the 
     Herget House. 
          The appellate court reversed, finding that the removal of the Herget House 
     from the mass appraisal system of valuation violated the uniformity clause of the 
     Illinois Constitution of 1970. In affirming the appellate court, we base our 
     decision on the Illinois Constitution's uniformity clause, and thus do not reach the 
     plaintiffs' arguments that the revised assessment also violated the United States 
     Constitution's equal protection clause. 
                            ANALYSIS 
          The Illinois property tax scheme is grounded in acticle IX, section 4, of the 
     Illinois Constitution of 1970, which provides in pertinent part that real estate taxes 
     "shall be levied uniformly by valuation ascertained as the General Assembly shall 
     provide by law." Ill. Const. 1970, art. IX, sec. 4(a). Uniformity requires equality 
     in the burden of taxation. Kankakee County Board of Review v. Property Tax 
     Appeal Board,  131 Ill. 2d 1 , 20 (1989). This, in turn, requires equality of taxation 
     in proportion to the value of the property taxed. Apex Motor Fuel Co. v. Barrett, 
 20 Ill. 2d 395 , 401 (1960). Thus, taxing officials may not value the same kinds 
     of properties within the same taxing boundary at different proportions of their true 
     value. Kankakee County Board of Review, 131 Ill. 2d  at 20. The party objecting 
     to an assessment on lack of uniformity grounds bears the burden of proving the 
     disparity by clear and convincing evidence. Kankakee County Board of Review, 
     131 Ill. 2d  at 22. 
          Here there can be no question that plaintiffs have established, by clear and 
     convincing evidence, that the uniformity clause of the Illinois Constitution has 
     been violated. The evidence presented by both the board of review and the 
     plaintiffs disclosed that sales-assessment ratios for other Pekin Township 
     properties ranged from 7% to 68%. This astonishing range of assessed values, as 
     a percentage of true values as evidenced by recent sales prices, results directly 
     from Tazewell County's utilization of the mass appraisal valuation method since 
     1957. At the time of the Pekin Township assessor's 1992 assessments, many Pekin 
     properties had assessed values unrelated to their true fair cash values. Some 
     properties were overvalued, while others were undervalued. The Herget House fell 
     into the latter category, enjoying a sales-assessment ratio of 11.5% at the time the 
     Pekin Township assessor applied the Department of Revenue's 11.7% assessment- 
     sales factor appreciation figure to the Herget House for the 1992 general 
     assessment year. 
          To the extent that Pekin Township's assessed valuations bear little 
     relationship to true fair cash value, they result in the unequal sharing of the 
     collective tax burden and thus violate the Property Tax Code, as well as the 
     Illinois Constitution's uniformity clause. 35 ILCS 200/9--145 (West 1996) 
     (requiring valuations at 33% of fair cash value); Ill. Const. 1970, art. IX, sec. 4(a) 
     (requiring that taxes be leveled "uniformly by valu[e]" (emphasis added)). That 
     having been said, it must be noted that the uniformity clause restricts the manner 
     by which Tazewell County may attempt to correct such disparities. The Illinois 
     Constitution's uniformity clause requires not only uniformity in the level of 
     taxation, but also in the basis for achieving the levels. Kankakee County Board of 
     Review, 131 Ill. 2d  at 20. 
          Simply put, Tazewell County must use the same basis for determining 
     assessed valuations for all like properties. Kankakee County Board of Review, 131 Ill. 2d  at 20. A necessary corollary to this most basic of principles is that Tazewell 
     County must likewise apply any attempts to alter the basis for assessing values in 
     a uniform manner. Accordingly, Tazewell County cannot use the recent sales price 
     of the Herget House to calculate the assessed value of plaintiffs' property without 
     doing so for all other like properties. 
          In an attempt to side-step this precept, the Property Tax Appeal Board 
     argues that the Herget House is a unique historical property without any "like" 
     properties for purposes of comparison. But even assuming this to be the case, such 
     is immaterial in the instant context. The plaintiffs do not contest the fair cash 
     value ascribed to their property, readily conceding that it is $355,000. Rather, they 
     contend that the Tazewell County board of review has arrived at an assessed 
     valuation of their property on a different basis than that employed for the vast 
     majority of other Pekin Township properties, thus resulting in plaintiffs arbitrarily 
     paying property taxes on a greater percentage of their property's fair cash value 
     than do other property owners. This violates the uniformity clause prohibition 
     against taxing properties at different proportions of their true fair cash value. Apex 
     Motor Fuel Co., 20 Ill. 2d  at 401. 
          Tazewell County's utilization of the mass appraisal method to calculate 
     Pekin Township assessed valuations for 40 years has resulted in many Pekin 
     properties enjoying sales-assessment ratios below the statutory 33% of fair cash 
     value. These properties thus contribute less than their fair share of the collective 
     tax burden, in conflict with article IX, section 4(a), of the Illinois Constitution. Ill. 
     Const. 1970, art. IX, sec. 4(a); Apex Motor Fuel Co., 20 Ill. 2d  at 401. 
     Notwithstanding, the Tazewell County board of review may not adjust plaintiffs' 
     assessed valuations to reflect 33% of its true fair cash value without doing so for 
     all like properties. 
               "[The] great central and dominant idea of the constitution is 
                    uniformity of taxation, and no power exists or should exist in any 
                    corporate authority to go counter to this command of the 
                    fundamental law. Therefore one person cannot be compelled to pay 
                    a greater proportion of taxes, according to the value of his 
                    property, than another, and where assessors have disregarded the 
                    injunction of the law and made an assessment of property far 
                    below its real cash value, their misconduct must also follow the 
                    principle of uniformity and their assessments of all persons must 
                    be at the same proportional value." (Emphasis added.) People's 
                    Gas Light & Coke Co. v. Stuckart, 286 Ill. 164, 173 (1918). 
     To hold otherwise would sanction assessed valuations on different proportions of 
     like properties in direct contravention of the uniformity clause. Ill. Const. 1970, 
     art. IX, sec. 4(a); Kankakee County Board of Review, 131 Ill. 2d  at 20. 
          Logic and taxation may not be the "best of friends" (Sonneborn Brothers 
     v. Keeling,  262 U.S. 506 ,  522 , 67 L. Ed. 1095, 1103, 43 S. Ct. 643, 648 (1923) 
     (McReynolds, J., concurring)), but until such time as Tazewell County 
     systematically ascribes true fair cash value to all like properties, plaintiffs are 
     entitled to the benefits they have accrued under a uniform, though flawed, basis 
     of valuation. The judgment of the appellate court is affirmed. 
 
     Appellate court judgment affirmed. 
 
 
                                                                 [fn1] Author unknown.