SIXTH DI VISI ON May 14, 2010

Nos. 1-08-3291 and 1-08-3292, Consolidated CALU MET TRANSF ER, LL

C, Petitioner -Appella nt,

v. THE PROPERTY TAX APPEAL BOARD; THE COOK COUNTY BOARD OF REVI EW; and THE CHICAGO BOARD OF EDUCATI ON, Responde nts-Appe llees. ) ) ) ) ) ) ) ) ) ) ) Petition from the I llino is Pro

pert y T ax Appeal Board

Nos. 0327670 0425665 0328386 0425663

PRESID ING

JUSTICE

CAHI LL deliver ed the opi nion of the

court: Petitioner , Calumet T

ransfe r, LL C, appea ls two fina

l orders by r esponde nt, the Illinois Property Tax Appeal B oard (PTAB). Petitioner argues PTAB erred as a matter of law in holding that the sale of property

through bankruptcy

defeats the presumption that the sale was "in the due course of business and trade, not under duress, betwe en a willing buyer and a willing seller" (at arm's l ength) (35 ILCS 20 0/1-5 0 (Wes t 200 2)). P etit ioner argues i n the a ltern ative that P TAB's dete rmina tion o f fai r cash val ue in this c ase w as ag ainst

the ma nife st we ight

of the evidence . We affirm. There are two parcels of prope rty at issue. The first, which we will refer to as the "coke production property," is a 96.5-acre, irregular ly shaped, industrial-zoned proper ty located ea st of1-08-329 1 and 1-0 8-3292, Cons.

2

the Calumet River to South Burley Ave nue and between 111th and 114th Streets, in Chicago. The property

was improved with several buildings of vary ing age, function and condition, including an inoperable coke (ca rbonized coal) production facility . Plaintiff purchased the property in De cember 2002 from LTV Stee l Company, which was in bankruptc y at the time. Plaintiff paid $850,000 for the property and the bankruptcy

court approved the sale. The second, which we will refer to as the " blast furnace property ," is 89.92 acres and adjoins th e coke production proper ty to the north . Like

the coke producti on prope

rty , the blas t furnace property

was zoned for industrial use and fronted the Calumet River. The property was owned in 2003 by Acme

Steel, which was also in bankruptcy at the time. Acme sold the improvements to the land, which included an old Acme blast furnace f acility, to a scra

p company for $250,000. Petitioner purchased the nonimproved land for $880,000 on Dec ember 4, 2003. The bankruptcy

court approved the sale subject to petitioner assuming re sponsibility for back taxes owed

on the pro

perty . Petitione

r paid a t otal cons ideration of $1,11 7,282.14 f or the bla st furnace property

. The assessed value of the properties, which is the value placed on the properties by the Cook County assessor's off ice for property

tax purposes, reflected fair market values much hig her than the amounts petitioner paid for the properties. The coke produc tion property had a

n assessed value of $1,051,100 for the 2003 tax y ear and $1,050,704 for the 2004 tax y ear, reflecting an approximate fair marke t value of over $2.9 million. The blast furnace property had an assessed value of $667,720 for the 2003 and 2004 tax y ears, reflecting a fa

ir market value of approximately $1.9 million.1-08-329 1 and 1-0 8-3292, Cons.

3

Petitioner filed separate complaints with the Cook County B oard of Review (Board of Review)to reduc e the 2003 and 2004 a ssessed v alues of each pr operty to refle ct the amo

unts petitione r paid for the pro

perties. The Boa

rd of Review denie d petitione r relief on his complaints. Petitioner appealed the Board of Review' s decisions separately to PTAB. PTAB granted leave to the Chicag o Board of Education (CBE) to intervene

. Hearings were held in eac h case. Alan Beemsterboer, pe titioner's creator and manag er, testified at both hearings about the circumstances surr ounding the sales and the condition of the properties. Beemsterboer said he be lieved he paid fair market value for the pr operties, saying both sales were conducted at arm' s length. Real estate appraiser Howa rd Richter testified on behalf o f petitioner at bot h hearin gs. Rich ter said p etitioner

paid fai r market value f

or both propert ies and r ejecte d the sug gestion

that the sa

le of pro perty sold throu

gh bank ruptcy is sold under duress. William Enright testified on behalf of the CBE at both hear ings, saying

the amounts petitioner paid for the properties did not reflect fair mar ket value because the sellers were in bankruptcy

at the time and were under pressure fr om their creditors to sell. Enright appraised the coke production property and the blast furnace property each at approximately $3.5 million. Richter and

Enrigh t submitted

written a ppraisa ls to suppor

t their re spective

opinions. The appraisals were based in larg e part on comparable property sales. PTAB hel d in both ca ses that the eviden ce was in sufficie

nt to warr ant a cha nge in assessed value. PTAB gave little weig ht to the price petitioner paid for the properties, say ing the fact the properties were subject to bankruptc y procee dings at the time of sale called into question the arm's-length nature of the transactions. PTAB concluded the assessed values of the1-08-329 1 and 1-0 8-3292, Cons.

4

properties in 2003 and 2004 were supported by comparable property

sales and denied petitioner relief. Petitioner

appeals both PTAB decision s to this cou rt under section 1 6-195 of t

he Prope rty Tax Code (35 IL CS 200/16-195 (West 2002)). Appeal No. 1-08-3291 involves the coke producti on prope

rty . Appeal

No. 1-08- 3292 involv es the bla st furna ce prope rty . The app eals were consolidated on this court's motion. There are "three ty

pes of questions that a court may encounter on administrative review of an agency decision: ques tions of fact , question s of law[] and mixed questions of fact and law. " Cinkus v. Village of Stickney Munic ipal Officers Electoral Board , 228 Ill. 2d 200, 210, 886 N.E.2d 1011 (2008). Our standard of review depe nds on the type of question pre sented. Cinkus , 228 Ill. 2d at 210. An agenc y's f indings and conclusions on questions of fact are deeme d prima facie true and correct and will not be overturned unless they are against the manifest weig ht of the evidence. Cinkus , 228 Ill. 2d at 210. Where the question is legal, on the othe r hand, our review is not as deferential. Cinkus , 228 Ill. 2d at 211. We review questions of law de novo

. Cinkus , 228 Ill. 2d at 211. Petitioner raises two issues on

appeal. The firs t involves a question of law a

nd is reviewed de novo . The sec ond involve s finding s of fac t and is re viewed u nder the manifest weight of the evidence standard of review. Property in Ill inois is ass essed for proper ty ta x purposes a s a perc entage of "fa ir cash value," which is sy

nonymous with fair marke t value. See Cook County Board of Revie w v. Illinois Property

Tax Appeal Board , 384 I ll. App. 3d 472, 480, 8 94 N.E.2d

400 (2008 ). Fair

cash1-08-329 1 and 1-0 8-3292, Cons.

5

value is defined by

statute as "[t]he amount for which a property can be sold in the due course of business a

nd trade , not unde

r duress , betwee

n a willing

buyer and a

willing s eller." 35 IL

CS 200/1-50 (

West 2002) . Section 1 910.65(c ) of Title 86 of the I

llinois Admi

nistrativ e Code (8 6 Ill. Adm. Code §1910.65(c), amended at 21 I ll. Reg. 3706, 3721, eff. March 6, 1997) specifies the typ e of evid

ence tha t may be consid

ered in d etermini ng fair cash val ue. That section r eads: "Proof o f the mar

ket value of the sub

ject pro perty may consist of

the follow

ing: 1) an appraisal of the subject property as of the assessment date at issue; 2) a rec ent sale

of the sub

ject pro perty ; 3) documentation evidencing the cost of construction of the subjec t property including

the cost of the land and the value of any labor provided by the owner if

the date of construction is proximate to the assessment date; or 4) documentation of not fewer than three re cent sales of suggested

co mp ar ab le pr op er ti es to ge th er wi th do cu me nt at io n o f t he si mi la ri ty, proximity and lack of distinguishing cha racteristics of the sales comparables to the subject property ." 86 Ill. Adm. Code §1910.65(c), amended at 21 Ill. Reg . 3721, eff. March 6, 1997 The best evidence of fair cash va lue is an arm's-length sale. Walsh v. Property Tax Appeal Board , 181 Ill. 2d 228, 230, 692 N.E.2d 260 (1998). Petitioner argue s PTAB er

red by holding, as a matte

r of law, that the sa

le of pro perty1-08-329 1 and 1-0 8-3292, Cons.

6

through a bankruptcy

proceeding is, by

its nature, not an arm's-length transac tion. We disagree with petitioner's characterization of the PTAB dec isions here. PTAB did not hold, as petitioner sugge sts, that a

sale thro ugh ban kruptcy cannot be

consider ed an ar m's-le ngth tra nsaction as a matter of law. Rather, PTAB allowed the CBE to cha llenge the arm's-leng

th nature of the transaction by off

ering evidence of compara ble property sa

les. This was permissible under paragra ph (4) of sect ion 1 910.6 5(c) (8 6 Ill. Ad m. Co de §19 10.65 (c)(4) , amen ded at 21 Ill. R eg. 3721, eff. March 6, 1997). In a related a

rgument, petitioner argues PTAB erred as a matter of law by considering evidence outside of the sale price to determine the pr operties' fair cash value. Petitioner cites Peopl e ex re l. Kor zen v . Belt Ry. Co. o f Chi cago , 37 Ill. 2d 158, 161, 226 N.E.2d 265 (1967), and cases like it, which stand for the proposition that "a contempora neous sale between parties dealing at arm' s length

is not only

releva nt to the qu

estion of fair ca sh market value, [c itations] but would be practicall y conclusive on the i ssue of wheth er an assessm ent was at ful l value." Petitioner 's arg ument ass umes the a

bsence o f eviden

ce call ing into q

uestion th e arm' s-leng

th nature of the transactions here. The CBE a

rgues t hat the se llers, L

TV Steel Company

and Acme

Steel, we re under duress to sell the propert ies to sati sfy

their cr editors. In su

pport, the CBE submit

ted compa

rable property sale s that suggested petitioner paid below the fair market value for the properties. There is no provision in the Property Tax Code that restricts PTAB' s authority to consider such evidence. To the contrary, paragraph (4) of sec tion 1910.65(c) specifically allows evidence of comparable property

sales to prove fair market value. 86 Ill. Adm. Code §1910.65(c)(4),1-08-329 1 and 1-0 8-3292, Cons.

7

amended at 21 Ill. Reg . 3721, eff. March 6, 1997. Petitioner argues in the alternative that PTAB' s findings are against the manifest we ight of the evidence. I

n reviewing petitioners' arg ument, we treat PTAB's findings and c onclusions on questions of fact prima faci

e true and correct. Cinkus , 228 Ill. 2d at 210. We cannot reweig h the evidence or substitute our judgment for that of PTAB. Cinkus , 228 Ill. 2d at 210. We consider only whether PTAB 's findings are ag ainst the manifest weight of the evidence, mea ning an opposite conclusion is clearly e vident. Cinkus , 228 Ill. 2d at 210. We begin our analy sis with the coke production property . The assessed value of that property wa s $1,051,100 in 2003 and $1,050,704 in 2004, reflecting a fair marke t value of over $2.9 million or $30,000 per acre. Petitioner bought the property in December 2002 for $850,000, or $8,808 per acre. Petitioner's expert, Howard Richter, testified the amount plaintiff paid for the c oke production property r

epresents the property

's fair market value. Richter supported his opinion with comparable property sales. The first property

used for comparison is a vacant lot located betwee n petitione

r's pro perty and resi dentially

zoned prop erty

that sold f

or $3,450 per acr e in June 2003. Richter next compared the blast furnace property, which petitioner bought for $9,786 per acr e (not inc luding ba

ck taxes) in Dece

mber 2003 . The thir

d proper ty is located immediate ly south of the coke production property and sold in January 2001 for $18,385 per acre. Richter acknowl edged

on cross- examination that the first two c ompariso n proper ties wer e subjec t to bankruptcy pr

oceedings at the time they sold. Richter also admitted that the $18,385-per-acre price of the third property represented the amount the parties to that sale believed the land was1-08-329 1 and 1-0 8-3292, Cons.

8

worth. The property

with improvements sold for $4.5 million, or $55,154 per acre. The CBE's expert, William Enright, testified he appraised the coke production property a

t $3.5 million in 2003 and $3.6 million in 2004, or approximately $37,000 per acre. Enrig ht relied on five comparable property sales. The properties were all located within three miles of the coke producti on prope

rty and sold be

tween F ebruar

y 20 00 and Fe

bruary 2002 for a

bout $19,0 00 to $76,230 per acre. Enright said he did not g ive significant weight to the price petitioner pa id for the coke production property because the property

was sold through bankruptcy and was below typical prices f

or comparable land. PTAB concluded the evidence was insuffic ient to warrant a reduction in the assessed value of the coke production property . PTAB placed little weight on the price petitioner paid for the prope rty , say ing the c ircumsta

nces sur rounding the sale called in to questio n whethe

r the sale repres ented fa

ir marke t value. PT

AB also g ave little

weight to the fir st two comp arable propert y sales use d by

Richter t o formula te his opin

ion on the g

round tha t those pr opertie s were so ld while in bankruptcy a s well. PTAB found the third comparable property used by Richter wa s simi lar to the co ke pro ducti on pro perty in s ize an d loca tion . But P TAB rej ected R ichte r's sugge stion that PT

AB use the $18,385 -per-a cre val ue place d on the la

nd without i

mproveme

nts because the coke production property was not sold as vacant land. PTAB concluded: "[a]fter considering all the evidence[,] including the experts' testimony and submitted documentation as well as the adjustments and differences for sale date, location, condition of the land, building conditions and type of leg al conveya nce in the [petitioner's] and intervenor's sugg ested comparables, the PTAB finds that the subject's cur rent 2003 and 2004 assessments are supported1-08-329 1 and 1-0 8-3292, Cons.

9

by these compar

able sales contained in this record." Petitioner argues there was no evidenc e contesting the arm's-leng th nature of the coke production property sa

le and that absent such evidence, PTAB' s rejection of the sale price as

conc lusiv e evi denc e of f

air m arke t valu e was aga inst t he ma nife st we ight

of the evidence . We disagree. The CBE prese nted evidence of comparable proper ty sales much hig

her than the price petitione r paid for the cok

e production prope

rty . This evid

ence wa s suffici ent to ca

ll into question the arm's-length nature of the transaction. We next consider the blast furnace property . Petitioner bought this property in De cember 2003 for $880,000, or about $9,800 per acre. The a ssessed value for the property in 2003 and 2004 was $667,720, reflecting a fair mar ket value of about $1.9 million or $21,000 per acre. Richter testified at the hearing before PTAB that he believed petitioner paid fair market value for the bla st furna

ce prope rty . Richter

used the s ame comp arable propert y sa les he use d to determine the value of the coke production proper ty except that he used the coke production property a s his second comparable property . Enright testified he believed the blast furnace propert y w as worth $ 3.5 million i n 2003 and

$3.6 million

in 2004. En

right a lso used th e same comparable property

sales he used in the coke production property case. PTAB concluded there was insufficient evidenc e to warrant a modification in the assessed value of the blast furnace prope rty. PTAB did not place

significant weight on the price petitioner paid for the property , finding the circumstances of that sale wer e called into question by t he bankr uptcy nature o f the tra

nsaction . PTAB g ave con siderab le weig ht to compa

rable properties that sold between July 2000 and July 2004 for $8,411 to $55,154 per acre. As in the1-08-329 1 and 1-0 8-3292, Cons.

10

coke production property case, we find PTAB's decision supported by the evidence. We affir m both PTAB decision s. Affirmed. McBRIDE and R. GORDON, JJ., concur.