3/7/97 No. 3--95--0813
_________________________________________________________________
IN THE
APPELLATE COURT OF ILLINOIS
THIRD DISTRICT
RICHARD T. WALSH and ) Appeal from the Circuit
BARBARA J.WELSCH ) Court of the 10th
Plaintiffs-Appellants, ) Judicial Circuit,
) Tazewell County, Illinois
)
v. ) No. 95-MR-1
STATE OF ILLINOIS PROPERTY )
TAX APPEAL BOARD and TAZEWELL ) Honorable
COUNTY BOARD OF REVIEW, ) Donald Courson
Defendants-Appellees. ) Judge, Presiding
_________________________________________________________________
JUSTICE HOLDRIDGE delivered the Opinion of the Court:
Plaintiffs, Richard T. Walsh and Barbara J. Welsch, appeal
from an order of the circuit court of Tazewell County affirming the
decision of the Property Tax Appeal Board (PTAB), which found that
the Tazewell County Board of Review (Review Board) had properly
established the 1992 equalized assessed valuation of $100,000 for
the subject parcel of real property owned by the plaintiffs and
located in Pekin Township, Tazewell County. The Plaintiffs
maintain that the subject property should have had an equalized
assessed valuation of $40,850.
The issue presented for our consideration in this matter is
whether the method of valuation used by the Review Board to value
plaintiffs' property violated the uniformity of taxation clause of
the Illinois Constitution (Ill. Const. 1970, art. IX, § 4) or the
Equal Protection Clause of the United States Constitution (U.S.
Const., amend. XIV). We hold that the method of valuation used by
the Review Board violated the constitutional requirements of
uniformity of taxation and we reverse and remand on that basis.
In order to rule on the plaintiffs' appeal, it is necessary to
briefly discuss the history of property taxation in Tazewell
County. The townships comprising Tazewell County last conducted a
true fair market value assessment of the property within their
jurisdiction in 1957. Since 1957, Pekin Township and Tazewell
County have determined the assessed valuation of real property
solely by means of the "mass appraisal method."
Under the mass appraisal method of assessment, each township
assessor begins by calculating the average percent of increase or
decrease in home sale prices within the township for the previous
three years. This calculation yields a percentage factor that is
then applied uniformly to all real property in the township. For
the 1992 tax year the Pekin Township assessor uniformly increased
the valuation of all real property within the township, including
the subject property, by 11.7%.
In January 1993, in response to complaints that certain
parcels of real property were "underassessed," the Review Board
removed approximately 40 parcels of property from the mass
appraisal system. Those properties were re-assessed based upon
their current fair market value, which was determined by the most
recent selling price, if available, plus yearly mass appraisal
method increases for each year between the most recent sale and
1992. The subject property was one of those parcels.
In the case of the subject property, the 1992 selling price
paid by the plaintiffs was used to establish the valuation. As a
result of this change in method of valuation, the plaintiffs' real
estate property tax for 1992 increased to $9,441.40. Had their
property been assessed according to the mass appraisal method, the
tax would have been $3,830.46. It is undisputed that all other
real property in the township, and the county continued have its
valuation determined only by the mass appraisal method.
The evidence presented in the hearing before the PTAB
established that the plaintiffs' property had an assessment to
sales ratio of 28%, i.e. the equalized value assessed valuation
established by the Review Board amounted to 28% of the parcel's
1992 sales price. The plaintiffs presented evidence of similar
parcels that sold in 1992 that were allowed to remain in the mass
appraisal system. These properties had assessment to sales price
ratios ranging from 7% to 39%. The Review Board presented evidence
of 11 parcels similar to the subject property that were sold in
1992 that remained in the mass appraisal system. These properties
had assessment to sales price ratios ranging from 28% to 63%.
The PTAB held that because the subject property's assessment
to sales price ratio of 28% was within the range of ratios for
comparable properties, i.e. 7% to 63%, the plaintiffs had failed to
prove that the constitutional protections of uniformity and equal
protection had been violated by removing their property from the
mass appraisal system. The plaintiffs then filed this appeal.
Before ruling on the merits of the plaintiffs' appeal, we must
determine the proper standard of review. It is well-settled that
the findings of an administrative agency are prima facie true and
correct and will not be disturbed by a reviewing court unless they
are against the manifest weight of the evidence. LaSalle Partners,
Inc. v. Illinois Property Tax Appeal Board, 269 Ill. App. 3d 621,
632 (1995). However, it is also well-settled that the manifest
weight of the evidence standard does not apply where the issue is
whether the assessment was based upon "an improper method of
valuation rather than a mere difference of opinion as to the market
value of a particular piece of property." Chrysler Corp. v.
Illinois Property Tax Appeal Board, 69 Ill. App. 3d 207, 210-11
(1979). Further, where the question on review is one of law, the
decision of the PTAB will be reviewed de novo. Kankakee County
Board of Review v. Illinois Property Tax Appeal Board, 131 Ill. 2d
1 (1989).
As the matter sub judice involves a question of the method of
valuation, rather than a mere difference of opinion over the market
value, as well as matters of constitutional law, we review the
PATB's decision de novo.
The Plaintiffs maintain on appeal that removing a select few
parcels of property from the mass appraisal method and subjecting
those parcels to a different method of appraisal violates the
constitutional rights of those property owners. The PTAB maintains
that as long as the Review Board correctly determines the fair cash
value of the plaintiffs' property, the plaintiffs' appeal should
fail. We disagree.
If the issue were simply whether the Review Board had
correctly determined the fair cash value of the subject property,
we would agree with the PTAB. Section 20 of the Illinois Revenue
Act of 1939, applicable during the tax year in dispute, provides
that "[e]ach tract or lot of real property shall be valued at 33
1/3% of its fair cash value" (35 ILCS 205/20 (Michie 1992)). Fair
cash value is normally associated with fair market value, i.e. what
the property would bring at a voluntary sale where the owner is
ready, willing and able to sell, but not compelled to do so, and
the buyer is likewise ready, willing and able to buy, but not
forced to do so. See, e.g., People ex rel. McGaughey v. Wilson,
367 Ill. 494 (1937). Illinois courts have consistently held that
"a contemporaneous sale between parties dealing at arm's length is
not only relevant to the question of fair cash market value but
would be practically conclusive on the issue of whether an
assessment was at full value." Residential Real Estate Co. v.
Illinois Property Tax Appeal Board, 188 Ill. App. 3d 232, 241
(1989).
Plaintiffs, however, do not contend that their property was
assessed at more than its fair market value. They maintain instead
that even though their property was assessed based upon its fair
market value, the rate of taxation of their property was,
nevertheless, significantly higher than that applied to other
comparable property in the township. Plaintiffs further maintain
that this disparity was the result of the unconstitutional use by
the Review Board of a different method of valuation from that used
for those other comparable properties. We agree.
In the assessment year 1992, Tazewell County and its townships
determined fair cash value for all real estate, except 40 parcels,
not by reference to current fair market value, but by the
relationship of each parcel to its proportional share of the fair
cash value of all property in 1957. Whether this is an appropriate
method for determining fair cash value is not an issue before this
court. At issue is whether, as a matter of law, removing one
particular parcel from this system and subjecting it to a different
method of valuation in order to increase the assessed valuation of
that property violates the constitutional requirements of
uniformity of taxation and equal protection. We hold that it does.
Article 9, section 4(a), of the Constitution of 1970 provides
that:
"Except as otherwise provided in this Section,
taxes upon real property shall be levied uniformly
by valuation ascertained as the General Assembly
shall provide by law." Ill. Const. 1970, art. IX,
section 4.
It is a fundamental constitutional principle that uniformity
of taxation requires equalization of the burden of taxation. Apex
Motor Fuel Co. v. Bartlett, 20 Ill. 2d 395, 401 (1960); People ex
rel Hawthorne v. Bartlow, 111 Ill. App. 3d 513, 520 (1983). Our
supreme court has consistently held that an equal tax burden cannot
exist without uniformity in both the basis of assessment, and in
the rate of taxation:
"The principle of uniformity of taxation
requires equality in the burden of taxation. People
ex rel Hawthorne v. Bartlow, 111 Ill. App. 3d 513,
520 (1983). This court has held that an equal tax
burden cannot exist without uniformity in both the
basis of assessment and in the rate of taxation.
Apex Motor Fuel Co. v. Barrett, 20 Ill. 2d 395, 401
(1960). The uniformity requirement prohibits
taxing officials from valuating one kind of
property within a taxing district at a certain
proportion of its true value while valuating the
same kind of property in the same district at a
substantially lesser or greater proportion of its
true value." (Emphasis added.) Kankakee County
Board of Review v. Property Tax Appeal Board, 131
Ill. 2d 1, 20 (1989).
We recognize that uniformity in the burden of taxation need
not be mathematically precise. Apex Motor Fuel, 20 Ill. 2d at 401.
We also note that reassessing only a limited group of properties in
a township is not per se indicative of an unequal tax burden.
People ex. rel. Costello v. Lerner, 53 Ill. App. 3d 245, 249
(1977). Under the facts of this case, however, we find that the
plaintiffs have proven an overvaluation of the subject property
when compared to other property in the township, in violation of
the uniformity clause.
We note that the record shows a significant portion of the
real estate in Tazewell County has an assessed valuation between 7%
and 63% of current market value as determined by recent actual
sales prices. While the mass appraisal system used in Tazewell
County maintains proportional equalized valuation among the
properties within the township or county, it appears to have
little, if any, relationship to the true, or fair cash, value of
the property in the county. Thus, the mere fact that the subject
property's assessment to sales price ratios fits within a range of
7% to 63% is of little importance in determining whether the
subject property has been assessed in violation of the
constitutional uniformity clause.
We must look instead to whether the use of a radically
different method of assessment from that used by the Review Board
to determine the value of most of the other property in the taxing
district violated the uniformity clause. In People's Gas Light and
Coke Co. v. Stuckart, 286 Ill. 164, 173 (1918), our supreme court
held that the actions of the taxing body violated the uniformity
clause where it routinely assessed most taxpayers by simply copying
the assessment from the previous year, but assessed the appellant's
property and a few other properties at arbitrarily different rates,
each at a higher rate than it had been assessed in the previous
year. Stuckart, 286 Ill. at 173. In holding that the individual
assessments violated the uniformity clause, the Court held:
"The board of equalization which made
this assessment was bound to make it according to
law and the rules which it had promulgated for
assessing [property]. It did not do so but
knowingly and intentionally disregarded its rules
completely, making no pretense of applying them in
the great majority of cases and making its
valuation in individual cases according to its will
without reference to the rules, instead of
according to its judgment with reference to the
rules. The appellant was knowingly and
intentionally discriminated against and the result
was a fraud upon it. The assessment cannot be
sustained." Stuckart, 286 Ill. at 177.
We find that, as in Stuckart, the Review Board's abandonment
of the mass appraisal method of assessment in a few individual
cases, including the plaintiffs, intentionally discriminated
against those property owners and resulted in a constructive fraud
upon the plaintiffs. We find that the record supports the
plaintiffs' contention that the Review Board's valuation methods
resulted in comparable property being valued at a substantially
lesser proportion of its true value than the subject property.
Kankakee County, 131 Ill. 2d at 20. The assessment, therefore,
cannot be sustained.
As we are reversing the circuit court based upon nonconformity
within the uniformity of taxation clause of the Illinois
Constitution, we will not address plaintiffs' argument that the
Review Board violated the federal constitutional doctrine of equal
protection.
In sum, we conclude that the PTAB erred as a matter of law in
removing the subject property from the mass appraisal method of
valuation used to value substantially all other property in the
taxing district. Accordingly, we remand this cause for further
proceedings consistent with the views expressed herein.
Reversed; cause remanded.
MICHELA, J., concurs. BRESLIN, J., dissents.
No. 3--95--0813
_________________________________________________________________
IN THE APPELLATE COURT OF ILLINOIS
A.D., 1997
RICHARD T. WALSH and BARBARA ) Appeal from the Circuit Court
J. WELSCH, ) for the 10th Judicial Circuit
Plaintiffs-Appellants, )
v. ) No. 95 MR 1
STATE OF ILLINOIS PROPERTY )
TAX APPEAL BOARD and TAZEWELL )
COUNTY BOARD OF REVIEW, ) Honorable
) Donald Courson
_________________________________________________________________
JUSTICE BRESLIN, dissenting:
_________________________________________________________________
Because I believe that the plaintiffs do not have a right to
insist that the Review Board assess their property at an amount
which is less than the fair market value, and because I believe the
PTAB lacked jurisdiction to consider the plaintiffs' constitutional
claims, I would analyze this case differently. Therefore, I
respectfully dissent.
The tax statute applicable during the tax year in dispute
mandates that "[e]ach tract or lot of real property shall be valued
at 33 1/3% of its fair cash value." 35 ILCS 205/20 (West 1992).
The fact that "other property *** may have been undervalued is
irrelevant as to whether [the plaintiffs' property] was valued in
excess of fair market value." Rosewell v. United States Steel
Corp., 106 Ill. 2d 311, 478 N.E.2d 343 (1985).
The plaintiffs admit that their property was assessed at its
fair cash value. Thus, it is clear that the assessment was proper
under the statute. But the plaintiffs's complain that they are
entitled to an assessment that is statutorily invalid because other
properties have received such an assessment. In my view, the
plaintiffs are not entitled to such relief even though the mass
appraisal system that was used here is vulnerable to constitutional
attack. Neither the PTAB nor the courts can order that an
incorrect assessment be substituted for an admittedly correct one.
Two wrongs do not make a right.
Moreover, the plaintiffs may not attack the constitutionality
of the mass appraisal system before the PTAB. The statute that
provides for appeals to the PTAB limits the appeals before it.
Section 111.1 of the Revenue Act of 1939 provides that a taxpayer
may appeal the decision of a Board of Review "as such decision
pertains to an assessment of his property for taxation purposes
***." 35 ILCS 205/111.1 (West 1992). This is the only power of
review granted to the PTAB. It is well settled that an
administrative body has only those powers that are expressly
granted to it by statute. E.g. People ex rel. Thompson v. Property
Tax Appeal Board, 22 Ill. App. 3d 316, 317 N.E.2d 121 (1974).
Accordingly, I would hold that the PTAB lacked jurisdiction to
consider whether the assessment scheme used by the Review Board was
unconstitutional.
In addition, I question whether the circuit court should
entertain such constitutional considerations in an administrative
review of a PTAB decision. While it is true that the circuit court
may consider a constitutional challenge to a statute on
administrative review (Chicago Bar Ass'n v. Department of Revenue,
163 Ill. 2d 290, 644 N.E.2d 1166 (1994)), the plaintiffs in this
case have not challenged the constitutionality of a statute.
Although judicial review of administrative decisions is available
in part to guard the constitutional rights of those who are subject
to administrative action (Murray v. Board of Review of Peoria
County, 237 Ill. App. 3d 792, 604 N.E.2d 1040 (1992)), judicial
review of constitutional questions that were not properly before
the administrative agency and that do not concern the agency's
conduct is not appropriate. Accordingly, I would hold that
administrative review is limited to questions concerning the
constitutionality of the agency's actions and procedures. Here,
the plaintiffs are not challenging the constitutionality of the
PTAB's procedures or decision. They challenge instead the
constitutionality of the mass appraisal system as imposed by the
Pekin Township tax assessor. Such a challenge must be brought
against Pekin Township in the Circuit Court to force township
officials to assess property in the township at its fair cash
value.
To recap, property must be assessed at its fair cash value and
the PTAB's function is to determine whether the board of review has
complied with this statutory requirement. In this case, the
plaintiffs agree that their property was assessed at its fair
market value, and they have not claimed that the PTAB acted
unconstitutionally in reviewing the assessment. Rather, the
plaintiffs claim that the Review Board's assessment method is
unconstitutional. This is not the type of claim that the PTAB may
consider, nor is administrative review of the PTAB's decision the
appropriate method to raise this challenge.