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Casenotes

Illinois

Real Estate Taxes

Calumet Transfer, LLC v Property Tax Appeal Board, 401 Ill App 3d 652, 929 NE2d 139, 340 Ill Dec 835 (1st D, 2010).

Facts:Calumet Transfer, LLC (CT) purchased two parcels of property in bankruptcy. The first was a coke production property that CT bought for $850,000 in December 2002. The second was a blast furnace property that CT bought, in the form of unimproved land after the bankrupt owner sold the improvement for scrap, in December 2003 for $880,000. CT also paid the back taxes owed on the property.

The county assessor's office valued the properties based on fair market value which was much higher than the amounts paid by CT. The total assessed value of the two properties for the 2003 and 2004 tax years combined was almost $5 million. CT complained to the Cook County Board of Review which denied CT's request to reduce these values. CT appealed to the Property Tax Appeal Board (PTAB).

At PTAB's hearings, CT presented testimony that CT's creator and manager believed he paid fair market value for the properties in arm's length transactions. Nevertheless, PTAB held that there was sufficient evidence of similar properties with similar assessed values to justify the assessments. CT appealed.

Holding:Affirmed. First, the court separated the two issues being appealed: (1) whether a sale of property through a bankruptcy proceeding is not an arm's length transaction as a matter of law, and (2) whether PTAB's findings were against the manifest weight of the evidence.

On the first issue, the court stated that properties sold in bankruptcy proceedings are not automatically sold under duress and these sales may or may not be considered to be sales under duress. However, the PTAB properly considered evidence of whether these particular sales were made under duress. In considering evidence of similar sales, the PTAB property concluded that these sales were made under duress because the property's were sold in bankruptcy for well below fair market value.

On the second issue, the court outlined the evidence brought before the PTAB and critiqued its analysis. In relevant part, the PTAB accepted evidence of similar sales from both parties, but rejected several sales presented by CT because those sales, like the ones in this case, were made in bankruptcy. Because the PTAB considered all the sales made in bankruptcy as suspect and potentially not made at arm's length, it gave them little weight. Instead, the PTAB carefully considered the other sales and found insufficient evidence to overturn the assessments. The court found no flaws in PTAB's reasoning and no grounds to overturn its ruling.

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