Chicagoland Chamber of Commerce v. Pappas

• Citation: 880 N.E.2d 1105,378 Ill. App. 3d 334
• Decision Date: 14 December 2007
• Docket Number: No. 1-05-1488.,1-05-1488.
• Parties: The CHICAGOLAND CHAMBER OF COMMERCE, an Illinois not-for-profit corporation; The Chicago Development Council, an Illinois not-for-profit association; The. Building Owners and Managers Association of Chicago, an Illinois not-for-profit corporation; Frank Orsini; Barbara Cellini; Chris Jackson; Tracy Heldt; David O'Donnell Eugene Bernshteyn; Ronald Smolen; Mark Reese; Michael Harley; John Cashman; Albert Hanna; and Anthony Morelli, Plaintiffs-Appellants, v. Maria PAPPAS, Treasurer and Collector of Cook County, Illinois; David Orr, Clerk of Cook County, Illinois; James M. Houlihan, Assessor of Cook County, Illinois; and Illinois Department of Revenue, Defendants-Appellees.
• Court: United States Appellate Court of Illinois

880 N.E.2d 1105

378 Ill. App. 3d 334

The CHICAGOLAND CHAMBER OF COMMERCE, an Illinois not-for-profit corporation; The Chicago Development Council, an Illinois not-for-profit association; The. Building Owners and Managers Association of Chicago, an Illinois not-for-profit corporation; Frank Orsini; Barbara Cellini; Chris Jackson; Tracy Heldt; David O'Donnell Eugene Bernshteyn; Ronald Smolen; Mark Reese; Michael Harley; John Cashman; Albert Hanna; and Anthony Morelli, Plaintiffs-Appellants, v. Maria PAPPAS, Treasurer and Collector of Cook County, Illinois; David Orr, Clerk of Cook County, Illinois; James M. Houlihan, Assessor of Cook County, Illinois; and Illinois Department of Revenue, Defendants-Appellees.

No. 1-05-1488.

Appellate Court of Illinois, First District, Sixth Division.

December 14, 2007.

Justice JOSEPH GORDON delivered the opinion of the court:

This case arises out of an effort by the General Assembly, in July 2004, to provide property tax relief through the enactment of an alternative homestead exemption.¹ Plaintiffs, the Chicagoland Chamber of Commerce, the Chicago Development Council, and the Building Owners and Managers Association of Chicago (organizational plaintiffs), Frank Orsini, Barbara Cellini, Chris Jackson, Tracy Heldt, David O'Donnell, Eugene Bernshteyn, Ronald Smolen, Mark Reese, Michael Harley, John Cashman, Albert Hanna and Anthony Morelli (individual plaintiffs) appeal from the dismissal of their complaint for declaratory and injunctive relief against defendants Maria Pappas, in her capacity as treasurer and collector of Cook County, David Orr, in his capacity as clerk of Cook County, and James M. Houlihan, in his capacity as assessor of Cook County (defendants), in which they alleged that the General Assembly's effort as enacted was unconstitutional. Plaintiffs contend that the circuit court erred when it determined that their complaint did not state a legally cognizable claim in attempting to demonstrate that section 15-176 of the Property Tax Code (Code) (35 ILCS 200/15-176 (West 2004)) violated the Illinois Constitution by vesting the power to grant property tax exemptions in local governmental units, by authorizing a nonuniform property tax exemption, by authorizing an ultra vices "assessment cap" rather than a genuine constitutional exemption, and by making arbitrary and irrational distinctions among homesteads in violation of equal protection. Plaintiffs seek a remand of the counts raising these issues to the circuit court with outright instructions to the court to grant relief to plaintiffs. Plaintiffs further claim that the circuit court erred by failing to recognize that there were factual issues precluding its dismissal of a count in the complaint alleging that plaintiffs' due process rights had been violated by a retroactive increase of their property taxes in 2003. With respect to this claim, plaintiffs ask that we remand for further proceedings in the circuit court. For the reasons that follow, we affirm.

BACKGROUND

The Property Tax Code provides for the assessment of property values, the determination of the applicability of statutory exemptions, and the collection of property taxes by officials in Illinois' 102 counties, subject to oversight by the Department of Revenue (Department) and the Property Tax Appeal Board (Board). See 35 ILCS 200/1 et seq. (West 2004). These county officials calculate the assessed valuation of each property by first determining whether a property is taxable or entirely exempt and, then, if taxable by determining its fair market value. 35 ILCS 200/9-145 through 9-255 (West 2004). To equalize the assessed valuation of properties throughout the 102 counties, the Code calls for the Department to determine an "equalization factor" for each county following its review of assessment data from each county and its holding of hearings. 35 ILCS 200/17-5 though 17-40 (West 2004). The assessed valuation of each property is then multiplied by that county's equalization factor, as determined by the Department, to produce the equalized assessed valuation of the property. 35 ILCS 200/17-5 though 17-40 (West 2004). Following the determination of a property's equalized assessed valuation, county officials determine whether the property is eligible for any statutory exemptions. 35 ILCS 200/15-5 through 15-180 (West 2004). The actual taxable value of the property is then determined by subtracting the statutory exemptions for which the property is eligible from its equalized assessed value. 35 ILCS 200/15-5 through 15-180 (West 2004).

The determination of properties' taxable value is only one step in the process of determining how much tax shall be assessed to property owners. Various statutes outside the Code permit various taxing districts, such as municipalities, counties, townships and school districts, to levy taxes. See 35 ILCS 200/18-10, 18-15 (West 2004). The taxing districts submit their levies to their respective county clerks. 35 ILCS 200/18-40, 18-45 (West 2004). The clerks, in turn, calculate the tax rate required to meet the levies by dividing the total taxable value of all the property in the taxing district. 35 ILCS 200/18-40, 18-45 (West 2004). As almost all statutes authorizing the taxing districts to levy taxes include a maximum tax rate, the clerks then ensure that the proposed tax levy will not require a tax rate in excess of the maximum rate available by statute. 35 ILCS 200/18-105 (West 2004). The clerks then apply the tax rate to the taxable value of each piece of property that is both within the taxing district and the clerk's county. 35 ILCS 200/18-40, 18-45 (West 2004).

Under the Code, Cook County is divided into three assessment districts. 35 ILCS 200/9-220 (West 2004). District One encompasses the City of Chicago; District Two covers suburban Cook County north of North Avenue; and District Three covers suburban Cook County south of North Avenue. 35 ILCS 200/9-220 (West 2004). As with the borders between taxing districts and counties throughout the state, the boundaries of the various taxing districts and the three assessment districts of Cook County are not contiguous. Moreover, some taxing districts cut across more than one of the three assessment districts.

Cook County, pursuant to article IX, section 4(b) of the Illinois Constitution (Ill. Const.1970, art. IX. § 4(b)) has enacted an ordinance classifying real property and imposing specific assessment rates on those different classifications (Cook County Real Property Assessment Classification Ordinance, Cook County Code of Ordinances, ch. 74, § 63 (2006)). For example, most residences are classified as Class 2 and are assessed at 16% of their fair cash value; large residential apartment buildings are classified as Class 3 and are assessed at 28% of their fair cash value; and most commercial and industrial property is placed in Class 5 and assessed at either 36 or 38% of its fair cash value. Throughout the rest of the state, however, all properties are assessed at 33 1/3% of their fair cash value. 35 ILCS 200/9-145 (West 2004).

In July 2004, section 15-176 was added to the Code and a new exemption structure effecting the equalized assessed value of homestead properties went into effect. See Pub. Act 93-715, eff. July 12, 2004. Code section 15-176 provided, in pertinent part:

"(a) For the assessment years as determined under subsection (j), in any county that has elected, by an ordinance in accordance with subsection (k), to be subject to the provisions of this Section in lieu of the provisions of Section 15-175, homestead property is entitled to an annual homestead exemption equal to a reduction in the property's equalized assessed value calculated as provided in this Section.

* * *

(e) The amount of the exemption under this Section is the equalized assessed value of the homestead property for the current tax year, minus the adjusted homestead value * * *." 35 ILCS 200/15-176(a), 15-176(e) (West 2004).

Under the new Code section, "adjusted homestead value" was defined as:

"(A) The property's base homestead value increased by 7% for each tax year after the base year through and including the current tax year, or, if the property is sold or ownership is otherwise transferred, the property's base homestead value increased by 7% for each tax year after the year of the sale or transfer through and including the current tax year. The increase by 7% each year is an increase by 7% over the prior year. (B) The property's equalized assessed value for the current tax year minus (i) $4,500 in Cook County or $3,500 in all other counties in tax year 2003 or (ii) $5,000 in all counties in tax year 2004 and thereafter." 35 ILCS 200/15-176(b)(2)(A), 15-176(b)(2)(B) (West 2004).

Section 15-176, in turn, defined "base homestead value" as:

"(A) Except as provided in subdivision (b)(3)(B), `base homestead value' means the equalized assessed value of the property for the base year prior to exemptions, minus (i) $4,500 in Cook County or $3,500 in all other counties in tax year 2003 or (ii) $5,000 in all counties in tax year 2004 and thereafter, provided that it was assessed for that year as residential property qualified for any of the homestead exemptions under Sections 15-170 through 15-175 of this Code, then in force, and further provided that the property's assessment was not based on a reduced assessed value resulting from a temporary irregularity in the property for that year. Except as provided in subdivision(b)(3)(B), if the property did not have a residential equalized assessed value for the base year, then `base homestead value' means the base homestead value established by the assessor under subsection (c)." 35 ILCS 200/15-176(b)(3)(A) (West 2004).

The new Code section limited the full benefit of its new, alternative exemption to existing owners or to persons who acquired a homestead through an intrafamily transfer, providing:

"(B) If the property is sold or...