Tax Objection Burden of Proof Decision Rendered by Illinois Supreme Court
The long awaited decision of the Illinois Supreme Court dealing with the constitutionality of the statute which abolished the onerous "constructive fraud" burden of proof on taxpayers in property tax lawsuits was issued on March 18, 1998. The Court upheld the statute’s constitutionality in a 4-3 decision holding that the legislative change did not violate the separation of powers clause of the Illinois Constitution.
The appeal had "frozen" all property tax litigation in Cook County, amounting to thousands of cases, for more than one year. All settlement negotiations with the Cook County State’s Attorney’s office and all court calls were suspended. As a result of the Supreme Court’s Opinion certifying the new taxpayer’s burden of "clear and convincing evidence," our attorneys are now prepared to go forward with an aggressive campaign to obtain significant tax refunds for our clients.
FK&K will issue a special Newsletter in the near future regarding the new era of taxpayer’s rights for property owners in Illinois.
Assessment Reduced to $19 Million Below Acquisition Price
Bob Tonos and Marty Katz, on behalf of a REIT which recently purchased a suburban office building, obtained a settlement which established a market value of $19 million below the acquisition price. Our arguments included a number of the creative concepts emanating from our recent APTC Seminar and our understanding of the intangible considerations involved in prices paid by real estate investment trusts. We are continuing to refine and expand valuation methodologies with appraisers which address REIT related property tax issues. This is especially critical in view of the proliferation of REIT acquisitions over the past several years and the anticipated property tax increases in future years.
This appeal is the subject of an article by Marty Katz in the Last Word column of the January issue of National Real Estate Investor magazine
Attorneys at FK&K reviewed the operations of the hotel and the assessments of all comparable hotel properties. In collaboration with appraisal experts in the field of hotel valuation at Landauer Associates, we concluded that a significant portion of the total value of the hotel was attributable to intangible business assets and not the real estate per se. Since Illinois law allows ad valorem taxation of real estate only, FK&K argued that the hotel was significantly overassessed.
The result of this appeal demonstrates the importance of separating and quantifying intangible business value from real estate assets, a concept which was originally discussed at the 1996 APTC Seminar on the Valuation of Hotel Properties.
American Property Tax Counsel Seminar
Our most recent APTC Seminar addressed Controlling Office Building Property Taxes. The Seminar included participation by a number of clients of our APTC member firms including numerous REITs. We anticipate that the issues discussed will lead to the development of refined valuation methodologies and will result in minimizing future property tax liabilities for office properties.
Presentations were also made by several APTC attorneys, including a high tech video explaining our Internet accessible property tax reporting and database system, MultiPoint National Property Tax Information, LLC, which is driven by its software component, Property Tax Office.
APTC announced that this year’s Seminar will address REIT related property tax issues and will be co-chaired by Jim Regan (FK&K), Ben Smith and Margaret Ford of Smith, Gendler, Shiell, Sheff & Ford, P.A., our APTC member in Minneapolis.
Unauthorized Practice of Law
A recent Ohio Supreme Court decision has banned the representation of property owners at any level of appeal by non-attorneys. This includes tax consultants, accountants, in-house tax representatives and resulted in the dismissal of any pending appeals from previous years which were not filed by lawyers.
The Ohio decision is reflective of a national trend which includes other states including Pennsylvania, Texas, North Carolina and Kentucky. An organization of tax consultants formed for the sole purpose of promoting unauthorized practice has called this trend a "cancer in their industry."
This should serve as a warning to all taxpayers to beware of hiring a non-attorney who is effectively promoting the unauthorized practice of law as it may result in an irrevocable loss of the right to appeal your assessments and corresponding taxes.
Fisk Kart and Katz News
Jeff Brown recently addressed the Chicago Mortgage Attorney’s Association on TIFs and their overall property tax ramifications.
Jim Regan led the REIT panel, which included representatives of CarrAmerica and Equity Office Properties at our recent APTC Seminar in Scottsdale, Arizona. Jim also is the author of an article in the January issue of Shopping Center Business on the Valuation of Regional Shopping Malls, which includes an analysis of our pending appeal in North Carolina where we serve as co-counsel with Senator Charles Neely and Nancy Rendleman of Maupin Taylor & Ellis, P.A., our APTC North Carolina member firm.
Marty Katz has been selected to address the National Association of Real Estate Investments Trusts (NAREIT) at their annual Law and Accounting Conference in Washington, D.C., in May on property tax considerations affecting REITs.
American Property Tax Counsel News
After an extensive screening process, APTC is pleased to announce the admission of four new member law firms: Stites & Harbison in Kentucky, The Wallach Law Firm in Missouri, Berenbaum, Weinshienk & Eason, P.C. in Colorado and Lemle & Kelleher in Louisiana. We are extremely impressed with the experience and creativity in property tax law of each of these firms and know that they will add to our collective ability to serve property tax needs of all our clients on a multi-state and multi-national basis.
Stan Fineman and Chris Camalier of our Washington, D.C., member Wilkes, Artis, Hedrick & Lane, Chtd. did an outstanding job of chairing our recent APTC Seminar on Controlling Office Building Property Taxes.
Fred Siegel in Cleveland and Mike Shapiro of Honigman Miller Schwartz and Cohn in Detroit, our Ohio and Michigan members, recently collaborated as co-counsel in successfully arguing before the Ohio Supreme Court that an allocated purchase price from a REIT portfolio acquisition cannot be used as a basis to increase that property’s assessment and corresponding taxes.
Marty Katz was re-elected President of APTC at the February meeting in Naples, Florida. Richard Nearhood of Nearhood & Lepley, PLC, in Phoenix, Arizona, was elected Treasurer. The other members of the APTC Executive Committee are Stephen Paul of Baker & Daniels in Indianapolis, John Garippa of Garippa & Davenport in New Jersey and Stan Fineman of Wilkes, Artis, Hedrick and Lane, Chtd. in Washington, D.C.
Seven of our APTC members were speakers at the annual Legal Seminar of the International Association of Assessing Officers (IAAO) held in Chicago in December. Included was a joint presentation by Jim Regan and John Garippa on the Valuation of Hotel Properties.
Property Tax Update contains material of general interest. The information offered is not intended as legal advice or opinion applicable in specific circumstances. If you are seeking additional information on these or other property tax issues, you are urged to consult an attorney concerning your particular situation. Under professional rules, Property Tax Update may be regarded as advertising material.