Riverside School District 96 will refund approximately $1.5 million over the next three years to a pair of retailing giants who operate department stores at North Riverside Park Mall.
The payout is the result of a legal settlement between the district and the retail chains, J.C. Penney and Carson Pirie Scott, which had appealed real estate assessments for four tax years beginning in 2005.
In essence, the companies sought to reduce their real estate assessments by roughly half. The two parties agreed to settle for a number somewhere in the middle. It’s a significant hit to District 96’s bottom line, but it could have been worse had the companies been successful in gaining what they had sought.
Combined, Carson’s and Penney’s had sought $2.2 million in refunds for the 2005-08 tax years. And it was likely they would have appealed tax years 2009 and 2010 for which there are no potential refund figures at this time.
The deal will allow District 96 to pay the refunds over a roughly three-year period, starting this year, at no interest. In the settlement, Carson’s and Penney’s have both agreed that there will be no tax refunds for the years 2009 and 2010.
According to Superintendent Jonathan Lamberson, the settlement was significant “because there’s no hit in one fiscal year.”
The refunds will be taken from future tax revenues, not current operating funds.
“And we won’t be in dispute for 2009 and 2010,” Lamberson said.
The agreement passed by the District 96 board on May 18 is similar to one that Riverside-Brookfield High School’s attorney recently agreed to on behalf of the district. The school board had authorized the attorney, Ares Dalianis, of Franczek Radelet.
According to RB Interim Superintendent David Bonnette, District 208 will refund a combined $1.05 million to Carsons’ and Penney’s over a period of years, the schedule of which was not immediately available.
Had the district not reached a settlement with the retailers, said Bonnette, the cost to the district could have been as much as 55 to 60 percent higher.
The attorneys for both school districts worked together on the negotiations. Both districts in the past have been hammered by property tax appeal refunds, which typically must be paid immediately and in full from existing operating funds.
Negotiating the terms in advance helps soften the blow if not eliminate it all together.
Bonnette explained the appeals process this way:
“Basically, we have the number the assessor puts out there,” he said. “When the taxpayer files an appeal, they use an appraiser that low-balls the value. The next step is we go out an hire an appraiser, who puts a third value on it. Very often the value our own appraiser put on it is less than that attributed by the assessor.
“All of this goes to the Property Tax Appeals Board, and that board comes up with its determination of the value. The history is that these settlements wind up coming in closer to what the taxpayer’s appraiser gets versus what the assessor has in the first place.”
But it gets worse, said Bonnette.
“The problem is that after this is said and done, the next tax cycle that comes along, the assessor gives no credence to the determination of the Property Tax Appeals Board,” Bonnette said. “It’s like a rat on a treadmill; it’s never ending.
In addition, the appeal rulings come three to four years behind the actual tax year being settled, Bonnette added.
“It’s the most ludicrous application of tax law you can imagine,” he said. “It’s like sending your pencil shavings back to the manufacturer and getting a new pencil after you’ve already used it.”
