A split Illinois Supreme Court upheld an appellate court ruling in favor of a downstate power plant operator over its decision to withhold contested property tax payments.
The underlying dispute involves Grand Tower Energy Center and its dispute with Jackson County over the 2014 tax year assessment valuation, a disagreement in which Shawnee Community Unit School District 84 intervened to defend its potential tax take. According to court records, Grand Tower didn’t pay its 2014 taxes while its appeal was pending before the Illinois Property Tax Appeal Board, which resulted in it being found delinquent and subject to tax sale.
In August 2016, District 84 asked the PTAB to rule Grand Tower was required to pay its taxes under protest and failure to do so should result in dismissal of its appeal. It further argued the sale of Grand Tower’s unpaid taxes ended the PTAB's jurisdiction over the appeal and said the delinquency ruling validated the assessment.
Grand Tower continued to dispute subsequent assessments, and in August 2017 redeemed all obligations from the 2014 and 2015 tax years, including penalties and interest. In June 2019, the PTAB released a decision on the appeals, criticized District 84’s valuation methodology and reduced the assessed value of the plant for 2014 and 2015 from $31.5 million to just $3.3 million. District 84 challenged that ruling before the Illinois Fifth District Appellate Court.
The appellate panel affirmed the PTAB’s decision, rejected an argument the PTAB was wrong to deny District 84’s motion to dismiss and held payment of contested taxes wasn’t required in order for Grand Tower to appeal. Before the Supreme Court, District 84 didn’t challenge the PTAB’s assessment reduction, only the denial of its motion to dismiss.
Justice Joy Cunningham wrote the 5-2 opinion, filed May 23, with concurrence from Justices Mary Jane Theis, David Overstreet, Elizabeth Rochford and Mary O’Brien.
Justice P. Scott Neville wrote a dissent, with concurrence from Justice Lisa Holder White.
Nothing in Illinois law “states that a taxpayer is required to pay the disputed property taxes in order to pursue an appeal of an assessment before the PTAB,” Cunningham wrote. The only requirement is filing a petition within 30 days of a local review board’s assessment decision.
“Because the property tax imposed on a taxpayer is determined by multiplying the assessed value of the property by the tax rate, the assessment decision is made well in advance of the extension of the tax,” Cunningham wrote. “The 30-day deadline therefore means that, in almost every instance, the taxpayer must initiate an appeal with the PTAB before the actual tax payments are due for the tax year in question.”
The majority said District 84 conflated the PTAB appeals with tax objections, which are mutually exclusive as taxpayers pursuing PTAB appeals are expressly prohibited from filing tax objection complaints in court.
Regarding the PTAB’s jurisdiction following the delinquency ruling, the majority again rejected the school district’s position. Cunningham said there are statutory explanations for divestiture of jurisdiction, but none address “when a county collector makes an application for judgment and order of sale.” One possible reason is that sometimes the party initiating the appeal isn’t the property owner, so District 84’s position would allow those property owners to end the process by withholding payment long enough to trigger a judgment, then paying the taxes before the sale to retain the property.
The majority also highlighted a 1995 amendment to a state law expressly removing language authorizing circuit courts to determine whether a tax amount is correct during the judgment and sale process. As such, the appellate panel’s denial of Distirct 84’s motion to dismiss was correct.
In his dissent, Neville framed the issue as “a simple and previously unquestioned principle” of a defendant failing to respond to a complaint paving the way for default judgment. He said District 84 wasn’t arguing Grand Tower had to pay taxes before they were due, but that the default judgment ended PTAB’s jurisdiction over Grand Tower’s appeal.
“The Jackson County Circuit Court’s final default judgment of Jan. 14, 2016, entered after Grand Tower failed to respond to the Jackson County Collector’s complaint, adopted the Jackson County Board of Review’s finding that Grand Tower owed $2,557,423.91 in property taxes for 2014,” Neville wrote. “The majority’s decision permits an administrative agency to contradict the circuit court’s order on the amount of Grand Tower’s liability for its 2014 property taxes.”
Neville said the majority misconstrued several portions of state law in its analysis and said Grand Tower had several options for avoiding a tax sale while also preserving the right to contest the amount owed.
District 84 was represented by Scott Ginsburg, of Robbins Schwartz, Chicago. Ginsburg issued a statement following the ruling, saying:
“For the past decade, Grand Tower Energy Center has been in a dispute with the school district over the valuation of its power plant for property tax purposes. During this period, the company ceased paying its property taxes, a move we believe contradicts the Property Tax Code and established case law. Since the era of the Great Depression, Illinois courts and legislators have consistently prohibited taxpayers from withholding property taxes while disputing their assessments. We view the Supreme Court’s decision here as potentially setting a precedent for other large taxpayers seeking alternative methods for property tax relief.
“Although we had hoped for a different outcome, the school district remains committed to safeguarding its educational programs in the best interests of its community. Our team is proactively engaging with stakeholders, legislators, and statewide organizations to rally support for the school district and others facing similar issues. We are optimistic that the state will collaborate with us to address this decision and work towards a solution that benefits the community and others in similar situations.”