NORMAL — Local taxing bodies will get more in property taxes after settling a dispute over the value of several apartment buildings near Illinois State University, but not as much as officials thought they should get.
McLean County Unit 5, the town of Normal and other bodies that have tax developments near ISU will bring in a combined $1.4 million over the life of a settlement they have reached with apartment owners.
Ownership, comprising 10 companies that include First Site and its president, Jeff Tinervin, pushed back after Normal Township Assessor Rob Cranston increased assessments on their properties starting in 2015.
The case escalated from McLean County's Board of Review to the state's Property Tax Appeal Board, where it was tied up in litigation that drained resources from the taxing bodies, said Unit 5 attorney Curt Richardson.
“The cost of litigation adds up, as well as the unknown: what the Property Tax Appeal Board would do, (which) could potentially put the district in a position of refunding taxes. ... We’d rather spend our money toward the purpose we serve, which is our students,” said Richardson.
“If we could get a deal that resulted in additional tax revenue and avoid that additional cost, we think we’ve done a good job.”
Tinervin could not be reached for comment on the agreement.
The settlement freezes the apartment sites' value for property tax purposes from 2015 to 2022, giving both the taxing bodies and the owners certainty about those payments, said Richardson.
But the freeze would end under any of four conditions:
- A 15 percent increase in rentable square footage
- A 15 percent decrease in rentable square footage
- An enrollment drop of 1,100 or more at ISU, Illinois Wesleyan University or Heartland Community College
- An employment reduction at State Farm to below 14,000
The taxing bodies will receive $1.4 million more under the settlement than they would have received if the assessments had stayed at their 2014 levels, said Richardson. If the increased assessments were enforced, taxing bodies would have received $280,000 more than they did in the settlement.
The agreement decreases taxes on six properties, but increases them on 20 others by 20 percent. Cranston said ownership may have feared that the assessments on those 20 properties would spike in the near future.
Unit 5 receives 58 percent of the tax money; the town, 11 percent; McLean County, 11 percent; Heartland, 8 percent; Normal Public Library, 5 percent; Normal Township, 3 percent; Bloomington-Normal Water Reclamation District, 2 percent; Bloomington-Normal Airport Authority, 1 percent; and Normal Township Road District, 1 percent.
Unit 5 and Heartland already have approved the agreement, which they negotiated. The Normal City Council will consider it Monday, and McLean County Board is expected to follow in December.
Another settlement, between taxing bodies and companies related to Young America Realty, is in negotiations and could include dozens more properties.
Cranston said he reassessed 57 properties in 2015, including six addressed in the First Site settlement, but the disagreement originated well before that, when new student apartments started to become luxury units around 2000.
Cranston said ownership disagreed with him on how much of a unit's rental income should be credited to the building and how much to amenities like internet and in-unit appliances that do not add to a property's taxable value. Board of Review filings confirm those disagreements.
“This is the first situation like this I’ve been involved in in the 35 years I’ve been doing this,” he said.
Bob Kahman, the county's supervisor of assessments, said the agreement is troubling as a precedent. Taxing bodies have reached similar agreements in the past, but with large companies like State Farm, Mitsubishi and Wal-Mart.
"To dictate to the Board of Review or the assessor what a property is worth is ludicrous,” said Kahman. “There’s a regulated system here, versus a bunch of attorneys getting together and saying what they want."