Agreements that ended a long-running property tax dispute involving student apartments and Unit 5 schools have left other taxing bodies with lots of questions.
The agreements were reached in 2017, resolving several years of tax appeals from Young America, First Site, and other apartment owners. Those owners objected when Normal Township Assessor Rob Cranston revalued 57 different apartments, raising their assessed values—and therefore their property tax bills.
The agreements have already been approved by the Unit 5 school board, the Normal Town Council, and Heartland Community College board, the largest taxing bodies impacted by the deals. But the Normal Public Library board rejected the agreements Feb. 28, and now Normal Township’s board expects to do the same in April.
Normal Township Supervisor Sarah Grammer opposes the agreements. She said they circumvent Cranston’s authority to set assessed values and unfairly redistributes the tax burden onto other taxpayers. Grammer said she’s also concerned about setting the precedent that a larger taxpayer can use the threat of protracted litigation to get what they want—a lower, or even more stable, tax bill.
“We have to be really careful about the compromises we make,” she said. “If they start, where do they stop? What might be the domino effect of this going forward?”
Avoiding years of legal costs is one of the main reasons that Unit 5 sought to reach agreements with the student apartment owners. Each property can be appealed every year, and cases can take more than one year to resolve, trapping the district in a state of perpetual litigation with the same taxpayers.
The agreements keep more money in the classroom, said Unit 5 attorney Curt Richardson. Knowing the tax bill won’t change year to year also provides stability for Unit 5’s budgeting process and for the apartments owners who need to set rents.
What Happens Next?
It’s not entirely clear what happens now that the library board has rejected the agreements and Normal Township might do the same.
Richardson, who helped craft the agreements, said not every taxing body that receives money from the apartments needs to sign the agreements. The agreements become binding for each of those that have signed, such as Unit 5’s board, he said.
By not signing, that means the library and township board could choose to “intervene” in future property tax disputes involving the apartments. (Intervening is a formal way for taxing bodies to become involved when a taxpayer appeals their assessed value.)
Unit 5 says it’s a good deal in part because the district will get an extra $141,000 annually because of Young America’s agreement, and $15,000 from First Site’s.
“I don’t know why somebody wouldn’t want to enter into this agreement, because it provides significantly more revenue for all the taxing bodies,” Richardson said. “Both of these agreements are a situation that results in additional revenue.”
Others aren’t so sure.
“We couldn’t tell in a definitive manner if it would have a positive or negative impact on the library,” said Normal Library Board President Jess Ray.
The Town of Normal does not expect to see any additional revenue because of how the town levies property taxes, City Manager Mark Peterson said previously. Other Normal property owners may see some tax relief as the apartments pick up more of the town's overall tax levy, he said.
The library board had other questions too, including about the actual impact of a “no” vote. In the future, Ray said more intergovernmental conversations about these tax agreements as they’re being developed would be helpful.
Normal Township is one of the smaller taxing bodies on your property tax bill, getting only a fraction of the money that Unit 5 (the largest) collects. But even though only a few thousand dollars are at stake for the township, Grammer is concerned.
“The few dollars that we do get are used on really important services,” she said, noting the Activity and Recreation Center for seniors and emergency aid for low-income residents.
Grammer also expressed concern that agreements like these could ultimately unravel the entire property tax system. If taxpayers and taxing bodies bypass assessors to set their own assessed values and tax bills, why do we have assessors?
The First Site and Young America agreements are not the first of their kind. State Farm reached a similar agreement with taxing bodies for its properties in 2010. The former Mitsubishi Motors manufacturing plant and the Clinton Power Station have been involved in their own tax disputes.
What’s different here, Grammer said, is that State Farm and Mitsubishi were major employers. Student apartments are not. Grammer said she wants to send a message.
“We want to see these types of disputes go through the legal process,” she said.
She also stressed that Cranston was not involved in much of the discussions that led to the Young America and First Site agreements. She called that unprecedented.
Cranston said he was involved in initial discussions, as he and Unit 5 worked to get some appraisals done on apartment tax appeals dating back to 2015. But he said he bowed out when the conversation turned to how much the apartments should or would be paying in taxes—instead of the assessed values themselves.
“Because in my opinion, that constitutes malfeasance on my part in that I’m allowing someone else to come up with the assessed values for values in my jurisdiction,” he said.
GLT’s Charlie Schlenker contributed to this report.
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