Cook County Board of Review v. Illinois Property Tax Appeal Board

FIRST DIVISION
July 28, 2008

No. 1-04-2402

THE COOK COUNTY BOARD OF REVIEW, ) Petition for
) Review of Decision
Petitioner-Appellant, ) of the Property Tax
) Board and Docket
v. ) Numbers.
)
ILLINOIS PROPERTY TAX APPEAL BOARD )
and OMNI CHICAGO, ) No. 98 29670-C-3
)
Respondents-Appellees. )

JUSTICE GARCIA delivered the opinion of the court.

This appeal arises from an administrative proceeding involving

a property tax assessment before the Cook County Board of Review

(BOR). The respondent-taxpayer, Omni Chicago, filed a complaint

with the petitioner, the BOR, alleging that its property had been

overassessed in 1998. After reviewing Omni's complaint, the BOR

refused to reduce the assessment. Omni appealed to the Illinois
Property Tax Appeal Board (PTAB). The PTAB conducted a hearing and

reduced the valuation of property from $48,296,794 to $43,250,000.

The PTAB relied on Omni's appraisal of the property, which focused

on the income approach to property valuation, to establish market

value. The BOR appeals that decision, arguing the method of

valuation adopted by the PTAB was improper as a matter of law

because (1) it excluded the sales comparison approach, and (2) it

utilized a vague and expanded definition of market value based on

a hypothetical model with no basis in fact or law. Because we
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agree with the BOR's first argument, which we find dispositive, we

reverse and remand.

BACKGROUND

Omni Chicago is the owner of real property located at 676

North Michigan Avenue in Chicago. The subject property consists of

a 17,550-square-foot land parcel improved with an 8-year-old, 40-

story, mixed-use commercial building, containing approximately

485,000 square feet of building area. The building is composed of

three distinct areas: (1) 139,193 square feet of office space; (2)

276,408 square feet of hotel space; and (3) 24,680 square feet of

retail space. The subject property had a zoning classification

unique in the City of Chicago; it was zoned "planned development

428."

For taxyear 1998, the Cook County assessor issued an

assessment for the subject property of $18,352,782. This tax

liability, which was leveled at 38% for commercial property,

reflected a market value of $48,296,794. Omni appealed both the

market value determination and the assessment level to the PTAB.

Omni alleged that the market value was overstated and that the

correct market value was $43,250,000.

At a hearing before the PTAB, Omni introduced a written

appraisal by Arthur J. Murphy, Sr., of Urban Real Estate Research,

Inc., which valued the subject property at $43,250,000 as of

January 1, 1998. Murphy testified that the subject property was

appraised as a fee simple estate, and he opined that it was being

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used for its highest and best use. Murphy testified that although

he considered all three of the classic approaches to value the

subject property, he found neither the cost nor the sales

comparison approach was appropriate. Concerning the cost approach,

Murphy testified that due to the unique character of the building,

adjustments in that approach would be too subjective. He did not

employ the sales comparison approach because there had been no

sales of properties similar to the subject property within the

Chicago area with which to make a meaningful comparison. Murphy,

therefore, relied on the income approach to value the subject

property.

Under the income approach, Murphy identified three profit

centers within the subject property: (1) the office space; (2) the

hotel; and (3) the retail space. To estimate the value of the

office space, Murphy used historic office space rentals of four

buildings located in close proximity to the subject property. The

four buildings contained between 250,000 and 500,000 square feet of

office space and ranged in age from 33 to 78 years old. Using

rental information from the four previous years, Murphy established

a range of $19 to $37 per square foot effective gross rent. Due to

the quality of the subject property, Murphy stabilized the base

rent at $25.50 per square foot. Other income was stabilized at

$0.20 per square foot for a total of $27,839. After analyzing the

competing market, Murphy estimated a vacancy and credit loss of

10.1%, which was stabilized at 10%. These calculations resulted in

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an effective gross income (EGI) for the subject property's office

space of $3,222,318, or $23.15 per square foot.

Murphy then ascertained allowable expenses at $1,501,197, or

$10.79 per square foot, by utilizing a 1997 report from the

Building Owners and Managers Association International (BOMA) and

other market data. Murphy testified that the actual expenses

incurred by the subject property's office space were higher than

his estimate. Murphy deducted the total expenses from the EGI for

a net operating income (NOI) of $1,721,121, or $12.37 per square

foot of net rentable area.

Murphy developed an overall capitalization rate of 17.2%.

Based on recent sales of office buildings in the market and

numerous published sources, Murphy estimated an overall rate of 10%

for the office space and a tax load of 7.2%, for a total rate of

17.2%. He then estimated the market value of the office space at

$71.89 per square foot, or $10 million rounded.

Murphy employed similar methods to estimate the market value

of the hotel area. He stabilized four income streams for the hotel

that totaled $24,335,989: (1) the hotel rooms at $17,785,989; (2)

food and beverages at $4,450,000; (3) telecommunications at $1

million; and (4) miscellaneous revenues at $1.1 million. Total

expenses were stabilized at $15,290,566. In addition, $3,438,199

was deducted for reserves for the replacement or return of

furniture, fixtures, and equipment, resulting in an estimated NOI

of $5,307,224. Murphy utilized an overall capitalization rate of

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17.7% and estimated a total value for the hotel area of $86,398 per

room, or $29,980,000 rounded.

To estimate the value of the retail space, Murphy prepared a

separate, limited-scope appraisal, which used a different

methodology. Murphy developed a model that represented an upscale

shopping area that surrounded the subject property. Murphy treated

this shopping area as a super-regional mall with each retailer

dependent on the others for consumer traffic. He explained that as

with existing super-regional malls, anchor stores would pay lower

rent per square foot than specialty stores. Murphy's model

contained 300,000 square feet devoted to anchor stores and 310,000

square feet devoted to speciality stores. Utilizing rental

information from nine buildings containing retail space and located

in the subject property's general area, Murphy concluded that the

lessor of the mall would rent the anchor space for $9.50 per square

foot and would rent space for the speciality stores at $60 per

square foot. Based on these numbers, Murphy prepared a traditional

income approach to market value.

Murphy attributed a total EGI to the model of $34,870,000, or

$57.16 per square foot. He deducted a vacancy and collection loss

of 10%. He also deducted operating expenses, personal property,

lease up and build out costs, replacements for reserves, and

business value resulting in an NOI before debt services of

$17,786,180, or $29.16 per square foot. With a total

capitalization rate of 16.7%, Murphy estimated that the model mall

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had an estimated value of $106,504,072, or $174.60 per square foot.

Murphy then converted the model to a market value attributable to

the subject property, but he discounted the basement area because

it could not be used for public space. Murphy's final estimate of

market value for the retail space was $3,270,000 rounded.

After reconciling the value of each section, Murphy opined

that the subject property's total indicated market value as of

January 1, 1998, was $43,250,000.

At the conclusion of Murphy's testimony, the BOR moved for a

directed finding, arguing that the limited scope of Murphy's

appraisal and his reliance on the income approach was insufficient

to establish market value. The PTAB denied the motion.

The BOR presented testimony of James Frommeyer, who prepared

a summary appraisal report. Frommeyer prepared the report when he

was employed by the Cook County assessor's office and opined that

the subject property's fair market value as of January 1, 1998, was

$68 million. Frommeyer did not personally inspect the subject

property, but he relied on descriptive information from an

independent 1994 appraisal, information from Omni Chicago's web

site and other records and reports archived with the BOR and county

assessor.

Frommeyer testified that he utilized all three traditional

approaches to value. Under the cost approach, Frommeyer analyzed

the sales of 18 properties ranging in size from 8,424 to 108,216

square feet that took place between May 1996 and July 1999.

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Although the properties were not located in the same "high-end

locale" as the subject property, they were located in comparable

high-end areas. The sale prices for the 18 properties ranged from

$3 million to $55,900,000, or between $206.67 and $972.62 per

square foot. After examining the sales and adjustments for size,

location, and utility, Frommeyer estimated a figure of $500 per

square foot of land area, or $8,775,000. Frommeyer then used

Marshall & Swift's Commercial Estimator as a basis for a

replacement cost new and estimated the market value of the subject

property of $69,325,000.

Under the sales approach, Frommeyer analyzed each area (hotel,

retail, and office space) independently. Although he identified 12

hotels that sold between April 1987 and September 1999, he relied

on three sales that sold between January 1997 and December 1998 for

$46 million, $56.9 million, and $90.5 million. The hotels were

built in 1972, 1974, and 1988 respective to their sale prices and

ranged in size from 184,250 to 368,800 square feet with 341 to 500

rooms. Frommeyer made adjustments for size, age, location, and

condition and estimated the sale price per year for each room of

$134,897, $113,800, and $141,509. He then utilized a figure of

$120,000 per room for the subject property's 347 rooms, estimating

a total market value of $41,640,000 for the hotel area of the

subject property.

Concerning the retail space, Frommeyer examined 15 retail

sales in Chicago, but focused on four that were located near the

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subject property. These retail spaces sold for between $5.4

million and $30.5 million, or $306.07 to $677.78 per square foot.

After making adjustments for location, size, age, and condition,

Frommeyer utilized a gross square footage for the retail area of

the subject property of 28,875 square feet with a value of $210 per

square foot for a total value of $6,063,750. He also used a net

rentable area of 24,680 square feet and a unit value of $235 for an

indicated value of $5,700,800. After reconciling these numbers,

Frommeyer testified that the total market value for the retail

space was $5.8 million.

For the office space, Frommeyer identified seven sales of

multitenant office buildings in Chicago and relied on three of them

that were sold between April 1998 and June 1999 for prices ranging

from $98 million to $133,240,000. Although he could not

specifically recall the details of the adjustments, he testified

that adjustments for location, size, age, and condition were made.

Based on that information, Frommeyer opined that the unit value of

the subject property was $125 per square foot of gross building

area for a market value of $20,400,000. He then utilized a unit

value for the subject property of $150 per square foot of net

rentable area based for a market value of $20,500,000. He

reconciled these totals and opined that the market value of the

office space was $20,500,000. The three areas combined for a total

market value of $68 million.

Frommeyer based his income approach on the subject property's

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income and expenses for 1994 and 1995 and a forecast of the subject

property's 1996 income and expenses. Frommeyer gathered this

information from an attorney's brief from a previous assessment and

a 1994 appraisal filed with the county assessor. He also utilized

numerous industry reports.

Concerning the hotel area, Frommeyer testified that it had an

NOI of $7,761,097, to which he applied a loaded capitalization rate

of 18.6%, for a total value of $41,730,000. Frommeyer combined the

office and retail area and developed two market values. He opined

that the office and retail space had an NOI of $4,426,495. He

applied a 16.85% loaded capitalization rate for a total value of

$26,270,000. Frommeyer also used a stabilized net income of

$3,050,000, deducted at a 10% vacancy and collection loss, to which

he applied a partially loaded capitalization rate of 10.23%,

resulting in a total value of $26,820,000. He reconciled these two

methods for a total market value of $26,270,000.

Frommeyer testified that he gave equal weight to the sales

comparison and income approach, although the scales tipped slightly

to the income approach. His final opinion was that the subject had

a total market value of $68 million as of January 1, 1998.

Omni called Anthony Uzemack as a rebuttal witness. Uzemack

completed a technical review of Frommeyer's appraisal report to

determine the accuracy and appropriateness of his conclusions.

Uzemack opined that Frommeyer's summary appraisal was not actually

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an appraisal under standards promulgated by the Uniform Standards

of Professional Appraisal Practice (USPAP), but it was merely a

report. He testified that the report was too brief, lacked

substance, had no support material for the opinions, and lacked

explanation of how the appraiser arrived at his conclusions. In

Uzemack's opinion, the report was unreliable.

On cross-examination, Uzemack testified that, in his opinion,

it would be a "critical problem" if an appraiser omitted the sales

comparison approach for the subject property.

The PTAB found that the subject property was unique in the

Cook County market and that, when it considered all three

traditional approaches, the scale weighed toward the income

approach. The PTAB found that the best evidence to estimate the

subject property's market value was the testimony, data and

analysis contained in the income approach to value performed by

Murphy on behalf of Omni. On the other hand, the PTAB found that

the BOR's evidence, and in particular Frommeyer's appraisal, was

"very weak" and without explanations of methodologies or supporting

documentation. Thus, the PTAB accepted Omni's market value of

$43,250,000, as of January 1, 1998. It applied the 38% assessment

as originally set (the assessment level is no longer challenged),

for a total assessment of $16,435,000. This appeal followed.

ANALYSIS

The BOR presents two issues for review. The BOR first

contends: "The method of valuation adopted by the PTAB, which

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excluded the sales comparison approach to value, was improper as a

matter of law." In response to the BOR's contention that this

issue raises a question of law, Omni responds that the PTAB merely

placed "more weight on [Mr.] Murphy's appraisal" and, therefore, is

neither contrary to law nor against the manifest weight of the

evidence The PTAB responds its "decision as to market value is

not against the manifest weight of the evidence."

In addition, the BOR argues that the PTAB, in accepting

certain premises underlying Mr. Murphy's appraisal, improperly

utilized a vague and expanded definition of market value based on

a hypothetical model with no basis in fact or law. According to

the BOR, the Urban appraisal expanded the definition of market

value for the subject property to include three "new requirements":

the property must (1) meet all debt service requirements; (2)

generate enough cash to maintain and repair the physical plant; and

(3) provide sufficient net operating income to "allow a reasonable

annual cash equity return." According to the BOR, the hypothetical

model "assumed that the subject retail space was part of a ***

'horizontal mall' comprised of other separately owned and operated

retail facilities located along Michigan Avenue." The PTAB

presents no direct response to the BOR's second issue. Omni

responds that the reliability of "Mr. Murphy's definition of market

value and his hypothetical model" were within the purview of the

PTAB's factual determinations and therefore not subject to de novo

review by this court as a question of law.

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I. Standard of Review

Because we find the first issue presented by the BOR

dispositive of the appeal, we limit our determination of the

standard of review to that issue.

The disagreement between the parties regarding the applicable

standard of review stems from their disagreement about the actual

issue on appeal. The BOR, as appellant, challenges the method of

valuation utilized by the PTAB, which it contends is a question of

law. Omni and the PTAB, as appellees, seek to turn our review into

one of assessing the competing evidence and, as such, this court's

review would be limited to determining whether the PTAB's decision

was against the manifest weight of the evidence. We agree with the

BOR; the initial issue before us concerns the method of valuation

utilized by the PTAB to reduce the valuation of the Omni property

and, as such, presents a question of law.

As our supreme court stated in addressing a similar challenge:

"[W]e are not charged with the responsibility of determining the

market value of the subject property. Rather, the central question

before us is whether the PTAB's decision to reduce petitioner's tax

assessments for the [1998] tax year[] was correct. The

determination turns on whether petitioner employed a proper

valuation method in assessing the subject property." Kankakee

County Board of Review v. Property Tax Appeal Board, 226 Ill. 2d

36, 50, 787 N.E.2d 363 (2007). While our analysis does not begin

with a question of statutory construction as the supreme court's

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analysis did in Kankakee County Board of Review, the bottom-line

issue is the same: "[W]hether the PTAB considered appraisals that

utilized the proper methodology for the valuation of the subject

property. This, too, is a legal question to be reviewed de novo.

Kankakee County Board of Review v. Property Tax Appeal Board, 131

Ill. 2d 1, 14[, 544 N.E.2d 762] (1989). See also United Airlines,

Inc. v. Pappas, 348 Ill. App. 3d 563, 569[, 809 N.E.2d 735] (2004)

('This appeal requires us to examine the appropriateness of the

valuation methodology used by taxpayer's expert in valuing the

leasehold interest to support its objection to the leasehold's

assessed value. *** Therefore, our standard of review relating to

the question of law at issue in this appeal is de novo'); Board of

Review v. Property Tax Appeal Board, 304 Ill. App. 3d 535, 538[,

710 N.E.2d 915] (1999) ('Where the propriety of the method of

valuation is challenged *** the issue is one of law')." Kankakee

County Board of Review, 226 Ill. 2d at 51.

II. Market Value

"Illinois law requires that all real property 'shall be valued

at its fair cash value, estimated at the price it would bring at a

fair, voluntary sale.' " Chrysler Corp. v. Property Tax Appeal

Board, 69 Ill. App. 3d 207, 211, 387 N.E.2d 351 (1979), citing Ill.

Rev. Stat. 1971, ch. 120, par. 501. "Fair cash value is synonymous

with fair market value." People ex rel. Korzen v. American

Airlines, Inc., 39 Ill. 2d 11, 18, 233 N.E.2d 568 (1967); Walsh v.

Property Tax Appeal Board, 181 Ill. 2d 228, 230, 692 N.E.2d 260

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(1998). "Market values generally are the standard to be used in

valuing property for tax purposes." Consolidation Coal Co. v.

Property Tax Appeal Board of the Department of Local Government

Affairs, 29 Ill. App. 3d 465, 470, 331 N.E.2d 122 (1975).

In the absence of a "contemporaneous sale between parties

dealing at arm's length" that would be practically conclusive on

the issue of market value, valuation methods are employed to

estimate the property's fair market value. Residential Real Estate

Co. v. Illinois Property Tax Appeal Board, 188 Ill. App. 3d 232,

242, 543 N.E.2d 1358 (1989). There are three basic valuation

methods: the comparison approach, the income approach, and the

reproduction cost approach. Chrysler Corp., 69 Ill. App. 3d at

211. Generally, "[n]one of these methods *** provides conclusive

evidence of value but are only factors to be considered."

Residential Real Estate Co., 188 Ill. App. 3d at 243. Professional

appraisals generally employ more than one method to determine

valuation; the use of more than one method in a single appraisal

serves as a check on the value reached by the other method or

methods. See Willow Hill Grain, Inc. v. Property Tax Appeal Board,

187 Ill. App. 3d 9, 12-13, 549 N.E.2d 591 (1989) (appraisers for

appellee and appellant sought to "check" replacement cost approach

valuation "with that of actual sales transacted in the

marketplace"). In theory, the different valuation approaches

should lead to the same value. "As this may not be the case in

practice, one of the duties of the professional appraiser is to

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weigh any disparate results in order to reach a determination that

best reflects the total true value of the property." Chrysler

Corp., 69 Ill. App. 3d at 211.

III. Sales Comparison or Market Approach

In the absence of market value set by a contemporaneous arm's-

length sale, "[t]he sales comparison approach *** is the preferred

method and should be used when market data [are] available."

United Airlines, 348 Ill. App. 3d at 572. The sales approach is

often referred to as the market approach because it relies on sales

of comparable properties in the open market to reach a

determination of the subject property's true value. See Willow

Hill Grain, Inc. v. Property Tax Appeal Board, 187 Ill. App. 3d 9,

549 N.E.2d 591 (1989) (sales comparison approach interchangeable

with market approach).

The existence of market data is central to the market approach

valuation method. United Airlines, 348 Ill. App. 3d at 572

(appraiser erred when he "failed to consider market data in

calculating the appraised value" (emphasis added)). Market data

are sale prices of comparable properties to the subject property.

That we look first to market data to determine fair cash value

is long established. "What constitutes market value is a question

of law, and is the price which the owner, if desirous of selling,

would under ordinary circumstances surrounding the sale of property

have sold the property for and what a person desirous of

purchasing, but not compelled to purchase, would have paid for it."

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City of Chicago v. Farwell, 286 Ill. 415, 419, 121 N.E. 795 (1918).

In Farwell, the supreme court held there are few instances where

the market value of property by sales comparison cannot be

established. The exclusion of market valuation by sales comparison

is limited to "property [that] is of such nature and applied to

such special use that it cannot have a market value, such as a

church, college, cemetery, club house, or terminal of a railroad.

[Citations.]" (Emphasis added.) Farwell, 286 Ill. at 420.

The exclusion of the sales comparison approach in a taxpayer's

appraisal based on a claim of special use property has been

addressed in several appellate court cases: Chrysler Corp., 69 Ill.

App. 3d 207, United Airlines, 348 Ill. App. 3d 563, and Kendall

County Board of Review v. Property Tax Appeal Board, 337 Ill. App.

3d 735, 737-38, 787 N.E.2d 363 (2003).

In United Airlines, the appraisal presented on behalf of the

taxpayer was challenged as fatally flawed because it "failed to

consider available market data, [and therefore,] the appraisal

should be insufficient to overcome the presumption that the

assessment is correct as a matter of law." United Airlines, 348

Ill. App. 3d at 570. The taxpayer's appraisal did not use the

sales comparison approach to estimate market value because, relying

on our holding in Kendall County, "no evidence existed in the

record indicating a reasonable actual or potential market for the

property." United Airlines, 348 Ill. App. 3d at 571. The

appraiser's explanation for the failure to consider market data was

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that "comparable leases sufficient to derive a market rent figure

did not exist, [therefore he] used the cost approach to estimate

market rent." United Airlines, 348 Ill. App. 3d at 570. The

taxpayer argued that its appraiser properly used the reproduction

costs valuation method because "no market value can be determined."

United Airlines, 348 Ill. App. 3d at 571. The taxpayer relied on

Kendall County, 337 Ill. App. 3d at 737-38, where we found the

record was "devoid" of any market for the subject

telecommunications facility built in an agricultural zone but not

salable as a telecommunications center, for its contention that no

sales comparison data need be presented so that it was proper to

rely solely on the "cost approach."

In United Airlines, we rejected the comparison of terminal

baggage space to an outdated telecommunications facility, built

under a special permit, for purposes of determining whether market

data existed. "We agree with collector that [the taxpayer's

appraiser] erred in failing to consider market data in calculating

the appraised value of the leasehold interest. We are unpersuaded

by taxpayer's contention that the leasehold interest related to

special purpose property for which no market exists. *** The key

criterion in determining whether property is special purpose

property is 'whether the property is in fact so unique as to not be

salable, not what factors might or might not make it so unique.' "

United Airlines, 348 Ill. App. 3d at 572, quoting Chrysler Corp.,

69 Ill. App. 3d at 213.

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We acknowledged that "the rental of an airport terminal may be

considered property of special use; [however,] we are not persuaded

that the lease of such property is 'so unique as to not be

salable.' " United Airlines, 348 Ill. App. 3d at 572, quoting

Chrysler Corp., 69 Ill. App. 3d at 213. We took note that "[t]he

airline industry consists of a multitude of airlines, many of which

would likely eagerly pursue available terminal space at what has

been known as the world's busiest airport." United Airlines, 348

Ill. App. 3d at 572.

In Chrysler Corp., the Second District rejected the school

unit's claim that massive size of the Chrysler plant warranted the

plant be characterized as "special purpose property" so that market

value could be determined by the reproduction cost approach alone

because of "insufficient evidence of market values." Chrysler

Corp., 69 Ill. App. 3d at 211-12. The school unit's appraiser

calculated the market value at $61 million, relying exclusively on

the reproduction cost approach. Chrysler Corp., 69 Ill. App. 3d at

210. The appraiser for Chrysler relied on two different methods of

valuation, the reproduction cost and the comparable sales, in

reaching a final market value of $23 million. Chrysler Corp., 69

Ill. App. 3d at 209. The PTAB, based primarily on the appraisal

submitted by the school unit, set the market value at $56 million.

Chrysler Corp., 69 Ill. App. 3d at 210. In reversing, the court in

Chrysler Corp. noted that while it was true that there were no

sales of other plants of similar size in the surrounding area,

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"there were numerous sales of extremely large properties" that

could provide market data as to the value of the Chrysler plant.

Chrysler Corp., 69 Ill. App. 3d at 213. The court grounded its

holding on the existence of such market data: "We hold, therefore,

that there was sufficient credible evidence of comparable sales for

these sales to be given significant weight as evidence of market

value. It follows that the Property Tax Appeal Board's assignment

of valuation herein based solely on a reproduction cost method was

incorrect as a matter of law." Chrysler Corp., 69 Ill. App. 3d at

214.

Here, neither Omni nor the PTAB contends the Omni property is

"special purpose property" so that no reliable market data are

available based on such a characterization of the property.

Nonetheless, the PTAB in its written decision accepted and adopted

Omni's assertion that the Omni property possessed a "unique

character" such that "there were no sales of building similar to

the subject within the Chicago area making a reliable sales

analysis problematical." This claim made by Omni, accepted by the

PTAB, is similar to the claims made in United Airlines, and

Chrysler Corp.: no "reliable" market data are available to allow

for the use of the sales comparison approach. But as we made clear

in United Airlines and Chrysler Corp., the test to determine

whether the sales comparison approach may be omitted is whether the

subject property is so unique as to not be salable, for which no

market exists.

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We note before the PTAB was a list of 34 sales in the BOR's

report offered as comparables to each of the three profit centers

for the Omni property: "sales [of] twelve Chicago hotels, fifteen

sales of retail sites, and the sales of seven multi-tenant offices

buildings."1 While the PTAB rejected the BOR's report "as not

contain[ing] enough detail and/or analysis to draw any reliable

conclusion of comparability," what is crucial is the PTAB's

implicit acknowledgment that comparable properties exist. This

implicit acknowledgment became explicit, according to the BOR's

brief, in Omni's own appraisal by its reliance on " ' comparable

sales' to estimate capitalization rates for the office and retail

components of the subject property." The Omni appraiser used

historic office space rentals of four buildings located in close

proximity to the subject property to estimate the market value of

the office space; he used rental information from nine buildings

containing retail space in the same general vicinity to calculate

the market value of the retail space. That market data of

comparable properties existed to sufficiently calculate market

1
Much as the school unit's faulted appraiser in Chrysler

Corp., the Omni appraiser's claim that no comparables existed is

suspect where he "made no independent examination of the other

properties discussed by [the report submitted by the BOR]."

Chrysler Corp., 69 Ill. App. 3d at 210. His silence on the

"comparability" issue was accepted without comment by the PTAB.

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value under the sales comparison approach is reinforced by the

testimony of Omni's rebuttal expert witness: "I believe that the

three standard approaches to value had no problem being used in an

appraisal technique for this type of property. *** I think it's a

critical problem to even venture a thought of wanting to omit the

sales comparison approach." (Emphasis added.) See United

Airlines, 348 Ill. App. 3d at 572 (airline appraiser "acknowledged

that leases with other airlines existed at O'Hare Airport" so as to

support conclusion that "leasehold interest is not so unique as to

not be salable and for which no market exists").

The PTAB's rejection of the evidence set forth in the sales

comparison approach offered by the BOR does not benefit Omni. When

a party appeals an assessment in the PTAB, that party has the

burden of going forward with "'substantive, documentary evidence or

legal argument sufficient to challenge the correctness of the

assessment.'" The Cook County Board of Review v. The Property Tax

Appeal Board, 334 Ill. App. 3d 56, 59, 777 N.E.2d 622 (2002),

quoting 86 Ill. Adm. Code §1910.63(b) (Conway Greene CD-ROM 2002).

The PTAB must look to the challenging party's submission of

substantive, documentary evidence to determine whether that party

has carried its burden of challenging the correctness of the

assessment. Where the correctness of the assessment turns on

market value and there is evidence of a market for the subject

property, a taxpayer's submission that excludes the sales

comparison approach in assessing market value is insufficient as a

21
1-04-2402

matter of law. "By failing to consider the sales comparison

approach in determining market value of the leasehold interest, we

conclude that taxpayer has not met its burden of demonstrating that

the assessment was incorrect by clear and convincing evidence."

United Airlines, 348 Ill. App. 3d 573; 86 Ill. Adm. Code

§1910.63(e) (Conway Greene CD-ROM 2002) ("inequity of the

assessments must be proved by clear and convincing evidence");

Chrysler Corp., 69 Ill. App. 3d at 214 (where there is evidence of

comparable sales, the PTAB's assignment of valuation based on the

exclusion of comparable sales is incorrect as a matter of law).2

The importance of the market or sales comparison approach is

embodied in the Administrative Code, which governs the procedure

before the PTAB. The Code provides that the PTAB generally

addresses either of two contentions in appeals regarding the

correct valuation of property for assessment purposes: "(1) the

2
While both United Airlines and Chrysler Corp. were decided

before the de novo provision was added to the statute setting out

the procedure before the PTAB (35 ILCS 200/16-180 (West's 2005),

effective July 16, 2004), the taxpayer, as the party contesting

the assessment affirmed by the BOR, bears "the burden of going

forward [with proper and admissible] substantive, documentary

evidence *** sufficient to challenge the correctness of the

assessment of the subject property." 86 Ill. Adm. Code

§1910.63(b) (Conway Greene CD-ROM 2002).

22
1-04-2402

subject property is not accurately assessed when its assessment is

compared to the assessment of other, similar properties in its

neighborhood; and/or (2) the market value of the subject property

is not accurately reflected in its assessment." 86 Ill. Adm. Code

§1910.65 (a) (Conway Greene CD-ROM 2002). Regardless of the

contention under which the taxpayer proceeds, "it is recommended

that not less than three comparable properties be submitted.

Documentation must be submitted showing the similarity, proximity

and lack of distinguishing characteristics of the assessment

comparables to the subject property." (Emphasis added.) 86 Ill.

Adm. Code §1910.65 (b) (Conway Greene CD-ROM 2002).

It is also no answer to call the sales approach

"problematical" in light of the "unique character" of the Omni

building. Being problematical says nothing more than it might be

difficult to do.3 It falls within the duties of a professional

appraiser to reconcile any "disparate results" under other

valuation methods "in order to reach a determination that best

reflects the total value of the property." Chrysler Corp., 69 Ill.

App. 3d at 211. Based on the testimony of Omni's rebuttal expert

witness, it is a deviation of the duties of a professional

appraiser to omit the sales comparison approach in valuing the Omni

3
It was not demonstrated that employing the sales

comparison approach would have resulted in unreliable estimates

of the fair market value of the Omni property.

23
1-04-2402

property. That there was evidence before the PTAB that comparable

property existed for purposes of determining the market value of

the Omni property is beyond contention as evidenced in both the

Omni appraisal and the report submitted by the BOR. "It follows

that the Property Tax Appeal Board's assignment of a valuation

herein based solely on [the income] method was incorrect as a

matter of law." Chrysler Corp., 69 Ill. App. 3d at 214. "We agree

with collector that [taxpayer's appraiser] erred in failing to

consider market data in calculating the appraised value of the

leasehold interest." United Airlines, 348 Ill. App. 3d at 572.

In reaching this decision, we note the observation of the

Chrysler Corp. court: "[B]y using different methods of valuation a

county could change the taxes paid by a particular business just as

certainly as it could have done by using a different assessment

procedure ***." Chrysler Corp., 69 Ill. App. 3d at 213. The

ability to manipulate the amount of taxes due based on the

selection of the method of valuation is no less available to the

taxpayer. See United Airlines, 348 Ill. App. 3d at 570 ("appraisal

should have been based in whole or in part on the sales comparison

approach, especially in light of the disparity between the monthly

rent of $606,000 computed by [taxpayer's appraiser utilizing the

cost approach] and the actual monthly rent paid by the taxpayer of

$4,300,000").

The concern expressed by the Chrysler Corp. court applies

equally here: "[T]he constitutional provision [regarding uniformity

24
1-04-2402

of assessment levels] highlights the strong public interest in

treating taxpayers in a uniform manner. Relying solely on

reproduction cost [(here, the income approach)] when another method

is used to value all other property in a county is a practice that

should be tightly limited. Likewise, characterization of one piece

of property among 12,000 [(here, many more we are sure)] *** is

something that should be done only as a last resort." Chrysler

Corp., 69 Ill. App. 3d at 214. Compare Walsh v. Property Tax

Appeal Board, 181 Ill. 2d 228, 235, 692 N.E.2d 260 (1998) ("To the

extent *** assessed valuations bear little relationship to true

fair cash value, they result in the unequal sharing of the

collective tax burden and thus violate the Property Tax Code, as

well as the Illinois Constitution's uniformity clause" (emphasis

added)). Based on the PTAB's own finding that Omni's appraiser

"did not prepare a sales comparison approach because there were no

sales of similar properties in the Chicago area" the PTAB's

willingness to rely on this assertion conflicts with its obligation

to determine the property tax assessment "based upon equity and the

weight of evidence." 35 ILCS 200/16-185 (West Supp. 1993).

As made clear by the three special use property cases, United

Airlines, Chrysler Corp., and Kendall County, the market or sales

comparison approach must be presented in a taxpayer appraisal to

satisfy Illinois case law that market value be established to

properly decide property tax assessment except where no market

exists for the sale of the property. Omni does not venture a

25
1-04-2402

suggestion that there is no market for its blended mix of hotel,

office and retail stores so as to make its property not salable.

If the Omni building were put on the market tomorrow, and Omni were

really desirous of selling, there can be no doubt that the price

reached by Omni and a willing and well-financed buyer would be

based on the market prices of comparable properties. The Omni

property does not approach the uniqueness of property for which

market value by sales comparison would be impossible to estimate.

We repeat the salient role the sales comparison approach plays in

estimating property value aptly expressed by Omni's own rebuttal

expert witness: "I think it's a critical problem to even venture a

thought of wanting to omit the sales comparison approach."

(Emphasis added.)

The exclusion of the sales comparison or market approach in

light of the existence of market data regarding comparable

properties rendered Omni's appraisal insufficient as a matter of

law to challenge the correctness of the property tax assessment.

Consequently, the PTAB's reliance on that appraisal as "the best

evidence to estimate the subject property's market value" was

erroneous as a matter of law.

Our resolution of this issue is dispositive of the appeal; we

need not address the BOR's other arguments.

CONCLUSION

For the reasons stated, we reverse the judgment of the PTAB

and direct that the assessment finalized by the Cook County Board

26
1-04-2402

of Review be reinstated.

Reversed and remanded with directions.

CAHILL, P.J., and WOLFSON, J., concur.

27
1-04-2402

REPORTER OF DECISIONS - ILLINOIS APPELLATE COURT
_________________________________________________________________
THE COOK COUNTY BOARD OF REVIEW,
Petitioner-Appellant,
v.
ILLINOIS PROPERTY TAX APPEAL BOARD,
an administrative agency created by 35 ILCS 200/7-5, and
OMNI CHICAGO, taxpayer,
Respondents-Appellees.
________________________________________________________________
No. 1-04-2402

Appellate Court of Illinois
First District, First Division

Filed: July 28, 2008
__________________________________________________________________

JUSTICE GARCIA delivered the opinion of the court.
Cahill, P.J. and Wolfson, J., concur.
_________________________________________________________________
Petition for Review of Decision of the
Property Tax Board and Docket Numbers.
_________________________________________________________________
For PETITIONER- Patrick T. Driscoll, Jr., Chief, Civil Actions Bureau
APPELLANT Whitney T. Carlisle, Assistant State's Attorney, Of Counsel
Michael C. Prinzi, Assistant State's Attorney, Of Counsel
RICHARD A. DEVINE
State's Attorney of Cook County
Richard J. Daley Center–Room 500
Chicago, Illinois 60602

For RESPONDENT-Gary Feinerman, Solicitor General
APPELLEE Diane M. Potts, Assistant Attorney General
Illinois Property LISA MADIGAN
Tax Appeal Board Attorney General State of Illinois
100 West Randolph Street, 12th Floor
Chicago, Illinois 60601

For RESPONDENT-Patrick C. Doody
APPELLEE Liat R. Meisler

28
1-04-2402

Omni Chicago FIELD & GOLAN
70 West Madison Street, Suite 1500
Chicago, Illinois 60602

29
 REPORTER OF DECISIONS - ILLINOIS APPELLATE COURT
_________________________________________________________________
THE COOK COUNTY BOARD OF REVIEW,
Petitioner-Appellant,
v.
ILLINOIS PROPERTY TAX APPEAL BOARD,
an administrative agency created by 35 ILCS 200/7-5, and
OMNI CHICAGO, taxpayer,
Respondents-Appellees.
________________________________________________________________
No. 1-04-2402

Appellate Court of Illinois
First District, First Division

Filed: September 8, 2008
__________________________________________________________________
JUSTICE GARCIA delivered the supplemental opinion of the court
on denial of petition for rehearing.
Cahill, P.J., and Wolfson, J., concur.
_________________________________________________________________
Petition for Review of Decision of the
Property Tax Board and Docket Numbers.
_________________________________________________________________
For PETITIONER- Patrick T. Driscoll, Jr., Chief, Civil Actions Bureau
APPELLANT Whitney T. Carlisle, Assistant State's Attorney, Of Counsel
Michael C. Prinzi, Assistant State's Attorney, Of Counsel
RICHARD A. DEVINE
State's Attorney of Cook County
Richard J. Daley Center–Room 500
Chicago, Illinois 60602

For RESPONDENT- Gary Feinerman, Solicitor General
APPELLEE Diane M. Potts, Assistant Attorney General
Illinois Property LISA MADIGAN
Tax Appeal Board Attorney General State of Illinois
100 West Randolph Street, 12th Floor
Chicago, Illinois 60601

For RESPONDENT- Patrick C. Doody
APPELLEE Liat R. Meisler
Omni Chicago FIELD & GOLAN
70 West Madison Street, Suite 1500
Chicago, Illinois 60602

1
 FIRST DIVISION
September 8, 2008

No. 1-04-2402

THE COOK COUNTY BOARD OF REVIEW, ) Petition for
) Review of Decision
Petitioner-Appellant, ) of the Property Tax
) Board and Docket
v. ) Numbers.
)
ILLINOIS PROPERTY TAX APPEAL BOARD )
and OMNI CHICAGO, ) No. 98 29670-C-3
)
Respondents-Appellees. )

JUSTICE GARCIA delivered the supplemental opinion of the

court on denial of petition for rehearing.

In its petition for rehearing, which Omni adopted, the PTAB

first contends rehearing should be granted "because the

appraisers agreed the income approach best measured Omni's market

value." Our opinion does not challenge any "agreement" that

might have been reached regarding the "best approach." We are

aware that in virtually every case involving appraisals of market

value of real property a decision must be made as to which of the

three approaches utilized by the appraisers best reflects true

market value. Our opinion does nothing to remove that decision

from appraisers. Our opinion simply holds that a single approach

appraisal is inadequate as a matter of law to warrant a "best

approach" decision except when there is "no evidence of an actual

2
1-04-2402

or a potential market for the subject property." Kendall County,

337 Ill. App. 3d at 741. The PTAB makes no argument that the

Omni property satisfied that test here.

In its second argument for rehearing, the PTAB expresses

concern that based on our opinion "appraisers [must] now fully

develop a sales comparison analysis regardless of its probative

value." The PTAB makes much of its claim that our opinion

imposes an "analysis that would not provide meaningful results."

In support of its claim, the PTAB quotes the Uniform Standards of

Professional Appraisal Practice: "If a 'specific requirement' of

valuation 'addresses analysis that would not provided meaningful

results in the given assignment,' it is not required." The very

same section of the Uniform Standards of Professional Appraisal

Practice that the PTAB quotes provides, "A specific requirement

is not applicable when *** it addresses analysis that is not

typical practice in such an assignment." (Emphasis added.) Our

opinion simply takes notice that the "typical practice" based on

our case law is to include the sales comparison approach in

assessing market value of real property; to exclude it is the

exception. See United Airlines, 348 Ill. App. 3d at 572 ("[t]he

sales comparison approach *** is the preferred method"). An

appraiser must justify an appraisal that excludes the sales

comparison approach with more than unsupported conclusions that

3
1-04-2402

"adjustments in [the cost approach] would be too subjective" and

"[h]e [could] not employ the sales comparison approach because

there [were] no sales of properties similar to the subject

property." Slip op. at 3. Three appraisers testified before the

PTAB. The BOR's appraiser determined that the Omni property was

subject to all three approaches to market value. Omni's rebuttal

expert witness testified that an appraisal not employing the

sales comparison approach regarding the Omni property would

present a "critical problem." Only the principal appraiser for

Omni submitted an appraisal that relied exclusively on the income

approach. The appraiser did so without any showing that either

of the other two approaches would provide results that were not

"meaningful." Nor did this appraiser acknowledge, much less

address, the disavowal by his fellow expert witness on behalf of

Omni of an appraisal that excluded the sales comparison approach.

Appraisers are free to interpret their governing standards. Our

opinion simply holds that case law and the Administrative Code

governing the procedure before the PTAB require a showing be made

before a single approach appraisal, which excludes the sales

comparison approach, can be relied upon as the "best evidence of

market value."

We also note, absent from the PTAB's petition for rehearing

is any argument that the appraisal submitted by Omni and accepted

4
1-04-2402

and adopted by the PTAB utilizing a single approach was warranted

because the other two approaches would not have provided

"meaningful results in the given assignment." Of course, that

argument was foreclosed to the PTAB by Omni's own expert witness

presented in rebuttal. To be clear, our opinion does not alter

the governing standards for appraisers. Our opinion only

reinforces the legislative mandate that the PTAB's "decision ***

be based upon equity and the weight of evidence." 35 ILCS

200/16-185 (West Supp. 1993).

Finally, the PTAB contends that our opinion somehow "removes

discretion from the Board to weigh expert opinions on market

value, contrary to legislative intent." Once again, the PTAB

misreads our opinion. The dispositive issue before us is a

matter of law. Our opinion is grounded on case law from our

supreme court and decisions of this court, now one of first

review, and the practice procedure in the Administrative Code

that the PTAB is bound to follow. Our holding is straightforward

and clear: absent a showing that a single approach appraisal is

warranted because the subject property is properly characterized

as special use property such that there is no evidence of market

data before the PTAB, the taxpayer's burden of going forward to

challenge the assessment finalized by the BOR has not been met as

a matter of law by a single approach appraisal that excludes the

5
1-04-2402

sales comparison approach.

The PTAB'S petition for rehearing is denied.

CAHILL, P.J., and WOLFSON, J., concur.

6