Illinois Appellate Court Refuses to Enforce Alleged Oral Agreement to Settle Property Tax Appeals

In KT Winneburg, LLC v. Roth, the Fourth District Illinois Appellate Court refused to enforce an alleged oral settlement agreement concerning the assessed value of land in Calhoun County. Additionally, the court granted the taxpayer’s request to reduce the assessed value of real estate because it was used either as farmland or other farmland.

KT owned vacant land that was platted and zoned for residential development. From 2011 to 2013, KT allowed corn and soybeans to be grown on the land. KT appealed the 2010 assessed value of the land to the Illinois Property Tax Appeal Board (“PTAB”). During a hearing on the 2010 assessed value, KT and the Calhoun County State’s Attorney agreed to settle the land’s 2010 assessed value. The parties also allegedly agreed that the land’s assessed value would be $20,000 from 2010 through 2013 and that, beginning in 2014, the land would be assessed as farmland or timber until the land’s use changed. At a later hearing concerning the land’s 2010 assessed value, the State’s Attorney told the PTAB that the county board voted to reject the proposed settlement. As a result, the PTAB denied KT’s motion to enforce the alleged settlement agreement and then held a hearing on the land’s 2010 assessed value.

KT never appealed the PTAB’s decision and did not challenge the enforceability of the oral agreement in that case. KT then filed a separate tax objection complaint in the circuit court concerning the land’s 2013 assessed value. In the tax objection case, KT again sought to enforce the alleged oral settlement agreement that the county entered into during the 2010 appeal. Further, KT argued that the property should be assessed as either farmland or other farmland and that the property was entitled to the developer’s exemption.

Because KT never appealed the PTAB decision as to the 2010 assessment, KT was not allowed to re-litigate the enforceability of that oral agreement during the lawsuit concerning the 2013 assessment.

The court then turned to the land’s 2013 assessed value. The court ruled that the land should have been assessed as farmland to the extent that it contained crops. Under Section 1-60 of the Property Tax Code (35 ILCS 200/1-60), a farm is defined to include property that is used solely for the growing and harvesting of crops. It was undisputed that KT’s land was used solely to grow crops from 2011 to 2013, so the circuit court’s finding to the contrary was clear error. Similarly, Section 10-125 of the Property Tax Code (35 ILCS 200/10-125) defines “other farmland” to include woodland. Thus, the portion of the land containing idle woodlands should have been assessed as “other farmland.” Finally, the land was not entitled to the developer’s exemption of Section 10-30 of the Property Tax Code (35 ILCS 200/10-30), which allows land to continue to be assessed as farmland while it is being platted and developed into residential property. Interpreting the plain language of Section 10-30, the court reasoned that if a platted lot is sold, the lot no longer receives the preferential assessment.

School districts often negotiate settlements of pending PTAB appeals in exchange for stipulated assessments in future tax years. In this case, the appellate court did not reach the issue of whether an oral settlement agreement concerning future tax years would be enforceable. Thus, it remains possible that a county representative’s proposed settlement offer could create an enforceable settlement agreement. In light of that possibility, school districts should insist that any settlement concerning future tax years be in a written settlement agreement. Further, school districts should always inform the parties that all settlement proposals are subject to the approval of the school board.

Contact an attorney in our Corporate practice group if you have questions regarding this case or any PTAB cases.

Source: KT Winneburg, LLC v. Roth, 2020 IL App (4th) 190274

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