2023 IL App (1st) 210799
Ill. App. Ct.2023Background
- Subject: commercial portion (836,662 sq ft, 32% of building) of the Trump International Hotel and Tower Chicago (Class 5 commercial); 2011 assessment at $15,604,993 (BOR), taxpayer sought reduction.
- 401 North Wabash Venture submitted an appraisal by Arthur Murphy valuing the subject at $33,000,000 as of Jan. 1, 2010 using income and sales-comparison approaches; Murphy did not employ a separate cost approach for the vertically subdivided portion.
- Murphy’s income approach produced a $32,250,000 indication (10.5% CAP rate within published ranges); sales-comparison produced $33,900,000 (used Rushmore adjustment to strip non-realty value).
- PTAB found Murphy’s analyses credible but concluded he undervalued 12% of the building (vacant retail space) and increased his value by 12% to $36,960,000, producing a final assessed value of $9,240,000.
- Cook County Board of Review (BOR) petitioned for review, arguing Murphy’s sales comparison relied on the income approach, the income approach/date/CAP were flawed, cost approach should have been used, appraisal errors undermined credibility, and BOR’s own (unrebutted) raw sales data was more persuasive.
- Appellate court applied Administrative Review Law deference to PTAB factual findings and affirmed PTAB’s decision as not against the manifest weight of the evidence.
Issues
| Issue | Plaintiff's Argument (BOR) | Defendant's Argument (401 North/Murphy) | Held |
|---|---|---|---|
| Validity of sales-comparison approach | Murphy’s sales analysis was not developed independently and lacked sound justification | Murphy testified the approaches were developed independently; sales set a value range cross-checking income approach | PTAB’s acceptance of Murphy’s sales comparison was supported; court will not reweigh credibility; affirmed |
| Income approach date and CAP rate | Murphy used Jan. 1, 2010 valuation date for a 2011 appeal and used an excessive CAP rate | Revenue stabilized by 2010; CAP rate (10.5%) fell within published luxury-hotel ranges and was justified | PTAB reasonably credited the income approach and CAP rate; court declines to disturb findings |
| Failure to develop cost approach | Murphy offered no credible reason to omit the cost approach for the subdivided portion | Cost approach is impractical for vertically subdivided hotels and is of limited use for income-producing properties | PTAB reasonably accepted reliance on income and sales approaches without a separate cost approach |
| Appraisal credibility and weight of BOR evidence | Typographical errors, zero value for vacant retail, and methodological flaws render Murphy’s appraisal unreliable; BOR’s raw sales better support higher value | PTAB found errors immaterial; PTAB adjusted Murphy’s value to credit the vacant retail; BOR presented no expert rebuttal and its notes were not an appraisal | PTAB’s credibility and weight determinations were not against the manifest weight of the evidence; appellate court affirms |
Key Cases Cited
- Cook County Board of Review v. Property Tax Appeal Board, 403 Ill. App. 3d 139 (Ill. App. 2010) (appellate court will not reweigh PTAB factual findings)
- Cook County Bd. of Review (Omni) v. Property Tax Appeal Board, 384 Ill. App. 3d 472 (Ill. App. 2008) (market/fair cash value is standard for tax valuation)
- Kendall County Board of Review v. Property Tax Appeal Board, 337 Ill. App. 3d 735 (Ill. App. 2003) (credibility determinations are within PTAB’s province)
- Ellsworth Grain Co. v. Illinois Property Tax Appeal Board, 172 Ill. App. 3d 552 (Ill. App. 1988) (sales-comparison analysis requires assessing similarities, dissimilarities, and sale circumstances)
- Nat’l City Bank of Michigan/Illinois v. Illinois Property Tax Appeal Board, 331 Ill. App. 3d 1038 (Ill. App. 2002) (taxpayer must prove property value by a preponderance of the evidence)