The Illinois Appellate Court recently allowed Illinois Valley Community College District No. 513 and several county governments to proceed with a complaint challenging the administration of a property tax abatement. At issue was whether the challenge to the abatement could be brought as an equitable action or whether a tax objection complaint had to be filed under the Property Tax Code. The Court found that the Property Tax Code did not provide a remedy for taxing districts seeking to challenge the administration of a property tax abatement, but it allowed the complaint to proceed finding that the trial court had equitable jurisdiction over the issue. The case sheds light on how to address a problem we are seeing with some frequency—the erroneous abatement of property taxes.

In Board of Trustees of Illinois Valley Community College District No. 513 v. Putnam County, the Community College District and several counties jointly challenged a property tax abatement administered by Putnam County. Specifically, they alleged that the County improperly over-abated property taxes on an ethanol facility from 2009 to 2011. The complaint sought a writ of mandamus ordering the County Treasurer to stop abating taxes on the property and to recalculate and reissue tax bills on the property for 2009 through 2011.

In 2006, the Community College District adopted a resolution stating that it would abate property taxes on any newly constructed improvements or completed renovations to existing improvements in the Bureau/Putnam Area Enterprise Zone. However, the resolution stated that no tax abatements would be provided for improvements constructed prior to July 1, 2007. Construction of a new ethanol facility in the Enterprise Zone began in September 2006 and was completed in April 2008. The County abated taxes on the facility from 2009 through 2011. The Community College District complained to the County that these improvements to the property were not entitled to abatement under its resolution. After the lawsuit was filed, the County argued that the complaint was improper because it was not filed as a tax objection complaint under the Property Tax Code. The trial court denied the County’s motion to dismiss, but allowed the County to appeal its ruling immediately.

On appeal the Court examined the Property Tax Code and found that the purpose of the tax objection procedure is “to protect the rights of the taxpayer while also ensuring that the functioning of government is not impaired by protracted delays in the collection of taxes necessary for the operation of governmental units.” The Court went on to say that while there may be some limited remedies available through a tax objection complaint proceeding for those who believe another’s property is under-assessed, the tax objection complaint procedures in the Property Tax Code do not provide a mechanism to increase the taxes paid on another’s property. Because the Community College District could not obtain the relief it sought through a tax objection complaint, the Court allowed it to pursue its claim on equitable grounds.

Before approving a property tax abatements, taxing bodies need to fully appreciate what they are agreeing to and make sure there are protections in place should the abatement unfold in unexpected ways. This case provides direction on how school districts and other units of local government can pursue a recovery of lost revenue when the abatement is not properly administered by County officials.