Last year, after an extended and highly public battle that included mass protests by supporters of Community Unit District 300, Sears Holdings Corp. won state approval of millions of dollars in tax breaks for its Hoffman Estates headquarters.
Much more quietly, Sears in recent years also has won millions in property tax breaks through the complex, multilayered Cook County property assessment appeals system.
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A review of county records shows Sears has filed appeals challenging the value of its headquarters, located at 3333 W. Beverly Road, with both the Cook County Assessor's Office -- the first level of the appeal process -- and the Cook County Board of Review -- the next level of the appeal process -- for at least the last six consecutive years.
Sears also has gone a step further, to Cook County circuit court, in some years to challenge the decision by the board of review.
Sears spokeswoman Kimberly Freely said the company could not comment on the appeals because there is pending litigation surrounding them.
A Daily Herald analysis of Sears' property tax appeal records gathered through a Freedom of Information Act request revealed that in some years the offices granted a few million dollars in reductions for the company.
But in each of the last three years the assessment reductions have reached upward of $32 million dollars, saving Sears about $5 million on its annual property tax bill.
The most recent case
In 2011, the most recent year of Sears' appeals, the initial assessed value set by the assessor's office for the nearly 200-acre, 2.4 million-square-foot Sears headquarters campus was $84.6 million.
Sears submitted, as they had in years past, an appeal prepared by Neal, Gerber & Eisenberg law firm that included an appraisal by LaSalle Appraisal Group Inc. The appraisal, which was done in 2010, stated that the building's fair market value should be $120 million. As the assessed value is supposed to be 25 percent of the fair market value, Sears was asking for an assessment of $30 million, only a little more than a third of the originally assigned value.
After review of the appeal, the assessor's office cut the value to $52.3 million. That amounted to a 38 percent decrease from the initial value, or a $32.4 million reduction.
Thomas Jaconetty, the assessor's deputy of valuations and appeals, was the final person in the assessor's office to sign off on the reductions. He said the initial number set by the office, which is generated with the help of computerized systems, isn't necessarily correct.
"It's not about where you started from, it's where you ended," he said, adding that while some research goes into determining initial assessed values, final values are more accurate because owners submit more research in appeals -- which can easily amount to hundreds of pages -- than the office is capable of doing.
"Evidence means something and appraisals mean something," Jaconetty said. "We have to be willing to change a number based upon the evidence and willing to say no when the evidence doesn't support it."
The lawyers for Sears, he added, put together a "very comprehensive" appeal.
"Sometimes appeals fail because the quality of the presentation is not up to par," he said.
Despite the massive drop in value by the assessor's office, the amount was still $22.2 million higher than what Sears wanted. The Sears legal team then took the next step and filed an appeal to the board of review. It agreed with the assessor's decision and left the value where it was.
That was not the case for the two years prior, however, as the board of review was taking its turn in granting huge reductions after the assessor's office refused to grant significant reductions.
The assessor's office in 2009 trimmed about $3 million from the initial value, which brought it down to $89.2 million, nowhere close to Sears' request for the value to be lowered to $55.8 million. Sears' legal team then appealed to the three-member elected board of review, which included at that time commissioners Brendan Houlihan, Larry Rogers and Joseph Berrios.
The staffs of two of the three commissioners must agree on a value before it is approved. The board ultimately decided to drop the assessed value by about 35 percent, to $57.6 million. That was only $1.8 million higher than what Sears had requested.
A similar situation occurred in 2010.
The initial assessed value was set at $85.2 million and this time, the assessor declined to grant any reduction. But again, the board of review awarded a big cut, slashing the assessor's final value by about 36 percent, to $54 million.
The big picture
Joseph Berrios left the board of review and assumed the elected position of Cook County assessor in December 2010. According to current employees in both offices, Berrios took many of his key staffers, including Jaconetty, with him when he moved to the assessor's office.
When Berrios and his staff moved, the appeal level at which the reductions were granted moved with him. Berrios was not available for comment.
Mark Kos, the FOIA officer for the assessor's office, said the difference between the assessor's final numbers each year and the board of review's are just a matter of people having varying opinions of what the value should be.
"Both sides are relying on the same criteria," he said. "But two different people, two different points of view, two different opinions and it's not unrealistic for two parties looking at the same thing to come away with two different numbers here, two different opinions as to what they think something is worth."
Jaconetty noted that it is not unusual for the owners of major commercial properties to file appeals every year. He also said that hundreds of appeals from big properties like Sears regularly end up in Cook County circuit court, which is the l ast step for taxpayers who feel -- despite a review by the assessor and board of review -- that their property's value still is wrong. As recently as April 2012, Sears filed a tax objection in circuit court for tax year 2010. And court appeals challenging values for some prior years are still undecided, according to the Cook County Clerk of the Circuit Court's website.
The problem with commercial property owners taking their appeals to court, Jaconetty said, is that if the court does decide the assessor and board of review were wrong and grants the petitioner their request, it will hurt taxing bodies even more, as they will have to issue refunds with interest.
According to the Cook County Treasurer's Office website, the 2011 tax bill for Sears headquarters was $12.3 million. If no reductions had been granted, the headquarters tax bill would have been about $8.1 million higher. On the other hand, if the value of the property had been lowered to Sears' request of $30 million, the tax bill would have been about $5.1 million less.
Jaconetty said the offices try to be very careful in making sure the numbers are correct, adding, "There's a human element to this."