Berrios' assessor's office gives tax break to firm's lobbying client
Tobacco giant Altria won a lucrative property tax break last year on a Franklin Park factory from the office of Cook County Assessor Joseph Berrios, who also is the co-owner of a lobbying firm that counts Altria among its clients.
In September, Berrios' office slashed the real estate assessment on a 500,000-square-foot chewing tobacco warehouse and manufacturing facility owned by the U.S. Smokeless Tobacco Company, part of the Altria Group which is best known for its Philip Morris brand.
The action shaved about $370,000 off the factory's 2017 property tax bill. And the value of the break could be worth hundreds of thousands of dollars more. Records show the warehouse was under contract to sell for double the value that Berrios' office assigned, despite the legal requirement that the standard for such determination is 100 percent of fair market value.
The Berrios lobbying firm, B-P Consultants, has represented Altria and its subsidiaries in Springfield since 2009, state lobbyist records show.
Berrios said he "wasn't involved" in the Altria tax appeal. At the same time, Berrios said he believed the assessment reduction granted to Altria was justified.
"I stand by the decision," Berrios said.
He declined to discuss his lobbying business because "that is not political."
In addition to his $125,000-a-year public job and the private lobbying business, Berrios also chairs the Cook County Democratic Party. He is seeking a third term and faces a challenge in the March 20 Democratic primary from Frederick "Fritz" Kaegi, a former investment fund manager from Oak Park.
The Altria tax break raises questions about yet a third hat worn by Berrios -- his ownership interest in B-P Consultants -- and how the firm represents the interests of a client that separately sought tax relief through the assessor's office run by Berrios.
For years, Altria's U.S. Smokeless subsidiary had used its Franklin Park facility to manufacture popular Skoal and Copenhagen brands of chewing tobacco. But in 2016, the company announced plans to lay off the factory's 246 employees and move operations out of state.
Last summer, it asked Berrios' office to lower the factory's assessed value on the grounds that the building was, on average, 45 percent vacant for the year. The assessor's office responded by lowering its estimate of the value of the property to $8.1 million from the original value of about $12.3 million. That translated into a reduction in the 2017 tax bill to about $725,000 from just under $1.1 million.
As the appeal was being weighed, U.S. Smokeless had already signed a contract to sell the property for $16 million -- double the value placed on it by the assessor. If Berrios' office had valued the property close to the actual sales price, Altria's tax bill would have increased to as high as $1.4 million.
The $16 million sale closed just days after the assessor's office signed off on the break.
Unlike with the income or sales tax, a break granted to one property taxpayer does not translate into a loss of revenue for local taxing bodies. Instead, other property taxpayers have to make up the difference.
Records show Altria gained the break from Berrios' office even as the assessor held a 49 percent interest in B-P.
Berrios is not personally registered to lobby, but his partner in B-P, former state Rep. Sam Panayotovich, is.
Both share in earnings from B-P, which, in addition to Altria, has as clients cable giant Comcast and trade associations for makers and operators of gambling machines, bars, package liquor stores and bowling alleys.
Berrios and Altria would not say how much B-P has been paid to lobby on behalf of the tobacco firm. The Cook County ethics ordinance does not bar Berrios from outside employment, but it does prohibit him and other elected officials from making decisions on matters in which they have an economic interest.
Tom Shaer, a spokesman for the assessor's office, said the Altria assessment break was justified and unconnected to the tobacco firm's lobbying contract with B-P. All assessment appeals are decided "solely on merit," Shaer said.
That was echoed by Altria spokesman Steven Callahan.
"It is our understanding that property tax assessments do not always correlate to the market value of a property," Callahan said.
Under Illinois law, commercial properties are supposed to be valued by a county assessor at fair cash value -- an estimate of what a willing buyer would pay a willing seller. It is not unusual for county assessors to provide assessment relief based on vacancy in hardship cases where problems outside the owner's control make it difficult to keep tenants and earn revenue. Examples include economic downturn, fire or flood damage.
The building was not a rental property but one used by the owner to make its own products. And the vacancy resulted solely from a decision by U.S. Smokeless to relocate.
In weighing any assessment appeal, Berrios' office requires it be notified of any property sale by an owner. But there is no indication contained in the appeal file for the Franklin Park property that Altria informed the assessor a $16 million sales contract had already been signed.
The buyer of the property was a partnership between Panattoni Development Company, a leading industrial real estate firm based in Newport Beach, Calif., and the California teachers pension fund. The new owners plan to tear down the tobacco factory and replace it with an industrial facility that would employ 60 to 150 workers, according to documents filed by the developer with Franklin Park.
Altria spokesman Callahan defended the tax relief his company obtained from Berrios' office.
"Common tax practice recognizes that a manufacturing facility that is limiting operations is eligible for a lower assessment for property tax purposes than a full utilized factory," Callahan said via email.
Shaer, the Berrios spokesman, said court decisions prohibit the assessor from using the sale price of a property as the sole determinant of its worth for tax purposes.
"We cannot and do not assess a property solely on its sales price," said Shaer.
Shaer said Berrios did not review or discuss the Altria tax matter with anyone. Callahan underscored that point, saying no one representing Altria contacted Berrios to discuss the tax appeal.
Since 2010, Altria has donated $1.3 million to Illinois politicians, though it made no contributions to political funds controlled by Berrios. The company, however, did donate $12,000 to Berrios' daughter, Toni, a Democratic member of the Illinois House from Chicago through 2014.
• Chuck Neubauer and Sandy Bergo write for the Better Government Association.