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’Tis the season for property owners to try and save some money on their taxes.
McLean County’s Board of Review is busy this week meeting with property owners who want to lower their assessed value. That’s the number that’s multiplied by the tax rate to determine how much someone owes in property taxes. Typical homeowner appeals cause only small fluctuations in the property tax base, but big changes for large commercial properties can cost taxing bodies tens of thousands of dollars. Schools are most reliant on property taxes.
There were 879 complaints filed by taxpayers in 2019, down about 2% from last year but slightly above the five-year average, according to Supervisor of Assessments Bob Kahman. Each is challenging what their township assessor has determined to be their assessed value, which is supposed to be one-third of their market value. (For example, a $200,000 home’s assessed value would be $66,666.)
To make their case for a lower assessed value, commercial property owners often reveal the state of their business or direction of the local economy.
Here are some examples from 2019’s appeals:
Owner: CBL Properties, Chattanooga, Tenn.
Assessed value: $13.3 million
Owner’s requested assessed value: $7.7 million
Taxes at stake: $1.1 million
The owners of Eastland Mall, one of the most valuable properties in McLean County, are asking for a significant reduction in its assessed value (around 42%). That could major implications for other property owners in the District 87 school district.
CBL Properties has already seen the mall’s assessed value plummet by 34% in the past decade. In its 2019 complaint, CBL said four of its five “anchor” stores have closed, leaving Kohl’s as the only one standing. “Technically, a one-anchor mall is not considered a regional mall,” CBL argued. (The mall has replaced some of that space with a new Planet Fitness and H&M store.)
CBL said all U.S. malls are suffering from the “Amazon effect” of e-commerce. CBL says base rents at Eastland Mall have declined 66%. Rent revenues have declined from $4.2 million down to $3.1 million. Around 59.4% of all square footage in the mall is now vacant.
CBL also disclosed that it tried to turn the former two-story Macy’s location, which it bought for $2 million in 2018, into student housing for an unspecified university. The plan would’ve resolved some of the university’s housing needs and brought life to the mall, CBL wrote. But ultimately “the University decided against the plan,” CBL said.
Spokesmen for both Illinois State and Illinois Wesleyan said they were not aware of any plans to build student housing at the mall. Bloomington Mayor Tari Renner was also not aware. CBL did not respond to a request for comment Monday.
The Macy’s building now “has no value and should be demolished. That is a problem because the costs of the demolition could be as much as $1 million,” CBL wrote.
CBL paid $1.1 million in property taxes for the 2018 tax year. If the tax rate was unchanged and CBL was granted its desired assessed value, its property tax bill would fall by $475,416. That includes $291,207 previously earmarked for District 87 schools.
“That amount would get spread out over the rest of us,” said District 87 Superintendent Barry Reilly. “They’re not paying their fair share.”
District 87 is opposing the reduction. Reilly said CBL does not appear to be investing in the property or doing much to attract new tenants. Instead, Reilly said, CBL keeps coming back to the taxing bodies “again and again and again” to lower the value.
“They’ve done very little to improve the footprint of that (mall). At some point we have to say enough is enough and we’re not going to take it anymore,” Reilly said. “If they’re not willing to invest, then let’s sell it to someone who will.”
In a report from the City of Bloomington Township, assessors noted that the Bloomington-Normal economy saw net in-migration and moderate population growth through 2010. But in 2014, State Farm began a regional expansion at hub locations in Atlanta, Phoenix, and Dallas that “has led to relocation of many employees to staff the new regional offices,” the assessor wrote. That’s contributed to a period of net outmigration over the last few years, they wrote.
However, the area’s economy remains relatively strong.
“Market demand for properties like this, though diminished from highs reached in the last decade, is projected to remain steady in the coming years,” the assessor wrote.
The mall’s appeal is set for a Board of Review hearing Dec. 4 at 11:30 a.m.
1802 Industrial Park Drive, Normal
Owner: Nord Enterprises Inc. (John R. Nord, Donna J. Nord), Bloomington
Assessed value: $1.3 million
Owner’s requested assessed value: $633,332
Taxes at stake: $111,075
This single-story, 190,000-square-foot manufacturing warehouse on Normal’s far west side was built in 1969. In its appeal, owner Nord Enterprises said over 50% of the space was vacant as of Jan. 1, 2019, and has been for years. Tenants include North American Van Lines.
The arrival of Rivian and Brandt in McLean County have “clouded the market for industrial properties,” Nord wrote. Both companies received tax incentives to move into the county.
“Overall, the local market is saturated with available industrial space. Much of the industrial market will remain vacant in hopes that both Rivian and Brandt continue to draw in additional jobs and support industries that will potentially occupy some of the industrial space left vacant by Mitsubishi’s exit,” Nord wrote. (Rivian bought the former Mitsubishi manufacturing plant.)
Nord also noted changes at State Farm, including the closure of its downtown Bloomington location.
“Major movements like this have degraded tenant confidence,” Nord wrote. “North American Van Lines is a long-term tenant in this property and has agreed to continue leasing space on a month-to-month basis in response to State Farm’s change in employment levels which is directly related to a large portion of their business which has been relocating people to central Illinois from other areas of the country.”
The assessor and Nord recently agreed to an assessed value of $766,666. If finalized, that would lower the property tax bill by around $42,000.
Colonial Plaza Shopping Center
Owner: BT Bloomington LLC (BET Investments, Dresher, Pa.)
1500 E. Empire St., Bloomington
Assessed value: $7.4 million
Owner’s requested assessed value: $6.1 million
Taxes at stake: $600,280
Colonial Plaza is located near Veterans Parkway and Empire Street, just north of Eastland Mall. Formerly home to stores like Kmart and Circuit City, the area has found new life with tenants including Dick’s Sporting Goods and Five Below, among others. Some of that redevelopment has been supported by a tax increment financing (TIF) district created in 2016.
In its complaint, the owner-developer said the property’s assessed value is too high in part because of increased vacancies in the plaza. The owner-developer’s chief financial officer said about 25% of available space was vacant through much of 2019.
In response, the assessor argued the revenue generated by the property had increased last year and that the current assessed value was still supported.
Colonial Plaza’s complaint is set for a Board of Review hearing Dec. 4 at 2:45 p.m.
Owner: TMI Hospitality, Fargo, N.D.
301 N. Greenbriar, Normal
Assessed value: $1 million
Owner’s requested assessed value: $796,012
Taxes at stake: $90,924
Many Bloomington-Normal hotels are struggling to compete in what many consider to be a saturated market.
In its complaint, the owners painted a bleak financial picture for the 78-room hotel. They said “every major financial statistic for this hotel is worsening for 2018,” and that was projected to continue in 2019. Room revenue was down 19.5% in 2018 from 2017, the owners said. They argued that the assessor’s market value (around $3 million) was about 22% too high.
The Board of Review’s hearing on the Courtyard was Nov. 20, but no decision has been made.
Turnberry Village Apartments
Owner: Bloomington Leased Housing Associates VI LLC (Dominium, Plymouth, Minn.)
901 Valley View Circle, Bloomington
Assessed value: $6.9 million
Owner’s requested assessed value: $3.1 million
Taxes at stake: $597,057
The new owners of Turnberry Village (now known as Traditions Bloomington Apartments) on the city’s far west side bought the property in 2018. After the sale, the City of Bloomington Township assessor raised the assessed value of the property from $3.1 million to around $6.9 million.
The owners filed a complaint, asking for the assessed value to remain around $3.1 million. Unit 5 school district and Heartland Community College filed to intervene in the case. They get some of the $271,236 in current taxes from the property, and they were in line to receive even more.
All sides reached an agreement Nov. 19, proposing an assessed value at $6.7 million. As a result, the owner’s Board of Review hearing set for Tuesday was canceled.
The township assessor did not respond to a request for comment.
Stadium Suites Apartments
Owner: J&J Brown Enterprises LLC, Bloomington (John Brown)
402 N. Main St., Normal
Assessed value: $1.4 million
Owner’s requested assessed value: $1 million
Taxes at stake: $110,094
In late 2017 and early 2018, taxing bodies (including Unit 5) ended a long-running dispute over property taxes by reaching an agreement with the owners of dozens of student apartment buildings, including First Site and Young America. Many claimed their assessed values were too high. The agreements lock in the assessed value on those properties through 2022.
In filing his 2019 complaint, Stadium Suites owner John Brown said he was seeking “equitable treatment” with the dozens of apartment owners included in those earlier agreements. He submitted data showing how the value-per-bed in his building, which opened in 2018, compared with those other properties. The requested change would have lowered his taxes around $32,913.
In response, Brown won only a modest reduction in his assessed value—down to $1.2 million.
Brown did not respond to a request for comment.
No assessed values are final until the Board of Review issues its final decisions at the end of the year. Appellants are then mailed a decision which is subject to appeal to the Property Tax Appeal Board within 30 days of the date of notice.