Filed 1/31/08              NO. 4-07-0405

                     IN THE APPELLATE COURT

                            OF ILLINOIS

                          FOURTH DISTRICT

BLOOMINGTON PUBLIC SCHOOLS, DISTRICT     )   Appeal from
NO. 87, McLean County, Illinois,         )   Illinois Property
          Petitioner-Appellant,          )   Tax Appeal Board
          v.                             )   No. 04-00644-C-3
THE ILLINOIS PROPERTY TAX APPEAL         )
BOARD, SEARS STORE No. 2840, and         )
THE McLEAN COUNTY BOARD OF REVIEW,       )
          Respondents-Appellees.         )
_________________________________________________________________

          JUSTICE McCULLOUGH delivered the opinion of the court:

          The petitioner, Bloomington Public Schools, District

No. 87, McLean County, Illinois (School District), appeals the

final administrative decision of the Property Tax Appeal Board of

the State of Illinois (PTAB).   In February 2005, the Board of

Review of McLean County found the 2004 assessed value for Sears

Store No. 2840 (Sears) was $1,980,262.     The respondent, Sears,

appealed that assessment to PTAB; and in April 2007, PTAB found

the assessed valuation was $1,265,400.

          The School District appeals, arguing that (1) PTAB

should have considered the sale of the mall in determining the

fair market value of Sear's property, (2) PTAB should have

considered the value of the land in determining the fair market

value of Sear's property, and (3) PTAB's decision to use the fair

market value found by Sear's appraiser is against the manifest

weight of the evidence.   We disagree and affirm.

          Because the parties are familiar with the evidence

presented at the June 2006 hearing, we present facts only to the
extent necessary to provide context for the issues.

          Evidence showed the Sears property is a one-story

retail store with an attached auto service center.    The building

is 117,234 square feet and sits on a 9.19-acre parcel.    The land

has been improved with a parking lot, sidewalks, lighting, and

landscaping.   The property has been leased to Sears since 1966 as

part of Eastland Mall.    In 1996, the lease was changed, allowing

Sears to upgrade and expand the property.    The 1996 lease runs

through 2011 with an option of three five-year extensions.    The

City of Bloomington township assessor assessed the property for

2004 at $1,980,262.   The Board of Review upheld that assessment.

In McLean County, the assessed value is one-third of the fair

cash value.    Fair cash value has the same meaning as fair market

value and is defined as "the price a willing buyer would pay a

willing seller for the subject property, there being no collusion

and neither party being under any compulsion."     Residential Real

Estate Co. v. Illinois Property Tax Appeal Board, 188 Ill. App.

3d 232, 242, 543 N.E.2d 1358, 1364 (1989).     Sears is responsible

for the property taxes.

          In April 2007, PTAB issued its written decision.    PTAB

concluded the best evidence of Sears' fair market value was the

appraisal submitted by Sears estimating the January 1, 2004, fair

market value at $3.8 million.   PTAB stated:

          "[PTAB] finds the appellant's appraiser pro-

          vided competent, professional, and logical

          testimony in support of his appraisal method-


                                - 2 -
          ology, the data used in the approaches to

          value, the adjustment process, and final

          value conclusion using two of three tradi-

          tional approaches to value.    In contrast,

          [PTAB] finds the [school district<s]

          appraisal prepared a sales-comparison ap-

          proach regarding only the subject's vacant

          land value within a limited[-]cost approach.

          The [school district<s] value conclusion was

          based on an alternative use based on a flawed

          highest and best use finding.    ***   [PTAB]

          finds the value conclusion detailed by

          [Sears] to be a persuasive indicator of the

          subject's fair market value.    Although some

          of the sales used were properties located

          outside of Illinois, the appraiser performed

          logical adjustments to the comparable anchor

          sales for differences to the subject in ar-

          riving at the final [fair market] value ***

          of $3,750,000.   The courts have stated that

          where there is credible evidence of compara-

          ble sales, these sales are to be given sig-

          nificant weight as evidence of market value."

PTAB reduced the assessed value established by the Board of

Review by $714,862.

          This appeal followed.


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           We review PTAB's decisions under the Administrative

Review Law.   735 ILCS 5/3-101 through 3-113 (West 2006).   The

scope of judicial review is limited to determining whether the

findings and orders of PTAB are contrary to the manifest weight

of the evidence, and it is not this court's function to reweigh

the evidence or assess the credibility of the witnesses.    Resi-

dential Real Estate Co., 188 Ill. App. 3d at 241, 543 N.E.2d at

1363.   We take the findings and conclusions of PTAB on questions

of fact to be prima facie true and correct.    Board of Education

of Gibson City-Melvin-Sibley Community Unit School District No. 5

v. Property Tax Appeal Board, 354 Ill. App. 3d 812, 816, 822

N.E.2d 550, 554 (2005) (hereinafter Gibson City).

           The Property Tax Code requires that the taxing author-

ity assess real-estate taxes at one-third the fair market value

of the subject property.   35 ILCS 200/9-145 (West 2004).   The

appraisals presented to PTAB focused on determining the fair

market value of the Sears property through three traditional

methods of valuation.    Sears' appraiser used the sales-comparison

and income approaches.   The School District's appraiser used the

sales-comparison, income, and cost approaches.

           The present case requires this court to first determine

whether PTAB erred in finding the sale of Eastland Mall was not

an arm's-length transaction prior to evaluating whether PTAB

should have given the sale of Eastland Mall weight in determining

the fair market value of the Sears property.




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            In deciding to give no weight to the sale of Eastland

Mall, PTAB concluded the sale was not an arm's-length transac-

tion.    The School District argued this finding of fact was in

error.    The transfer declaration states the beneficial owner of

the property before and after the sale was Eastland Mall, LLC,

with Eastland Member, LLC, being the sole member of Eastland

Mall, LLC.    Prior to the sale, Eastland Member, LLC, consisted of

17 members, including Eastland Holding I, LLC.    After the sale

there were two members of Eastland Member, LLC.    Eastland Holding

I, LLC, was the only member that remained before and after the

sale.    However, the membership within Eastland Holding I, LLC,

also changed during the sale.    Thus, the School District argued a

transfer of the beneficial ownership of Eastland Mall resulted.

The School District contended Sears had from December 29, 2005

(when the transfer declaration was submitted into evidence),

until the hearing on June 20, 2006, to explain the purchase price

as something other than an arm's-length transaction.    Sears did

not do so, and when Sears' witness was asked by PTAB whether he

believed the sale was an arm's-length transaction, he failed to

answer the question.    The Sears assessor stated in response that

the deal was made with leases in place as part of a three-mall

transaction.

            Mike Ireland, the township assessor for the City of

Bloomington, testified that he believed the sale was at arm's

length.    Under the Property Tax Code, assessment officers may use

the information on transfer declarations in properly assessing


                                - 5 -
property value.   35 ILCS 200/31-30 (West 2004).     Criminal penal-

ties attach for false statements on transfer declarations.        35

ILCS 200/31-50 (West 2004).   In this case, the transfer declara-

tion shows a $79,030,000 purchase price and an outstanding

mortgage of $59,400,000 for Eastland Mall's sale.      Finally, the

transfer declaration provides that the property was advertised

for sale and that $19,630 in taxes were paid on the sale.

           In its written decision, PTAB concluded the Eastland

Mall transaction was not an arm's-length sale for five reasons,

and the sale therefore did not provide evidentiary value in

establishing the correct assessment.      First, PTAB found the

transaction was an ownership restructuring, where beneficial

ownership might have been unchanged, rather than a market sale.

The transfer declaration shows the owner before and after the

sale was Eastland Member, LLC.    PTAB does not consider the change

of members within Eastland Member, LLC, sufficient evidence of

change in beneficial ownership.    Second, PTAB found the sale was

most likely a leased-fee transaction and not a fee-simple trans-

action.   Third, PTAB found no evidence explained how the

$79,030,000 sale price was allocated to Eastland Mall.      Fourth,

PTAB found the three-mall sale to be a highly complicated trans-

action like that in Town of Cunningham v. Property Tax Appeal

Board, 225 Ill. App. 3d 760, 587 N.E.2d 573 (1992), with little

consideration of fair market value.      Finally, PTAB found the

signatures on the second real estate transfer declaration indi-

cated one individual signed as both the buyer and the seller.


                                 - 6 -
           Sears argued that PTAB's conclusion from the evidence

that the sale of Eastland Mall was not an arm's-length transac-

tion, and therefore not indicative of the fair market value of

the property, was not against the manifest weight of the evi-

dence.   We agree.    PTAB's determination that the sale was not at

arm's length is a question of fact, which we consider prima facie

true and correct.     735 ILCS 5/3-110 (West 2004).   While Edward

Salisbury, Sears< appraiser, and Mike Ireland, the township

assessor, had different conclusions regarding whether the

Eastland Mall sale constituted an arm's-length transaction,

PTAB's job is to weigh the evidence and determine the credibility

of the witnesses.      Oregon Community Unit School District No. 220

v. Property Tax Appeal Board, 285 Ill. App. 3d 170, 175, 674

N.E.2d 129, 132, (1996).     As the record contains evidence to

support PTAB's factual finding, we will not disturb that finding.

Gibson City, 354 Ill. App. 3d at 816, 822 N.E.2d at 554.

           We return to the question of whether PTAB erred in its

decision not to give any weight to the sale of Eastland Mall.

The Illinois Supreme Court has held that a contemporaneous sale

of the subject property between parties dealing at arm's length

is relevant to the question of fair market value.      People ex rel.

Korzen v. Belt Ry. Co. of Chicago, 37 Ill. 2d 158, 161, 226

N.E.2d 265, 267 (1967).     "However, the sale price of property

does not necessarily establish its value without further informa-

tion on the relationship of the buyer and seller and other

circumstances."      Residential Real Estate, 188 Ill. App. 3d at


                                  - 7 -
242, 543 N.E.2d at 1364.     The record shows little evidence

regarding the sales contract and how the sales price was allo-

cated among the three malls sold.     Where sufficient evidence of

comparable sales was presented by both Salisbury for Sears and

the School District's appraiser, Brian Finch, PTAB properly

concluded that no weight should be given to the sale of Eastland

Mall in determining the fair market value of the Sears property.

          The School District next argued PTAB should have

considered the land value in determining the Sears property's

fair market value.    Finch prepared an appraisal based on both the

traditional income approach and the sales-comparison approach.

He used sales comparison to assess the property's value in two

ways, as compared with sales of anchor stores and as compared to

local sales of land.    Both the income approach and the comparable

sales of anchor stores produced fair market values similar to

those of Sears< appraisal.

          When the School District's appraisal valued the under-

lying land through comparable local sales, Finch found it to be

considerably higher than the income approach and comparable sales

of anchor stores.    In valuing the land, the School District's

appraiser compared seven local sales to the subject property.     He

opined the first comparable sale was the best evidence of the

subject property's value.     It was similar to the subject property

in that it was (1) similar in size, (2) located less than a mile

from the subject property, (3) located on a corner like the

subject property, (4) similarly exposed to Veteran's Parkway, and


                                 - 8 -
(5) sold approximately five months prior to the valuation date.

It sold for $13.96 per square foot.    Finch valued the land at $14

per square foot for a total fair market value of $5,604,000.

          Finch then used the cost method to appraise the value

of the improvements on the site.   He used a nationally recognized

cost service and determined the 38-year-old building was nearing

the end of its economic life of 50 years.   He applied a straight-

line rate of depreciation and found the improvements should be

valued at $485,585.   He added the depreciated value of the

building improvements to the estimated land value for a value of

$6.09 million.   Finch's report states, "While the cost approach

indicated a higher value, its dependence on mathematical calcula-

tion to some extent yields an unreliable result.   With overall

depreciation estimated at over 96%, common sense suggests the

improvements are essentially fully depreciated, given the prop-

erty age."   He concluded the market value for a typical buyer was

land value plus some minor value for site improvements for an

estimated fair market value of $5.7 million.

          The School District supports the argument that the

subject property is at least worth the value of the underlying

land pursuant to the Illinois Supreme Court holding in Spring-

field Marine Bank v. Property Tax Appeal Board, 44 Ill. 2d 428,

256 N.E.2d 334 (1970).   The School District contends that under

Springfield Marine Bank, a property-tax assessment should not be

reduced based on the income actually earned from the lease but

should be based on the earning capacity of the "'tract or lot of


                               - 9 -
real property.<"    Springfield Marine Bank, 44 Ill. 2d at 430, 256

N.E.2d at 336.

           PTAB looked to the highest-and-best-use concept to

decide which appraiser testified to the best evidence of the

subject's fair market value.    PTAB found the School District's

appraisal determined the highest and best use as vacant was for

retail development.    As improved, the highest and best use is not

as an anchor store.    PTAB found the report to be flawed regarding

the property's highest and best use.     Finch's appraisal applied

the four tests for highest and best use (physically possible,

legally permissible, financially feasible, most productive) only

as if the property were vacant.    PTAB found that Finch's ap-

praisal failed to fully analyze and perform the four tests.      PTAB

was unpersuaded that the building was near the end of its eco-

nomic life as it had been expanded and remodeled between 1997 and

1999.   PTAB found the property should be valued as an anchor

store for Eastland Mall under Illinois v. Illinois Central R.R.

Co., 27 Ill. 64 (1861) (property should be valued for the pur-

poses for which it was constructed and not for any other purpose

for which it might be used).    PTAB found Finch did not demon-

strate financial feasibility to redevelop the parcel; he took no

consideration of the cost to acquire the lease or reconfigure or

demolish the building.    PTAB found these costs must be accounted

for since any potential buyer of the parcel would heavily weigh

those factors.     PTAB, citing In re Rosewell, 120 Ill. App. 3d

369, 458 N.E.2d 121 (1983), found Finch's land values to be


                                - 10 -
speculative as neither Eastland Mall nor Sears had any future

plans to demolish or redevelop the property.   In Rosewell, 120

Ill. App. 3d at 375, 458 N.E.2d at 126, the court noted, "Values

which are future in character may not be taken into consideration

*** where they are so elusive and difficult of ascertainment that

they have not affected the present market value of the property."

PTAB concluded Finch's proposed highest and best use as vacant

land was not reasonable, probable, or proximate.   PTAB gave

little weight to Finch's assessment of fair market value.    PTAB

concluded because the School District's $5.7 million estimated

fair market value was less than the $5,946,733 township assess-

ment, both the School District and Sears' estimated fair market

value supported a reduction in the assessed valuation.

          Sears argues that PTAB's conclusion that the land-only

value of the property was not determinative of the fair market

value was not against the manifest weight of the evidence.     PTAB

could rely on Salisbury's testimony over that of Finch under

Gibson City, 354 Ill. App. 3d at 816, 822 N.E.2d at 554.    Salis-

bury testified that the land-only value was not determinative of

the highest and best use; that is, the analysis should consider

the potential uses of the property and its current use and not

the land value as vacant.   Sears argues Finch admitted his land-

value assessment relied on speculative future events which, under

Rosewell, should not affect the market value of the property.

          Sears argues the decision in Board of Review of Macon

County v. Property Tax Appeal Board, 295 Ill. App. 3d 242, 692


                              - 11 -
N.E.2d 417 (1998), supports PTAB's decision.     In that case, the

fair market value of the taxpayer's industrial complex was at

issue.   The Board of Review's appraiser valued each of three

office buildings separately as part of the highest-and-best-use

analysis, concluding the three buildings should be subdivided and

sold separately from the remainder of the property.      Board of

Review of Macon County, 295 Ill. App. 3d at 246, 692 N.E.2d at

420.   This court held that PTAB's decision rejecting those

conclusions was not against the manifest weight of the evidence

and was supported by competent evidence, where the Board of

Review's appraiser "did not give sufficient consideration to the

costs that would be incurred by separating these three buildings

for sale and the difficulty any buyer would have with filling

these buildings *** with tenants because of the size of these

buildings."    Board of Review of Macon County, 295 Ill. App. 3d at

248, 692 N.E.2d at 421-22.    Sears argues Finch acknowledged there

would be costs to demolishing or modifying the property that he

did not consider in his appraisal.      Finch admitted the mall owner

would be reluctant to demolish part of the existing mall and

develop it into something other than an anchor store.

            Sears argues the record contains evidence to support

PTAB's giving little weight to Finch's land-only value.     Four of

the seven land sales were well below Finch's $14-per-square-foot

estimate.    Sales six and seven were the most similar properties

because they were acquired by Eastland Mall, yet Finch gave them

the least weight.    Finch relied on properties with zoning and


                               - 12 -
size differences.    Finally, Sears argues Springfield Marine Bank

does not require PTAB to give more weight to the land value.     In

this case, the long-term lease is not a low rental income where

the rental value of the property has increased significantly.

Sears points out Springfield Marine Bank does not hold that a

flawed land-only valuation of an improved property is determina-

tive of the property's fair market value.

          In its reply brief, the School District states Finch

did not prepare a land-only appraisal or speculate as to future

uses of the property.   His appraisal began with the value of the

land as though vacant using the sales-comparison approach.     He

used all three traditional approaches to estimate fair market

value and found only the cost approach resulted in a fair market

value that would take into account the value of the land.

Because of the age of the building, Finch depreciated over 96% of

the cost of the improvements.    He used the ordinary and customary

technique to conclude the fair market value of the Sears property

was worth $5.7 million.   The School District argues that his

approach is supported by the Appraisal Institute and that Finch

reached a sensible conclusion using all three traditional ap-

proaches to value.

          The School District argues the Sears appraisal is

flawed because Salisbury intentionally left out the cost approach

to value and did not value the land.     Both Salisbury and Finch

reached similar results using the income and sales-comparison

approaches.   Finch continued by comparing those results to the


                                - 13 -
land value and found the land value far exceeded the results of

both the income and sales approaches while Salisbury was unaware

that his result could not be reconciled with the value of the

land based on sales comparisons or the cost approach.      The School

District argues PTAB's analysis of Finch's determination of land

value is not consistent with the facts set forth in the record.

Finch supplied comparable land sales and opined as to the value

of the land, and Salisbury did neither.      Finch reviewed seven

sales in close proximity to Sears.      He concluded the first

comparable sale was the best indicator of the subject property's

land value because it was near in time, similar in size, close in

distance, and similar in its location on a corner lot on Vet-

eran's Parkway.   The School District argues PTAB's preference for

comparable land sales six and seven is without basis in fact.

PTAB states these sales illustrate the owner of Eastland Mall

prefers to purchase lots adjacent to the mall for less than other

parcels located along Veteran's Parkway.      The School District

argues the value is based on what any willing buyer would pay any

willing seller for the land, not what Eastland Mall prefers to

purchase.   In sales comparison number one, there is a willing

buyer and willing seller.    PTAB also preferred comparable sales

five, six, and seven because their zoning is similar to the

subject property.   The School District argues no evidence on

record showed Sears' zoning is better or worse than the zoning

for comparable sale one.    Finch stated in his report that the

zoning for land sale numbers six and seven is more restrictive


                               - 14 -
than for the subject property and that land sale numbers five,

six, and seven are inferior because they are not located on

Veteran's Parkway and are considerably smaller in size.

            We find while PTAB did misconstrue both Finch's report

and his testimony, PTAB's decision is sound.   It is appropriate

for PTAB to give little weight to the comparable sales of land.

Sears does not own the building or the 9.19-acre parcel; thus,

the most weight should be given to the income approach.   The rent

paid by Sears to Eastland Mall, while it is less than the rent

paid by smaller stores within the mall, is comparable to rents

paid by other anchor stores and is not below market-rate rents as

was the case in Springfield Marine Bank.    Both Salisbury and

Finch arrive at values based on the income approach that support

a reduction in the subject property's assessed value.   Finch

finds the fair market value of Sears to be a maximum of

$4,494,438, and Salisbury finds the fair market value to be $3.8

million.

            The School District argues PTAB's decision is against

the manifest weight of the evidence and the Board of Review's

opinion of value is supported by the evidence and should be

affirmed.   This case presents five opinions of the Sears prop-

erty's fair market value, four supporting the Board of Review's

assessment and Sears' approach, which does not.   PTAB chose to

follow Sears' appraisal, which left out a land valuation and a

cost approach, resulting in an appraisal almost $2 million less

than the land value, nearly $9 million less than the mortgage


                               - 15 -
debt allocated to the subject property, and over $13 million less

than the purchase price of Eastland Mall allocated to the subject

property.    The fair market value reached through the income

approach was based on discounted anchor store rents and on

Springfield Marine Bank holding an owner still has to pay tax on

the earning capacity of the property.    Sears' comparable-sales

approach was based on sales of anchor stores either vacant and/or

in bankruptcy.    Sears' appraisal did not make adjustments for the

fact the subject property is in an excellent location with

virtually no vacancy in the area.

            Sears argues PTAB's decision was not against the

manifest weight of the evidence.    Under Winnebago County Board of

Review v. Property Tax Appeal Board, 313 Ill. App. 3d 179, 184,

728 N.E.2d 1256, 1260 (2000), reduced fair market value "within

the range of experts' valuation figures for the properties the

PTAB deemed most suitable for comparison" is not against the

manifest weight of the evidence.    This court found it appropriate

in Board of Review of Macon County for PTAB to determine which

expert appraiser's approach to value was most persuasive and to

rely on that.    Board of Review of Macon County, 295 Ill. App. 3d

at 247, 692 N.E.2d at 421.    This court also found PTAB's decision

as to the fair market value of the property was supported by the

taxpayer's expert appraiser's sales-comparison approach to value

and was not against the manifest weight of the evidence.       Board

of Review of Macon County, 295 Ill. App. 3d at 248, 692 N.E.2d at

421.


                               - 16 -
          PTAB's findings are supported by substantial competent

evidence, and its decision is not against the manifest weight of

the evidence.

          For the reasons stated, we affirm the Property Tax

Appeal Board's judgment.

          Affirmed.

          MYERSCOUGH and TURNER, JJ., concur.




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