As the owner of a law firm that seeks to reduce property taxes for big business clients including companies that work for City Hall, it’s important for Chicago Ald. Edward M. Burke to have a good working relationship with the Cook County state’s attorney’s office.
When Kim Foxx was running for state’s attorney, Burke hosted a fund-raiser at his home in the Southwest Side’s 14th Ward to help elect her.
At the time, the alderman’s law firm was battling the state’s attorney’s office, seeking millions of dollars in property-tax refunds for clients including Donald Trump and AT&T Corp., which has a $125 million contract to provide telecommunications services to various city agencies.
A few weeks after the fund-raising party, Foxx easily won election as state’s attorney, taking office on Dec. 1, 2016.
In August, nine months after she took office, her staff struck a deal with Burke’s firm: It settled three lawsuits, agreeing that various local governments Foxx’s office was representing would refund nearly $2 million in property taxes that AT&T had paid between 2013 and 2015 on a 105-acre campus in Hoffman Estates that now sits vacant.
That is the biggest tax settlement that Foxx’s staff has approved during her first 11 months as state’s attorney, according to a Chicago Sun-Times review of data released by her office in response to a public records request.
It’s a fraction of the $16 million in refunds that Burke was seeking when he filed those lawsuits, asserting that Cook County Assessor Joseph Berrios and the Cook County Board of Review had overestimated the value of the AT&T campus for three years.
Slightly more than half of AT&T’s refund will be borne by Barrington School District 220, which will be docked $1.1 million from its upcoming property-tax collection. The rest of the money will come from the village of Hoffman Estates, Cook County and other taxing bodies.
Beside holding the fund-raiser for Foxx, Burke also contributed $10,000 to her campaign, records show.
Foxx had no direct role in settling the lawsuits filed against the county by her political patron, her spokeswoman Tandra Simonton says.
Just how her staff decides to settle cases, Foxx’s office won’t say. Nor would it answer questions about how it decides how much money should be refunded to taxpayers in such cases, which generally involve commercial property owners often represented by clout-heavy lawyers including Burke, Illinois House Speaker Michael J. Madigan and former Cook County Assessor Thomas Tully, all of them Democrats who supported Foxx’s successful campaign.
“The state’s attorney’s office reviews each tax appeal on a case-by-case basis and seeks the most appropriate solution,” Simonton says. “State’s Attorney Foxx is not involved in the handling of any of these cases.”
Neither AT&T nor Burke responded to questions on the settlement — including why the company accepted millions of dollars less than it was seeking and how much of the money Burke was paid in fees. In Cook County, property-tax attorneys often receive as much as a third of the tax savings. In financial disclosures Burke has filed with City Hall, he has reported only that AT&T pays him more than $25,000 a year.
The alderman’s law firm, Klafter & Burke, has filed dozens of appeals in Cook County circuit court and with the Illinois Property Tax Appeals Board, seeking tax refunds for clients that include Trump’s companies. Burke has six pending cases seeking tax refunds for Trump Tower’s hotel, restaurant and empty storefronts. Foxx’s staff is contesting those cases on behalf of the city and other local governments.
As state’s attorney, Foxx’s prime duty is prosecuting criminals. But her office also represents Cook County government officials who oversee the property-tax system, determining the value of each property and how much land owners must pay in taxes, as well as collecting the money and distributing it to schools, cities and other local governments. The state’s attorney’s actions can retroactively cut property assessments, resulting in tax refunds years after the taxes were paid.
It’s a complicated system. And it all starts with Berrios, who in addition to being the county assessor also is chairman of the Cook County Democratic Party. He sets the value of each property — a critical calculation that’s used to determine each landowner’s tax burden.
Property owners often challenge his assessments, hiring lawyers such as Burke to try to persuade Berrios that his staff overvalued their land. Getting a reduced assessment would reduce their share of taxes — and force other property owners to pay more.
Those unhappy with Berrios’ decisions can appeal to the Board of Review — three elected officials, two Democrats and one Republican, who have the power to lower the assessor’s assessments before tax bills are mailed out.
Once the taxes are paid, property owners can still fight by appealing to the state property tax appeals board or filing suit against the county, arguing that their property assessments were too high — and, as a result, so were the taxes they paid.
When taxpayers do that, it’s Foxx’s office that represents taxpayers and government agencies that received and spent the taxes. Those local governments have the authority to join in the appeals. But the state’s attorney has the sole authority to settle cases, and most governments rely on the office to oppose the taxes getting cut.
Even when land owners sue, their appeals rarely end up going to trial, according to data the Sun-Times obtained from the state’s attorney for all cases that were settled from the time Foxx took office on Dec. 1, 2016, through Nov. 7. During that time, only two cases went to trial — one involving a strip mall in Ravenswood on the city’s North Side and the other a Burger King in Alsip. Those cases resulted in refunds totaling about $12,134.
A review of the state’s attorney’s data shows:
• 5,208 property-tax appeals were settled during Foxx’s first 11 months, resulting in refunds totaling more than $79.5 million, not counting interest. Those refunds cost local governments across the county, none more than the Chicago Public Schools, which had to refund more than $12 million.
• 21,004 cases were listed as “pending,” some dating to 2000. But the Sun-Times found that many of those cases actually were settled years before Foxx took office. Her office blamed the inaccurate data on “the human nature of manual data entry,” explaining that some of the cases listed as pending “are, in fact, closed in the courts.”
• 147 appeals were dismissed under Foxx, including cases going back as far as 2005.
The Sun-Times asked to examine 22 cases settled by Foxx’s staff, including several cases involving Burke clients. The state’s attorney provided information on 21 of those cases, saying it couldn’t locate any files on a $77,938 settlement reached Nov. 23 with Burke client Transwestern on its building at 1 N. State St.
Here’s a look at some other tax lawsuits Foxx has settled:
• The Chicago Cubs won a $99,852 refund on May 17. That was about 6.5 percent of the $854,508 sought by Tully’s law firm. Berrios and the Board of Review decided that Wrigley Field was worth about $32.2 million for the 2014 tax year. The Cubs argued it was worth less than half that — $14.4 million. Under a deal with Foxx’s office, the ballpark’s value was set at $30 million, triggering a refund of its 2014 taxes of $1.5 million. The state’s attorney provided no paperwork to show how that value was calculated.
• The American College of Surgeons got a $524,856 refund on April 25 because tax attorney Thomas McNulty says he was able to show the tax-exempt college had begun occupying more space at its building at 633 N. St. Clair. The state’s attorney agreed to cut the assessed value for the 2012 tax year, when the college paid nearly $2.7 million in taxes — a bill that ended up being cut to slightly more than $2.1 million.
• The owners of a skyscraper at 225 W. Wacker wound up with a refund of $100,365 on May 18 after Madigan’s law firm and the state’s attorney agreed the building was worth $97.9 million — about $2.1 million less than Berrios and the Board of Review had said. Madigan had been trying to get the building’s value cut by $13.5 million, which would have resulted in a $613,827 refund from its 2012 tax bill of $4.5 million.
Burke, widely regarded as the city’s most powerful alderman, has been working for years to seek property-tax cuts for AT&T, whose current contract with the city began in 2009. Since 2014, Burke has filed three suits for AT&T seeking $4.5 million in refunds on the telecom’s skyscraper at 225 W. Randolph and three others seeking $16 million in refunds on the Hoffman Estates campus.
City Hall stood to lose if AT&T got refunds on the downtown skyscraper. So Mayor Rahm Emanuel’s law department got involved in the case, which prompted Burke to step aside rather than directly fight City Hall. He handed over the lawsuits to the law firm of Deutsch Levy & Engel.
Foxx’s staff obtained its own appraisal on AT&T’s skyscraper, which prompted the company’s lawyers to settle on Oct. 5 by agreeing to slightly lower the value of the building. That brought AT&T refunds totaling $343,390 from the $13.7 million in taxes it paid on the building for the 2013, 2014 and 2015 tax years. Half of the money will come from Chicago’s school system.
Though Burke walked away from the tax-refund cases for AT&T’s downtown skyscraper, he continued to represent the city contractor in seeking tax refunds on the Hoffman Estates campus, which the company slowly abandoned over the past few years.
For three years, Burke tried to convince Berrios and the Board of Review to slash the property’s value. Each time, he failed — and ended up filing suit, arguing that county officials were failing to properly assess the property, resulting in higher taxes.
The assessor argued that the property was worth $140 million. Burke’s firm produced an appraisal saying the site was worth $50 million. And the state’s attorney’s office got an appraisal last year valuing the property at $124 million.
The dispute ended last Aug. 25, when Foxx’s staff negotiated a settlement with Burke’s firm: AT&T would get nearly $2 million in refunds, plus $72,663 in interest.
The settlement came as a shock to Barrington Schools Supt. Brian Harris, who says his district will bear the biggest brunt of the refunds to AT&T by tapping in to its rainy-day fund.
“We weren’t even made aware of this until the fall, after the case was settled,” Harris says. “They have no legal obligation to notify us.”
The suburban district considered challenging the refund, Harris says, but decided against it because it was just a fraction of the $16 million Burke wanted — which would have been a much harder hit for the school system to absorb.
“We accepted the state’s attorney’s settlement,” Harris says. “This AT&T process brought this to our attention. And we have our attorneys watching it so we won’t be involved in a $1.1 million hit again.”
Contributing: Jacqueline Campbell