ASSESSMENT APPEAL CASE HISTORY THEATER

Facts

The owners of a long established legitimate theater in the Chicago suburbs had been trying without success for 15 years to reduce the real estate taxes on their property. The owners retained Allen A Lefkovitz & Associates, P.C., to explore approaches to reducing the assessment. Our initial review revealed that the property was assessed based on the cost approach to value.

Issues

1. Whether we could extract the value of the real estate from the value of the total business assets.
2. How the income approach to property valuation should be modified when a substantial portion of the income is attributable to non-real estate sources of income.

Proceedings

1. We filed an assessment appeal with the DuPage County Board of Review based on our analysis of the theater's income stream.
2. We allocated the income stream between the legitimate theater, the restaurant and bar, the meeting/banquet rooms and the real estate.
3. We met and discussed our approach with the township assessor who, after carefully reviewing the economics and our analysis, agreed to a substantial reduction in the assessment.

Resolution

As a result of our negotiations with the township assessor, he recommended that the 2003 real estate assessment be reduced from $3,684,000 to $3,345,000 and that the 2004 real estate assessment be reduced from $3,683,000 to $3,200,000. This resulted in a substantial tax savings to the client.