Appellate court ruling on Scott housing could mean millions in tax revenue for county

News-DemocratFebruary 26, 2014 

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A sign welcomes visitors through the Belleville Gate entrance at Scott Air Force Base.

SSGT CHAD R. GANN, USAF — Chad R. Gann, USAF

St. Clair County leaders won an appellate court fight for millions of dollars in taxes from a private housing company, although the legal fight may continue on to the state's Supreme Court.

Hunt Development Group in El Paso, Texas, has been fighting a state law amended in 2012 that would allow local taxation of private operated housing on Scott Air Force Base. The company believes the law violates the U.S. and Illinois constitutions.

The law added more than 1,200 of Hunt Development's homes worth about $64.4 million to the county tax rolls. Consequently, the company's annual tax bill increased by about $1.3 million, and Hunt Development may face paying backtaxes from 2006 to present.

Representatives with Hunt Development could not be reached for comment.

Much is at stake for local taxing bodies, including Mascoutah School District 19.

If the ruling stands, the school district will collect annually about $930,000 in taxes from Hunt Development. If the Supreme Court finds the law unconstitutional, the district may be forced to repay nearly $5 million in collected taxes from the company.

Mascoutah School District Superintendent Craig Fiegel said the fight was really between the housing company and St. Clair County, and he anticipated it continuing on to the Supreme Court.

Fiegel said school officials will not be budgeting for the increased tax revenue until the lawsuit concludes.

The legal dispute began in 2008 when the St. Clair County Board of Review rejected Hunt Development's claim that the property at Scott Air Force Base should be exempt from taxation.

Hunt successfully appealed the matter to an administrative law judge at the Illinois Department of Revenue in 2010, but a judge in St. Clair County Circuit Court later reversed the appeal.

Now, two of three judges at the 5th District Appellate Court in Mount Vernon have upheld the latest decision in St. Clair County Circuit Court.

The appellate judges, Melissa Chapman and Richard Goldenhersh, ruled the disputed state law passed in 2012 "control our decision."

"Where ... the legislature has expressly indicated that a statutory amendment applies retroactively, that legislative intent must be given effect absent a constitutional prohibition," Chapman wrote in the court's opinion.

The state law explicitly states it is applicable retroactively to agreements issued on or after Jan. 1, 2006 -- the same date Hunt Development agreed to a lease and deed with Scott Air Force Base. The lease was for 50 years and the deed noted future tax bills will be sent to Hunt Development, according to court documents.

Judge Thomas Welch disagreed with the two other judges, finding the state's property tax code violates the state's constitutional ban on personal property taxes.

"Our legislature cannot, constitutionally, simply 'rename' or 'reclassify' a license, which is personal property, as a leasehold, which is real property, and then tax it as real property," Welch states in his dissenting opinion. "To do so subverts our constitution's express prohibition against taxes on personal property."

Contact reporter Daniel Kelley at dkelley@bnd.com or 618-239-2501.

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