By: Rob Harris
Current and prospective members of Lake County, Illinois’ Onwentsia Club–site of the 1906 U.S. Open–need erasers as they attempt to budget for their club dues. As the seesaw moves up and down, the most recent news, from the Illinois Court of Appeals, does not bode well.
Prior to 2006, the Lake County tax assessor treated all property owned by a golf clubs as open space. Thus, clubs would be assessed at lower open space rates for the golf course, and also for the clubhouse, swimming pool, tennis courts, etc. Other land owners were not so fortunate, as the taxing authorities scrutinized the uses of their land, providing open space tax rates only to those portions of the property that truly were open space.
In 2006, golf courses lost their privileged tax status, with the taxing authorities assessing the improved portions of golf courses based on their fair market value as residential property. This change in assessment made quite a difference to Onwentsia, as a 3.85 acre tax parcel would be assessed at a $1000 per acre as open space (i.e., $3850) carried an assessment of $861,594 with its improvements.
Onwentsia took an appeal, and, at that time, the Court of Appeals agreed with the club. The court explained that the tax statute provided that “land is considered used for open space purposes if it is more than 10 acres in area and conserves landscaped areas such as public or private golf courses.” As the court noted,
“A golf course typically requires certain appurtenances in order to function, such as parking areas, a building in which to conduct the course business (i.e., a clubhouse), and perhaps a building to support the physical maintenance of the course.Without such improvements, many courses would not exist. Since they facilitate the existence of the golf course, and the course conserves landscaped areas, such improvements also can be said to conserve landscaped areas… As such, they do not prevent the land upon which they exist from attaining open-space status.”
Club members cheered, and, believing that it was following the wishes of the court, the taxing authority reversed its prior decision and decided that Onwentsia’s amenities, not just the golf course, should be treated as open space. “After again reviewing the record and considering the testimony in light of the directions given by the court …, the Property Tax Appeal Board finds the improvements on various parcels under appeal including the clubhouse, the swimming pool, tennis facilities, golf learning center, parking lots, caddy shack, maintenance buildings/sheds, driveways and the halfway house for the golf course all facilitate the existence of the golf course. The Board finds that each of these improvements facilitates the subject golf course being and remaining a golf course and providing green space in this urban area.”
Not so fast. With Onwentsia’s members breathing a sigh of relief that their taxes were not headed for the stratosphere, the Illinois Court of Appeals chastised the taxing authorities for getting it wrong, again. According to the court,“’conserve’” as it is used in the [tax] code …must be construed narrowly, and, in turn, there must be some substantial nexus between the land for which the exemption is claimed and the landscaped area it is claimed to conserve. That is to say, the improvement in question must directly relate to and thus facilitate the existence of the golf course.”
The court explained, “we perceive no nexus between the swimming pool, tennis facilities, and riding arena and stables and the golf course such that they could be said to facilitate its existence in any way. On the other hand, clearly, the halfway house and the caddy shack relate directly to and thus facilitate the existence of the golf course.”
So, with the dust settling, taxes will rise at Onwentsia, though the halfway house and the caddy shack will be treated as open space. And let’s not forget that Illinois has a Supreme Court, so there is a higher authority that may want a chance to put its weight on one end of the seesaw.