Photography: Dennis Rodkin
There’s a struggle going on in Lake County over the property tax rates that private country clubs are charged. Depending on how it resolves, homeowners in Lake County—not just in its affluent lakeshore towns, but in middle-class places like Mundelein and Gurnee—may end up having to pick up the slack, to the tune of about $2 million a year tacked onto their property tax bills.
The tension dates back to 2006, when Lake County Assessor Martin Paulson changed the way country clubs’ property would be assessed. Buildings on clubs’ land, he announced, would be assessed at their market value. Until then, buildings had been assessed, like golf course land and other unbuilt land the clubs own, as open space, at a far lower tax rate.
The dollar difference is difficult to spell out in a simple way, but “the open space rate is very preferential,” Paulson says. He says that a typical 150-acre private club has between about two and seven acres that his plan would tax at market rate.
The issue has volleyed back and forth like a tennis ball since. The Illinois Property Tax Appeal Board initially sided with Paulson but later swung all the way in the opposite direction, deciding in 2012 that all of a club’s property—buildings like stables and cabanas, as well as golf greens and the landscaped margins—contribute to the overall mission of open space. In late March, an Illinois appellate court told the Tax Appeal Board to think again. Donald Hudson, 2nd District Appellate Judge, wrote that the board’s position would “create an enormous tax shelter whereby any parcel of property associated with a golf course would escape taxation.”
Paulson believes that giving private clubs a tax exemption amounts to giving them an unfair business advantage: “They compete with other businesses—for instance restaurants and catering facilities—so there’s a bit of a fairness question here,” he says. “If they can essentially not pay taxes on their buildings but these other properties in the private sector have to, that doesn’t seem fair to me.” At the same time, country clubs compete with publicly owned golf courses, which are tax exempt.
Whether country clubs should pay more or less property tax may not seem like a burning issue. But the taxing bodies—towns, school districts, library districts—whose boundaries contain country clubs would need to find funds to replace whatever country clubs were able to stop paying under the new exemption. “When somebody stops paying, somebody else has to pay to cover that,” Cook County Commissioner John Fritchey said Monday when I asked him, as a county-level official removed from the situation in Lake, about what would happen under the exemption.
Paulson estimates that about $2 million a year is hanging in the balance; that’s the amount that “improved” land with buildings would bring in under the plan he announced in 2006. He concurs with Fritchey that at some point, taxing agencies would have to shift the bill over to other property owners—either residential, commercial or both. “They’ll have to replace the [lost] revenue somewhere,” he says.
The difference wouldn’t be made up by all Lake County property owners, but only by those whose property is in taxing districts where country clubs lie. Those include Lake Forest—which contains the upper-crust Onwentsia Club, the only club, of an original three, that is pursuing the taxation battle. Other towns with clubs that could claim the same exemption include Highland Park, Waukegan, Mundelein, Gurnee, Buffalo Grove, Lincolnshire and Hawthorn Woods, Paulson says.
Officials at the Tax Appeal Board and the Onwentsia Club did not respond to requests for comment.
On whether it’s unfair to transfer some of the clubs’ property tax bill to nearby residents, Larry Hirsh, the president of Golf Property Analysts, says “the question has to be raised, are those residences benefiting from being adjacent to a golf club?” He points out that the golf “industry has been struggling; golf courses are worth much less than they were five or ten years ago.” If some were to close or to fall into disrepair—with the property tax bill being just one straw in a bundle of unsupportable expenses—he wonders, “will the home values around them struggle?”
I talked about a separate property tax issue Monday on WBEZ’s The Morning Shift: why only one of about a dozen suburban tax-increasing referenda passed on election day, April 9. Proponents of a school-funding referendum in Highland Park, Highwood and Deerfield made a strong connection between repairing schools and local property values. In Wheaton, McHenry, Roselle and other places, the connection wasn’t made as clearly, and the referenda failed. Here’s that segment.