Property Tax Dispute Between D-219 And NorthShore Ends With Deal

SKOKIE, IL — A legal battle between Niles Township High School District and NorthShore University HealthSystem over property tax exemptions for Skokie Hospital has ended with an out of court deal to drop the litigation. Instead of continuing to litigate whether the hospital properly received three years worth of tax breaks, the two parties agreed to cooperate on educational programs.

The dispute focused on tax exemptions awarded to various properties on campus, including a parking lot, from 2009 to 2011, according to an appellate court ruling from last year. NorthShore sought exemptions as a school and as a charitable purpose from the Illinois Department of Revenue and received several of them in 2013. The school district sought an administrative review hearing, which the health care firm has resisted ever since.

First, the hospital group tried to get the administrative judge hearing the case to dismiss it. When that failed, lawyers for NorthShore filed a 2015 case in Cook County Circuit Court containing five counts, "all premised on the Department [of Revenue's] alleged lack of jurisdiction" over the district's application for a hearing, according to the appellate decision. But the Cook County judge disagreed, dismissing NorthShore's complaint in December 2015. In March 2017, the hospital company filed an appeal, which was rejected unanimously by a three-judge panel.

However, discussions between NorthShore and District 219 officials in May 2018 led to an agreement to drop the dispute, according to the Skokie Review. Days after District 219 dropped its complaint to the Department of Revenue, NorthShore agreed to drop its attempt to appeal the case to the Supreme Court, per the terms of the agreement.

The deal involves a joint effort to provide training opportunities for district students at NorthShore in Skokie, according to the agreement. Training programs will focus on the needs of district's career and life learning program and could include lectures, learning in small groups, work or volunteer opportunities, Pioneer Press reported.

“The lawsuits consume significant time and money for both parties," the agreement said, according to Pioneer Press. It said District 219 and NorthShore agreed to resolve the disputes to "replace the time spent on litigation with cooperative efforts on behalf of [students.]"

Superintendent Steven Isoye explained the justification for the agreement in a memo to District 219 board members last month ahead of their ratification of the agreement:

District 219 staff and NorthShore University HealthSystem (“NorthShore”) have conducted several meetings over the last months. As a result, the parties have agreed to recommend an action plan to conclude the outstanding litigation and dispute between District 219 and NorthShore. As you recall, this dispute centers on NorthShore’s application for a property tax exemption from the Illinois Department of Revenue. At the conclusion of the joint meetings, I signed the Agreement to confirm staff’s commitment to the proposed action plan, subject to ratification by the Board.

Over the past several years, there has been significant legislation and statewide litigation surrounding hospital property tax exemptions. According to our attorneys, this issue is far from over and is likely to lead to several more years of statewide-continued litigation and legislation before this issue is finalized. The District believes that it is in its best interest to conclude this lawsuit and restore the good relations between all agencies. Whenever the Illinois General Assembly and Illinois Supreme Court finally decide the status of hospital property tax exemptions, we will be able to then rely on the ultimate resolution without engaging in years of litigation and expense.

Following the July 17 agreement to end the litigation, NorthShore Skokie Hospital President David Rahija and Isoye released a statement to the Review praising the agreement:

This collaboration will provide District 219 students the opportunity to learn new skills and prepare for careers in the dynamic field of healthcare, and will help to cultivate a future workforce for NorthShore and other healthcare institutions.

The partnership also fulfills the mission of both organizations to be vital and active members of the communities we serve. We’re happy to be working together on a program that will have a positive impact for years to come.

A separate 2015 lawsuit involving a different hospital and taxing district may better decide the tax exempt status of hospitals, the Journal & Topics reported, since it addresses some of the same key issues.

In addition to its campus in Skokie, NorthShore owns Evanston, Glenbrook and Highland Park hospitals.

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