Forest Preserve Dist. of Du Page County v. Department of Revenue

Decision Date15 September 1994
Docket NumberNo. 2-93-0881,2-93-0881
Citation266 Ill.App.3d 264,203 Ill.Dec. 566,639 N.E.2d 1385
Parties, 203 Ill.Dec. 566 FOREST PRESERVE DISTRICT OF DU PAGE COUNTY, Plaintiff-Appellant, v. The DEPARTMENT OF REVENUE et al., Defendants-Appellees (Waste Management of Illinois, Defendant-Appellant).
CourtUnited States Appellate Court of Illinois

Paul M. Mitchell, Nadelhoffer, Campbell, Kuhn, Mitchell, Moss & Saloga, P.C., Naperville, for Forest Preserve Dist. DuPage.

Thomas J. McNulty, Patrick J. McNerney, Keck, Mahin & Cate, Chicago, for Waste Management of Illinois.

James E. Ryan, DuPage County State's Atty., Robert G. Rybica, Asst. State's Atty., Wheaton, for Bd. of Review DuPage County.

Roland W. Burris, Atty. Gen., Peter G. Goldsmith, Asst. Atty. Gen., Revenue Litigation Div., Rosalyn B. Kaplan, Sol. Gen., Jerald S. Post, Asst. Atty. Gen., Chicago, for IL Dept. of Revenue.

Richard J. Tarulis, James, Brooks, Adams & Tarulis, Naperville, for C. Gordon Shultes, Lisle Tp. Assessor, Lisle Tp., Naperville Comm. School Dist.

Justice DOYLE delivered the opinion of the court:

This case raises the principal question of whether a certain parcel of land, which is located within the Greene Valley Forest Preserve, is exempt from taxation as property being used for a public purpose under either section 19.6 or section 19.9 of the Revenue Act of 1939 (35 ILCS 205/19.6, 19.9 (West 1992)). Section 19.6 exempts from taxation "all property owned by a county, village, taxing district, or city that is being held for future expansion or development, except property that has been leased or may be leased by a county, village, taxing district, or city to lessees for use for other than public purposes." (35 ILCS 205/19.6 (West 1992).) Section 19.9 generally exempts "other public grounds owned by a municipal corporation and used exclusively for public purposes." 35 ILCS 205/19.9 (West 1992).

In 1990, the Du Page County board of review determined that the tax-exempt status of the subject property, which was being operated as a sanitary landfill within a larger area known as the Greene Valley Forest Preserve, remained unchanged for the 1989 tax year. The Department of Revenue (Department), however, subsequently denied the District's application for property tax exemption on the subject property.

Following the Department's denial, the Forest Preserve District of Du Page (District) applied for a formal hearing before the Department, contending that the property was being used for a tax-exempt purpose and should continue to be exempt. A formal hearing before a Department administrative law judge (ALJ) was held, and the Department ultimately approved the ALJ's determination that the subject property was not tax exempt because its primary use was the operation of a landfill for profit by Waste Management of Illinois, Inc. Prior to 1989, the subject property had been exempt from taxation.

The District then filed a complaint for administrative review in the circuit court of Du Page County against the Department, the board of review of Du Page County, C. Gordon Shultes, Lisle Township assessor, Lisle Township, Naperville Community School District 203, and Waste Management of Illinois, Inc. (WMI). District 203 and Lisle Township counterclaimed against the supervisor of assessments of Du Page, the Du Page County board of review, the Du Page County clerk, and the Du Page County treasurer. The trial court dismissed the counterclaim, and, following further hearing, it dismissed the District's complaint and affirmed the Department's denial of the District's application. The District timely appeals, and WMI, although originally postured as a defendant, joins, as an appellant, in the District's appeal.

The principal issue germane to both the District and WMI's position on appeal is whether the trial court erred in affirming the Department's determination that the subject property was not being used for a public purpose. WMI contends further that even if it were determined that the property was not used for a public purpose the operating agreement entered into between the District and WMI was merely a license and not a lease. Additionally, WMI contends that this appeal is moot because the 1989 tax assessment for the subject property was zero.

The following relevant facts are undisputed. The subject property is an approximately 16.8-acre parcel located within the 210-acre Greene Valley Forest Preserve. Since 1974 the property has been operated as a sanitary landfill under an agreement between the District, as owner of the property, and WMI.

The agreement recites that the District "desires the partial development of the Greene Valley Forest Preserve for scenic and recreational hill development through modification of the ground form using the techniques of sanitary landfill." The District expressly granted WMI the exclusive right and privilege to have ingress and egress to the subject property.

Additionally, WMI retained overall management of the landfill, and its operation was to be put in a separate division and cost center of WMI with an individual set of books. WMI's operating personnel were further required to conform to certain requirements as set forth by the District.

The agreement further provided that the District would receive compensation. WMI was obligated to pay to the District 10% of the amount charged by WMI for all waste material received and deposited during the first 10 years of the contract. For each additional two-year period, an additional 1% was to be added "to the preceding period's royalty." Additionally, the District would receive 25% of the amount received for the sale of material recovered from the waste stream.

Also contained in the record on appeal was a 1988 year-end statement of revenue and royalties for the Greene Valley landfill. For the year ending 1988, a "net revenue for royalty calculation" of $10,533,039.57 was shown. The District was paid $1,331,715.35 in royalty payments and the "landfill expense fund" showed $1,871,475.80 in remittances to the District. Additionally, $629,149.44 in county solid waste disposal fees were remitted to the District.

We initially note that the parties differ to some extent as to the appropriate standard of review to be applied. Because the facts in the present case are undisputed, a determination of whether the subject property is exempt from taxation is a question of law. (See City of Chicago v. Illinois Department of Revenue (1992), 147 Ill.2d 484, 491, 168 Ill.Dec. 841, 590 N.E.2d 478; Harrisburg-Raleigh Airport Authority v. Department of Revenue (1989), 126 Ill.2d 326, 331, 127 Ill.Dec. 944, 533 N.E.2d 1072.) Therefore, the decision regarding the tax-exempt status of the property " 'depends solely upon an application of the appropriate legal standard to the undisputed facts.' " City of Chicago, 147 Ill.2d at 491, 168 Ill.Dec. 841, 590 N.E.2d 478, quoting Illinois Central Gulf R.R. Co. v. Department of Local Government Affairs (1983), 95 Ill.2d 111, 129, 69 Ill.Dec. 98, 447 N.E.2d 315; Girl Scouts of Du Page County Council, Inc. v. Department of Revenue (1989), 189 Ill.App.3d 858, 861, 137 Ill.Dec. 131, 545 N.E.2d 784.

We further note that the legislature in December 1989 amended the Revenue Act of 1939 to expressly exempt from taxation "[a]ll property of every kind belonging to any forest preserve district." See 35 ILCS 205/19.18c (West 1992).

Turning to the merits, WMI contends first that the construction of the Greene Valley Recreational Preserve by "modification of the ground form through the sanitary landfill technique" necessarily compels the conclusion that the subject property was being used for a public purpose. WMI argues that when sections 18.1 and 18.6a of the Downstate Forest Preserve District Act (70 ILCS 805/18.1, 18.6a (West 1992)) are read in pari materia, it demonstrates that the use of the property was consistent with the legislative grant of power to serve the public. Therefore, according to WMI, the use of the property was for a public purpose because it was consistent with the legislative edict governing forest preserve districts. In our opinion, WMI's argument merely begs the pivotal question on review, which is whether the primary use of the property for the 1989 tax year was for a public purpose.

While the operation of a sanitary landfill on forest preserve property in 1989 was an arguably legal use, and the power of the District to construct recreational and cultural facilities on its property is unquestioned (see 70 ILCS 805/18.1 (West 1992)), the mere fact that WMI has shown an independent statutory basis for the construction of recreational facilities and the establishment of a landfill expense fund does not address the fundamental inquiry necessary to determining the tax-exempt status of the property. It is the primary use of the property which determines its tax-exempt status (City of Lawrenceville v. Maxwell (1955), 6 Ill.2d 42, 48, 126 N.E.2d 671), and the right to exemption can only be established by direct proof of all the facts necessary to authorize exemption (Smith v. Board of Review (1922), 305 Ill. 38, 43, 136 N.E. 787).

Differing from WMI's position somewhat, the District maintains that the operation of a sanitary landfill is a use for an exclusively public purpose under section 19.9 of the Revenue Act of 1939. (See 35 ILCS 205/19.9 (West 1992).) The District correctly maintains that exclusive public use has been consistently held to mean that the primary, and not incidental, use of the property determines the property's tax-exempt status. (See, e.g., Lawrenceville, 6 Ill.2d at 48, 126 N.E.2d 671.) It argues, however, that the operation of the subject property as a sanitary landfill was a proper public and forest preserve purpose. The District argues further that it did not intend to earn a profit but rather to construct a recreational facility and operate a landfill. Under the District's view, any...

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