Lutheran Child and Family Services of Illinois v. Department of Revenue

• Decision Date: 11 September 1987
• Docket Number: No. 2-87-0087,2-87-0087
• Citation: 160 Ill.App.3d 420,513 N.E.2d 587,112 Ill.Dec. 173
• Parties: , 112 Ill.Dec. 173 LUTHERAN CHILD AND FAMILY SERVICES OF ILLINOIS, Plaintiff-Appellee, v. DEPARTMENT OF REVENUE, State of Illinois, Defendant-Appellant.
• Court: United States Appellate Court of Illinois

Page 587

513 N.E.2d 587

160 Ill.App.3d 420, 112 Ill.Dec. 173

LUTHERAN CHILD AND FAMILY SERVICES OF ILLINOIS, Plaintiff-Appellee, v. DEPARTMENT OF REVENUE, State of Illinois, Defendant-Appellant.

No. 2-87-0087.

Appellate Court of Illinois,

Second District.

Sept. 11, 1987.

Neil F. Hartigan, Atty. Gen., Michael J. Wynne, Bret A. Rappaport, Assistant Attys. Gen., Roma Jones-Stewart, Sol. Gen., Chicago, for Dept. of Revenue.

Gary M. Moore, Mitchell J. Overgaard, Overgaard & Davis, Chicago, for Lutheran Child and Family Services.

Justice DUNN delivered the opinion of the court:

The defendant, the Illinois Department of Revenue (Department), appeals from the judgment of the circuit court which reversed the Department's denial of a property tax exemption for two buildings on a parcel of real estate owned by the plaintiff, the Lutheran Child and Family Services of Illinois (LCFS), a not-for-profit corporation organized to provide social services. The sole issue on appeal is whether the trial court erred when it determined that the buildings in question, the residence of the superintendent of grounds and an apartment building for six staff members, met the requirements for exempt status set forth in sections 19.2 and 19.7 of the Revenue Act of 1939 (Act) (Ill.Rev.Stat.1985, ch. 120, pars. 500.2, 500.7).

On April 17, 1983, the Board of Review of DuPage County denied exemptions for the two buildings in question. The Department agreed with the denial, and LCFS requested an administrative hearing. The following are the undisputed facts.

Lutherbrook Childrens Center (Lutherbrook), located in Addison, Illinois, is a residential care and treatment facility licensed to serve 36 children. These children have all been diagnosed as having either emotional and/or behavioral problems. The parcel at issue concerns the tax-exempt status of two buildings on a four-building lot.

Building No. 1 is a residential structure occupied by the maintenance man. At the time of the hearing, this building had been used exclusively as a residence for the maintenance man, whose duties include physical plant repair and grounds upkeep from 7 a.m. to 3 p.m. daily, although he is also available for emergencies. The director of Lutherbrook testified that the maintenance man is requested to do off-hours repair several times a week and no one else at Lutherbrook could make these off-hour repairs. The maintenance man lives at the residence rent-free, and this arrangement is considered part of his salary.

Building No. 2, known as Chapman House, consists of six one-room apartments for staff employees and a storage facility for Lutherbrook's van, tractor and bicycles. These small units contain a kitchen and washroom facility. Previously, the Department determined that the garage portion, which constitutes 10% of the building, was exempt. That decision is not on review in the present case.

At the time of the hearing, five of the six units housed single staff members, while the remaining unit housed a family with one child. The staff members can choose voluntarily to live at Chapman House, and Lutherbrook then adjusts their salary to account for their residence at a rent-free apartment. Chapman House is not used as a facility to counsel or tutor the children.

Fifty-nine persons are employed at Lutherbrook. The other fifty-three employees, although residing off the premises do live in close proximity.

On the hearing date, Chapman House housed one child-care supervisor, one teacher, and four child-care workers. The supervisor works a 40-hour week; however, she is available for the once or twice-weekly emergencies which normally occur. Lutherbrook has always had a supervisor residing on the premises. The teacher does no tutoring at Chapman and no teaching other than during regular hours. The remaining residents and childcare workers work eight-hour shifts and are seldom asked to work off-hours for any reason.

Lutherbrook is fully staffed 24 hours a day, divided into three shifts, and, thus, the residents at Chapman House are not normally needed outside their normal shifts. On occasion, however, those employees were called if regularly scheduled staff were unavailable.

On January 5, 1987, on administrative review, the circuit court reversed the Department's denial and granted the property tax exemption with regard to both Chapman House and the maintenance man's residence. In finding that these two buildings were "reasonably and directly necessary to the charitable purpose of Lutherbrook," the court noted that it placed weight on the particular nature of Lutherbrook, namely, as a facility for emotionally and behavior-disturbed children.

On appeal, the defendant argues that the circuit court erred when it reversed the Department's denial of a property tax exemption for the maintenance man's residence and for Chapman House. Specifically, the defendant contends that the facts presented do not establish that the statutory-use requirement found in sections 19.2 and 19.7 of the Act (Ill.Rev.Stat.1985, ch. 120, pars. 500.2, 500.7) was satisfied.

Because the relevant facts are undisputed, the issue of whether the property here is exempt is a question of law. (Cook County Masonic Temple Association v. Department of Revenue (1982), 104 Ill.App.3d 658, 660, 60 Ill.Dec. 341, 432 N.E.2d 1240; see also Caterpillar Tractor Co. v. Department of Revenue (1963), 29 Ill.2d 564, 566, 194 N.E.2d 257.) Thus, the decision as to whether the property is exempt "depends solely upon an application of the appropriate legal standard to the undisputed facts" (Illinois Central Gulf R.R. Co. v. Department of Local Government Affairs (1983), 95 Ill.2d 111, 129, 447 N.E.2d 315), and this court's role is to determine whether the trial court properly found that the property in question was entitled to tax-exempt status. See Northwestern Memorial Foundation v. Johnson (1986), 141 Ill.App.3d 309, 311, 95 Ill.Dec. 688, 490 N.E.2d 161.

It is a well-settled rule of law in Illinois that all property is subject to taxation unless specifically exempted by statute. (Rogers Park Post No. 108 v. Brenza (1956), 8 Ill.2d 286, 289-90, 134 N.E.2d 292; Metropolitan Sanitary District v. Rosewell (1985), 133 Ill.App.3d 153, 155, 88 Ill.Dec. 492, 478 N.E.2d 1100.) The Illinois Constitution provides that exemptions may be made only for property "used exclusively" for certain purposes, stating:

"The General Assembly by law may exempt from taxation only the property of the State, units of local government and school districts and property used exclusively for agricultural and horticultural societies and for school, religious, cemetery and charitable purposes." (Ill. Const. 1970, art. IX, sec. 6.)

Section 19 of the Act states that "[a]ll property described in Sections 19.1 through 19.23-1 to the extent therein limited, is exempt from taxation." (Ill.Rev.Stat.1985, ch. 120, par. 500.) The applicable sections at the time the tax exemption was denied were sections 19.2 and 19.7 of the Act. Section 19.2 described property exempt, because of its use for religious purposes, as follows:

"All property used exclusively for religious purposes, or used exclusively for school and religious purposes, or for orphanages and not leased or otherwise use with a view to profit, including all such property owned by churches or religious institutions or denominations and used in conjunction therewith as parsonages, or other housing facilities provided for ministers (including bishops, district superintendents and similar church officials whose ministerial duties are not limited to a single congregation), their spouses, children and domestic workers, performing the duties of their vocation as ministers at such churches or religious institutions or for such religious denominations, and including the convents and monasteries where persons engaged in religious activities reside." Ill.Rev.Stat.1985, ch. 120, par. 500.2.

Section 19.7 of the Act, described property exempt because of its use for charitable purposes as follows:

"All property of institutions of public charity, all property of the beneficent and charitable organizations, whether incorporated in this or any other state of the United States, all property of old people's homes * * * when such property is actually and exclusively used for such charitable or beneficent purposes, and not leased or otherwise used with a view to profit; and all free public libraries." Ill.Rev.Stat.1985, ch. 120, par. 500.7.

Statutes granting tax exemptions must be construed strictly in favor of taxation (Board of Certified Safety Professionals of Americas, Inc., v. Johnson (1986), 112 Ill.2d 542, 547, 98 Ill.Dec. 363, 494 N.E.2d 485; People ex rel. Kassabaum v. Hopkins (1985), 106 Ill.2d 473, 476, 88 Ill.Dec. 606, 478 N.E.2d 1332), and the party claiming an exemption has the burden of proving clearly and conclusively that the property in question falls within the terms of the statute under which the exemption is claimed. (Board of Certified Safety Professionals of...