APPEAL from the Circuit Court of Jackson County; the Hon. BILL
F. GREEN, Judge, presiding.
MR. JUSTICE JONES DELIVERED THE OPINION OF THE COURT:
This appeal arises out of an action brought to enjoin and restrain the defendants, who include the supervisor of assessments, the treasurer and the State's Attorney of Jackson County, from collecting or attempting to collect real estate taxes assessed against certain real estate in Jackson County commonly known as Evergreen Terrace. Evergreen Terrace consists of 38 buildings providing family housing for married students who attend Southern Illinois University-Carbondale. The title to the property is in the name of the plaintiff Southern Illinois University Foundation, an Illinois not-for-profit corporation, which leases the property to the plaintiff Board of Trustees of Southern Illinois University.
From the trial court's order denying a permanent injunction plaintiffs appeal raising two principal issues. Plaintiffs contend that the property is tax exempt pursuant to section 19.5 of the Revenue Act of 1939 (Ill. Rev. Stat. 1979, ch. 120, par. 500.5), which exempts from taxation property "belonging to the State of Illinois." In the alternative plaintiffs maintain that the property is tax exempt pursuant to section 19.1 of the Revenue Act of 1939 (Ill. Rev. Stat. 1979, ch. 120, par. 500.1), which exempts from taxation property of schools used "exclusively for school purposes, not leased by such schools or otherwise used with a view to profit including, but not limited to, student residence halls, dormitories and other housing facilities for students and their spouses and children."
Defendants argue that plaintiffs cannot assert on appeal that the property in question is the property of the State of Illinois because they failed to advance that theory in the trial court. Plaintiffs deny having failed to raise the issue. We note that section 19.1, relating to the exemption for exclusive use for school purposes, requires that exempt property must not be "leased by such schools or otherwise used with a view to profit." The relationship between Southern Illinois University Foundation and Southern Illinois University is a close one. That closeness is reflected not only in the name of the Foundation but also in its bylaws, which are included in the record on appeal and will be discussed shortly. In view of the close relationship in this case between the lessee school and the lessor foundation, we think it is necessary to ascertain the precise nature of the relationship between the two in the transaction at hand. By doing so we may determine the interest of each in the disputed property and, ultimately, whether the status of the incidence of ownership is such as to bring the property within the exemption provided by section 19.1. Thus, the question of ownership under the circumstances presented in this case is implicit in the question of exclusive use of the property for school purposes and must be considered by the court in order to dispose of the issues presented. It is of no moment whether the issue of ownership by the State was expressly raised in the trial court.
Pending in this court is plaintiffs' motion to supplement the record on appeal with a bystander's report by which plaintiffs seek to show that they expressly raised in the trial court the issue of State ownership of the property. In view of our conclusion that the question of ownership is implicit in the question of exclusive use of the property for school purposes, it is not necessary that plaintiffs show they expressly raised the issue in the trial court, and we therefore deny their motion to supplement the record on appeal.
According to the bylaws of the Southern Illinois University Foundation, it is a "wholly not-for-profit corporation" whose "purpose shall be wholly charitable and educational." Its expressed corporate purposes include, among other things, "to buy, sell, lease, own, manage, convey, and mortgage real estate" and "[i]n a manner specified by the Board of Trustees of Southern Illinois University, to act as the business agent of the said Board in respect to * * * [a]cquisition, management and leasing of real property and buildings." The final purpose of the Foundation which is set forth in the bylaws is expressed as follows: "To do such other acts and undertake such other enterprises as in the judgment of the Board of Directors shall tend to promote the interests and welfare of the Southern Illinois University."
With respect to the corporate organization of the Foundation, the bylaws provide that the affairs of the corporation shall be managed in accord with policies and directions established by a board of directors, of whom there shall be 11, consisting, among others, of the president of Southern Illinois University at Carbondale or his designee, "[t]he member of the Board of Trustees of Southern Illinois University designated to serve on the Executive Committee of the Board of Governors of the SIUF at Carbondale under these Bylaws," and "[t]he Chief of Board Staff of Southern Illinois University or his designee." The bylaws provided as follows for a board of governors:
"Section 3. Division Board of Governors. Each of the two permanent divisions of the corporation shall be governed by a Board of Governors which shall manage the affairs of the respective Divisions [of the corporation, known as `The SIU Foundation at Carbondale' and `The SIU Foundation at Edwardsville'], subject to policies and directions to be provided by the Board of Directors * * *. Each such Board of Governors shall be composed of the following classes and number of Governors:
A. Ex-Officio Governors: The following persons shall be exofficio Governors and shall serve and have full voting powers for so long as they hold the respective offices enumerated below:
(1) The Chairman of the Board of Trustees of Southern Illinois University shall designate two Trustees to serve on the Board of Governors for the SIUF at Carbondale and two Trustees to serve on the Board of Governors for the SIUF at Edwardsville.
(2) The President of each University governed by the Board of Trustees of Southern Illinois University and a designated representative of each such President shall be members of the Board of Governors corresponding to his University.
(4) The Chief of Board Staff of Southern Illinois University and a designated representative of the Chief of Board Staff shall serve on each of the respective Boards of Governors."
Also included in the record on appeal are numerous stipulations of fact by the parties. We quote those that are pertinent to the issue of ownership insofar as they set forth the details of the transaction with which we are here concerned between the Foundation and the University:
"7. The Foundation acquired title to [Evergreen Terrace] by warranty deed from the Board of Trustees of Southern Illinois University, dated July 1, 1967, for the purpose of financing the building of residence halls and other housing facilities for the use of students and their spouses and children of Southern Illinois University at Carbondale.
8. [Evergreen Terrace] and the residence halls and housing facilities constructed thereon have at all times since their completion been operated by the Board of Trustees of Southern Illinois University and used by the University as a student family housing facility for low and moderate income University students and their spouses and children. The control and operation of the housing facilities are and have been at all times referred to herein under the jurisdiction of the University.
10. The Foundation financed the cost of construction of the Evergreen Terrace housing facilities through a mortgage agreement with the Federal Housing Administration as a low and moderate income family housing project.
11. The University has, since deeding the said property to the Foundation paid, and continues to pay, as rent for the property, an annual sum of money representing the amount necessary to pay the financing obligations on the property. This sum ($188,125.68 per annum for FY 1971 through FY 1976) has been transmitted by the University, as agent for the Foundation, to the Federal National Mortgage Association, from funds derived from the operation of Evergreen Terrace.
12. At the time of transfer of title to the property from the University to the Foundation in 1967, separate resolutions were passed by both corporate bodies, stating that upon retirement of the mortgage, the Foundation will reconvey the property as improved to the University without further cost to the University, and that the University will continue to operate the project as a student family housing facility.
13. The University and the Foundation on August 1, 1978, entered into a written lease agreement, formalizing the terms of the lease agreement which have verbally been understood to exist and govern the actions of the University and the Foundation since 1967 with respect to the Evergreen Terrace property. * * *
14. The control and operation of the Evergreen Terrace housing facility is under the jurisdiction of the Southern Illinois University at Carbondale Housing Office. The Evergreen Terrace housing facility is managed by the Housing Office in the same manner as all other on-campus University student housing facilities. The University provides on-campus housing for four thousand six hundred ninety-one (4,691) single students and has family housing units for approximately five hundred seventy-six (576) students, which includes spaces for three hundred four (304) students and their families at Evergreen Terrace.
16. Police and security services for the Evergreen Terrace housing area are provided by the Southern Illinois University Security Office. The University's security officers patrol and exercise authority over the area in the same manner as for other University housing facilities. The University's Physical Plant Office provides maintenance service for the Evergreen Terrace housing facility in the same manner as is done for other University housing facilities."
In their brief plaintiffs explain more fully the reason why the Foundation acquired title to the property:
"One way to meet [the] ever growing need for married student housing was through loans funded through the Federal Housing Administration under Section 221(d)(3) of the National Housing Act of 1961. * * * Such a loan arrangement required the property owner to enter into a long term loan, an obligation which the University was legally prohibited from incurring. The Foundation, on the other hand could incure [sic] such long term debts, since ...