Appeal from the Circuit Court of Adams County; the Hon. Cecil
J. Burrows, Judge, presiding.
PRESIDING JUSTICE GREEN DELIVERED THE OPINION OF THE COURT:
On August 13, 1982, the Adams County Board of Review (Board) denied a petition filed by plaintiff, the Good Samaritan Home of Quincy (Home), an Illinois not-for-profit corporation, requesting a charitable tax exemption for certain of its real property for the year 1982. Following an administrative proceeding, defendant, Illinois Department of Revenue (Department), entered a decision on August 16, 1983, which also denied the tax exemption. On administrative review in the circuit court of Adams County, that court entered a judgment on June 8, 1984, finding that the Department's decision was contrary to the manifest weight of the evidence and reversing the denial of the tax exemption. The Department has appealed. We reverse the circuit court's judgment and uphold the Department's decision to deny the tax exemption.
The record of the administrative proceedings in this case contains the following information. The Home's corporate purpose, as stated in its bylaws, is:
"[E]xclusively for the religious, charitable, benevolent and eleemosynary care for aged people without regard to poverty or riches of the recipient of the service provided, including the establishment, support and maintenance of a home or homes and related facilities for the appropriate care of such aged persons."
The Home operates a nursing home and related facilities in Quincy for the care of aged persons. During 1982, the main building, which is the nursing home, was licensed by the Illinois Department of Public Health for 105 sheltered care beds and 102 intermediate care beds. The portion of the property on which the main building is located has been exempted for property tax purposes and is not at issue in this case.
The Home also operates a cottage program which provides a total of 90 units of living area for couples or individuals. Six cottages, consisting of 30 apartment units, were constructed prior to 1976, and 12 apartment units were constructed in 1976. Construction of an additional 48 units was begun in 1980 and was completed in 1982. The cottages are adjacent to, but separate from, the main facility
The cottage apartments are constructed by the Home and are rented by individual residents. Construction costs range from $36,000 to $58,000, depending on the size and design of the apartment. The Home finances the construction of the cottages by charging a prospective resident the full construction cost of the cottage on a prepaid rent basis. The prepaid cost of construction is then written down month-by-month by the amount of monthly rental charged for that type of unit. For example, if the construction cost of a particular unit is $40,000, the resident pays that amount to the Home. If the monthly rental for that unit is $320 per month, that amount is subtracted each month from the prepaid rent of $40,000. If the resident dies or moves out, the unused balance is refunded and the next resident must deposit the remaining unpaid cost of construction. After the cost of construction is recovered for a unit, the unit is rented on a monthly basis with no prepayment.
The monthly rent for the cottage apartments varies with size and design. A one-bedroom apartment is $260; a two-bedroom apartment is $320; and a two-bedroom apartment with a garage is $340. The rate of monthly rental is subject to increase by Board action whether the rent is charged against prepayment or not.
A potential cottage resident signs a residential contract prior to construction of a cottage which provides for the amount of down payment required upon signing the agreement and the subsequent payment of the construction cost balance. The contract signed by potential cottage residents also provides that the Home can dismiss a resident any time any provision of the agreement is not performed or if, in the opinion of the Home, a resident is not able to maintain himself properly in the apartment.
The cottage apartments remain the Home's property throughout a renter's occupancy. The cottage resident never owns his or her cottage or the real estate upon which the cottage is located. The cottage resident never has any equity in the cottage itself, but simply has the right to a recovery of the portion of the prepaid rent which has not been fully accrued prior to the resident's vacating of the cottage or death.
All potential cottage residents must fill out an application as do persons seeking admission to the nursing home. The names of those seeking to reside in the cottages are placed on a separate waiting list from those seeking intermediate or sheltered care in the nursing home. Potential cottage residents have the option of being put on a waiting list for one of the units where there is no equity remaining and which require no prepaid rent, on a list for a new unit, or on a list to pay off the remaining equity on a unit. As of January 1, 1982, there were 30 apartment units that had no prepayment requirement, while 60 apartments still have a prepaid rent requirement.
Following the administrative proceeding, the Department's hearing officer recommended that the tax exemption for the cottages be denied. In support of this recommendation, the hearing officer found that the Home (1) does not dispense charity to all who need and apply for it; (2) places obstacles in the way of those seeking benefits; and (3) did not use the property in question for primarily charitable purposes during 1982. The Department then adopted the hearing officer's recommended decision. The Department maintains on appeal that the circuit court erred in reversing the Department's decision because that decision was not contrary to the manifest weight of the evidence. We agree.
Article IX, section 6, of the Illinois Constitution of 1970 provides, in pertinent part:
"The General Assembly by law may exempt from taxation only * * * property used exclusively for agricultural and horticultural societies, and for school, religious, cemetery and charitable ...