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12/30/94 CHICAGO PATROLMEN'S ASSOCIATION AND

December 30, 1994

CHICAGO PATROLMEN'S ASSOCIATION AND AMERICAN POLICE CENTER AND MUSEUM, PLAINTIFFS-APPELLEES,
v.
DEPARTMENT OF REVENUE OF THE STATE OF ILLINOIS, DEFENDANT-APPELLANT.



Appeal from the Circuit Court of Cook County. The Honorable Alexander P. White, Judge Presiding.

Released for Publication February 16, 1995.

Presiding Justice Egan delivered the opinion of the court: Egan, P.j. and McNAMARA, J. concur. Rakowski, J. dissents

The opinion of the court was delivered by: Egan

PRESIDING JUSTICE EGAN delivered the opinion of the court:

This is a tax case involving interpretation of that part of the Illinois Revenue Code dealing with charitable exemptions of property. The defendant Department of Revenue (Department) takes the position that property is not exempt from taxation unless it is owned entirely by a charitable institution. The trial judge disagreed with the Department; and so do we in this case.

On May 3, 1987, the plaintiffs, Chicago Patrolmen's Association (CPA) and the American Police Center and Museum (Museum), became the beneficial owners in a land trust of four parcels of land located at 1705-25 South State Street, in Chicago. Each of the plaintiffs retained a 50% undivided interest in the parcels. Each of three parcels contained a two-story brick building and the fourth parcel contained a one-story building with an adjacent parking lot.

After the plaintiffs acquired the property they spent the rest of the year renovating and remodeling the buildings to prepare them for the Museum's opening in June of 1988. The northernmost building, one of the two-story buildings, was not used by the CPA and Museum while the other buildings were undergoing renovation.

The plaintiffs applied for exemptions for the 1987 tax year alleging that the property was exempt under Section 19.7 of the Illinois Revenue Code. (Ill. Rev. Stat. 1987, ch. 120, par. 500.7) On June 22, 1988, the Department's Board of Appeals recommended that the plaintiffs be given a partial year exemption from May 8, 1987 to December 31, 1987. The Department's Director rejected the Board's recommendation and denied the exemption. The plaintiffs requested a formal hearing on the denial of the exemption. A hearing was held before an administrative law judge, who recommended that the exemption request be denied. The Department's Director approved the recommendation of the administrative law judge.

The plaintiffs filed a complaint in administrative review in the circuit court. On September 24, 1991, the trial judge entered an order remanding the case to the Department. The judge found, as a matter of law, that whether the CPA was a charitable organization was irrelevant under the Act; that the CPA's ownership interest in the property was irrelevant under the Act; and that the plaintiffs use of the property was material. Based on those findings, the judge remanded the matter to the Department for a determination of whether the Museum's use was the primary use of the property. If the Department found the Museum's use to be primary, the Department was to then make a further determination of whether the property was to be granted a full or partial exemption.

After remand, on February 11, 1992, the Department issued its order in which it determined that all the parcels of land were used by the Museum for charitable purposes for 66% of the calendar year 1987, except for the northernmost 5500 square foot building, which the Department concluded remained vacant, and 160 square feet of office space used by the CPA in another building. The Department stated that the CPA was not a charitable organization.

The trial judge entered his final order on August 14, 1992. He ruled that the property which included the 5500 square foot building was not entitled to a charitable tax exemption; that two of the parcels were entitled to a total exemption as of May 6, 1987; and the fourth parcel, which contained 160 square feet of office space used by the CPA was entitled to a 98% tax exemption as of May 6, 1987. The Department appeals, contending that there may be no exemption because the Museum, which the Department concedes was a charitable organization, did not own all of the property. The plaintiffs do not appeal from the order denying an exemption to the vacant building.

Although the Department does not deny that the Museum was a charitable organization, we deem it appropriate to set forth the evidence. Joseph Pecoraro was the President of the CPA and the Chairman of the Museum. Before the CPA and the Museum acquired the subject property, they owned a five-story building in 1972. That building had previously been exempted from real estate taxation.

The Museum contains artifacts and exhibits about police officers, as well as information about their training and how they function. It is open to the general public; and although there is no admission charge, the Museum has a donation box at the door. Approximately 20,000 children tour the Museum during the year, and most of its activities are directed toward children. Many of the Museum exhibits and programs are designed to alert children to the dangers of drugabuse, to instruct them on street awareness and to promote better relationships between young people and the police. Since 1974, the Museum had received a federal tax exemption pursuant to section 501(c)(3) of the internal Revenue Code 26 USCA ยง 501(c)(3).

The space occupied by the CPA was used for the CPA's credit union and for its monthly board meetings. The CPA was formed in 1916; and its purpose, according to Pecoraro, was to "champion, the cause of the policeman, the patrolman working for the City of Chicago." He would go to Springfield and "act as a union" and try to encourage legislation "to make the policeman's job easier." The CPA collects dues and provides death benefits for its members. It also makes its facilities available upon request to other civic ...


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