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November 26, 1997


Appeal from the Circuit Court of Cook County. Honorable Lester A. Bonaguro, Judge Presiding.

As Corrected January 7, 1998. Released for Publication January 22, 1998.

The Honorable Justice Gordon delivered the opinion of the court. Cousins, P.j. and Cahill, J., concur.

The opinion of the court was delivered by: Gordon

The Honorable Justice GORDON delivered the opinion of the court:


This appeal arises from a circuit court order, entered on administrative review, which affirmed the Illinois Department of Revenue's denial of the plaintiff's request for a property tax exemption from 1989 property taxes. The plaintiff, Chicago and Northeast Illinois District Council of Carpenters Apprentice and Trainee Program (hereinafter referred to as the Council), is a not-for-profit entity which was established solely for the purpose of operating a carpentry training program. The Council offers such a training program on an improved parcel of property which it owns, located at 1256 Estes Avenue in Elk Grove Village, Illinois, and sought an exemption for that property from 1989 property taxes under section 19.1 of the Revenue Act of 1939 (Ill. Rev. Stat. 1989, ch. 120, par. 500.1, now repealed, amended and recodified in the Property Tax Act at 35 ILCS 200/15-35 (West 1996)). The Council filed a real estate tax exemption application with the Board of Appeals of Cook County (see 35 ILCS 200/15-5 (West 1996)), alleging that because it operated a school on the subject property, it was entitled to tax-exempt status under section 19.1. After reviewing the Council's application, the Board of Appeals recommended to the Department of Revenue that the Council receive the requested exemption from its 1989 property taxes. See 35 ILCS 200/16-130 (West 1996) (stating that decisions of Board of Appeals regarding tax liabilities are not final and that the Illinois Department of Revenue shall make all final liability determinations). However, the Department of Revenue denied the Council's request for tax-exempt status on the grounds that the primary use of the subject property was not educational.

Thereafter, the Council requested and received an administrative hearing before the Department of Revenue (see 35 ILCS 200/8-35 (West 1996)). At the conclusion of that hearing, the administrative law judge rejected the requested exemption, and the Council sought administrative review in the Circuit Court of Cook County. See 35 ILCS 200/8-40 (West 1996). The circuit court remanded the case for a new administrative hearing due to inconsistencies in the record and because the plaintiff had failed to give proper notice of its application for tax exemption to all municipalities and school districts in which the subject property was located (see 35 ILCS 200/16-130 (West 1996)). Pursuant to that remand and prior to the new hearing, defendants Community Consolidated School District 59 and Arlington Heights Township High School District 214 intervened in this dispute and opposed the granting of the requested tax exemption.

On July 27, 1995, the Department of Revenue held its final administrative hearing in this matter, and denied the Council's request for a real estate tax exemption from 1989 property taxes. Thereafter, the Council filed another complaint seeking administrative review in the Circuit Court of Cook County, which affirmed the decision of the Department of Revenue. The Council now appeals from that decision.


The facts are undisputed. The Council is a not-for-profit trust which was created in 1965 by the International Brotherhood of Carpenters (a union) and the Builders' Association of Chicago (a group of general contractors) for the exclusive purpose of providing education and training for carpenters. The Council has received not-for-profit tax exemption status from the United States Internal Revenue Service under section 501(c)(5) of the Internal Revenue Code (see 26 U.S.C. § 501(c)(5) (1988)), which exempts labor organizations from federal taxation. The Council is also exempt from occupation tax, service occupation tax, use tax and service use tax in Illinois, pursuant to the 1987 finding of the Illinois Department of Revenue that the Council "is organized and operated exclusively for educational purposes." Pursuant to the Declaration of Trust, the Council is governed by four members of the Brotherhood of Carpenters and by four members of the Builders' Association. A collective bargaining agreement between those groups requires the Builders' Association to contribute sufficient funds to the Council to finance its creation and maintenance.

According to the undisputed testimony presented at the final administrative hearing, the goal of the Apprentice Training Program is to enable students enrolled in the program to complete a job properly by bringing their skills up to the level at which they could work competitively for contractors. The program consists of four years of instruction, which includes both the pre-apprentice and apprentice training programs. To qualify for the pre-apprentice program, a person must be at least 17 years old and must have completed at least two years of high school.

The pre-apprentice training course lasts 12 weeks, and is conducted eight hours per day during that period. Approximately one-third of each day (i.e., approximately 2 1/2 hours per day) is spent in the classroom, and two-thirds of each day is spent in the shop. During the first three weeks of the pre-apprentice program classroom time, the training is divided into instruction in improving the math skills of the students and in blueprint reading. The shop work in the pre-apprentice program was designed to introduce the students to the major divisions of carpentry. After completing the pre-apprentice program, the students are required to join the International Brotherhood of Carpenters, to pay union dues, and to get a job as a carpenter's apprentice with a union contractor. The Council assists its students in securing such carpenter positions, which are prerequisites to continued enrollment in the Apprentice Program.

Upon completion of the pre-apprentice program, students enter the second phase of instruction--the apprentice program. In each of the remaining three to four years of training, the students are required to complete at least 1,200 hours of on-the-job training. During each quarter, an apprentice is also required to attend one five-day class on some subject concerning carpentry. Those classes include courses on concrete, drywalling, construction of stairs, roof framing, vinyl and carpeting floor-covering, and framing structural steel. The students are also required to complete a ten-hour course regarding compliance with the Occupational Safety and Health Act of 1970 (see 29 U.S.C § 651 et seq. (1982)). Besides the limited instruction in math skills previously noted, no other traditional academic subjects are taught in the program. (During the administrative hearing, the coordinator of the Apprentice Program testified that the "general educational" subjects taught at the Elk Grove Village property included "Math, drafting, sketching, and welding. I am not sure you could call that a general education."

Upon completion of the pre-apprentice and apprentice programs, students receive a certificate from the United States Department of Labor stating that they have completed those programs, and also receive a journeymen's certificate from the United Brotherhood of Carpenters. However, students are not awarded either a diploma or a degree for completing their carpentry training.

Between 1965 and 1988, the carpentry training program now offered by the Council was offered by the Chicago Board of Education at the Washburne Trade School in Chicago, Illinois. While the program was at Washburne, it was financed by the Board of Education, which received reimbursement or contribution for that financing from the State of Illinois. During the 1987-88 school year, the Board of Education budgeted 18 carpentry teaching positions at Washburne, had a total carpentry training program budget at Washburne of approximately $800,000, and had an overall Washburne budget of $4,708,768 (the Board of Education offered courses in other areas besides carpentry at Washburne).

In 1986, the Council purchased the subject parcel of real estate in Elk Grove Village, Illinois and constructed a building thereon for both pre-apprentice and apprentice training. The Elk Grove Village facility included a pre-apprentice training area, and, in addition, contained a millwright shop, a welding lab, a millwork area, a lathing area, a floor-covering area, a concrete-forms-construction area, carpentry shops, a stair-construction area, a rafter-construction area, a lunchroom and restrooms. In 1988, the Board of Education terminated all apprentice training at Washburne, and the Council alone began to fund and operate that same program at its Elk Grove Village facility. However, pursuant to a written agreement between the Council and the Chicago Board of Education, the Board of Education continued to offer pre-apprentice training at Washburne until 1991. After 1991, the Board of Education also terminated all pre-apprentice training at Washburne, and the instruction in carpentry that had been provided at Washburne was thereafter offered and funded exclusively by the Council at its Elk Grove Village facility (the Elk Grove Village facility began to offer both pre-apprentice and apprentice training in 1989).

As noted, the circuit court affirmed the Department of Revenue's denial of the Council's application for an exemption from 1989 property taxes otherwise owing on its Elk Grove ...

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