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Big Ten Conference, Inc. v. Department of Revenue

February 22, 2000

THE BIG TEN CONFERENCE, INC., PLAINTIFF-APPELLEE,
v.
THE DEPARTMENT OF REVENUE, DEFENDANT-APPELLANT.



The opinion of the court was delivered by: Justice McNULTY

Appeal from the Circuit Court of Cook County

Honorable Alexander White, Judge Presiding

In 1995 Big Ten Conference, Inc. (the Big Ten), applied for a property tax exemption for a building in Park Ridge, Illinois. The Department of Revenue (Department) denied the application. The Big Ten requested a hearing before the Department's Office of Administrative Hearings. The administrative law judge (ALJ) recommended denial of the application, and the Director of the Department adopted the recommendation. The Big Ten then sought administrative review of the Director's decision. The trial court reversed the Director and ordered the Department to grant the Big Ten the property tax exemption. The Department appeals.

A group of Midwestern universities formed the Big Ten. According to the Big Ten's certificate of incorporation,

"Its specific organizational purposes are: (1) to control and regulate intercollegiate athletics as institutional activities; (2) to encourage sound academic practices for student athletes and (3) to establish harmonious intercollegiate relationships among member institutions."

The Big Ten's bylaws echo this statement of purpose. In its handbook the Big Ten states that it "recognizes the transcendent priority of a student-athlete's academic collegiate experience. It places its highest values upon high academic standards. The student-athlete is student first, athlete second."

Therefore, "[s]tudent-athletes have the right to regularly prepare for and attend classes and final examinations without significant interruption from athletic participation," and each institution "will only permit a schedule of practice, training and competition which will result in a minimum loss of class time and minimum conflict with a student-athlete's final examination schedule."

The Internal Revenue Service granted the Big Ten an exemption from income tax, and the Department exempted the Big Ten from use and related sales taxes.

The Big Ten purchased the Park Ridge property in 1990. It used the building as a work site for administrative personnel, clerical workers and support staff. The employees negotiated contracts on behalf of the member universities, hosted promotional luncheons, monitored compliance with applicable rules, and assigned referees to various athletic events. It offered no classes on a regularly scheduled basis.

The Big Ten distributed $43.5 million to member universities in 1994. Most of the money came from contracts for televised coverage of athletic events. The Big Ten also earned revenues totaling more than $4.2 million that year, while incurring almost $3.9 million in expenses.

The ALJ found that the Big Ten played no role in accreditation and established no academic standards or other admission policies for its members. It published no journal or directory of admission requirements and performed no evaluative functions related to admission. Instead, it coordinated business aspects of members' athletic programs. Although the ALJ found the Big Ten "undoubtedly reduce[d] the administrative costs associated with such programs to constituent members," he found this insufficient to qualify the property as one used for an educational purpose within the meaning of section 15-35(c) of the Property Tax Code (the Code) (35 ILCS 200/15-35(c) (West 1996)). The Director adopted the ALJ's findings and his recommendation for denial of the application for an exemption.

We deem the Director's findings of facts prima facie true and correct. City of Belvidere v. Illinois State Labor Relations Board, 181 Ill. 2d 191, 204, 692 N.E.2d 295 (1998). Because agencies interpret statutes based on experience and expertise, the courts substantially defer to an agency's construction of a statute that the agency administers and enforces. Van's Material Co. v. Department of Revenue, 131 Ill. 2d 196, 202-03, 545 N.E.2d 695 (1989); Moncada v. Illinois Commerce Comm'n, 212 Ill. App. 3d 1046, 1052-53, 571 N.E.2d 1004 (1991). But the agency's decision on a question of law does not bind the courts. Belvidere, 181 Ill. 2d at 205. The court should not reverse the Director on a mixed question of fact and law unless the decision is clearly erroneous. Belvidere, 181 Ill. 2d at 205.

Section 15-35 of the Code exempts from property tax all "property *** used for *** educational purposes." 35 ILCS 200/15-35(c) (West 1996). We construe the exemption strictly, resolving all debatable questions in favor of taxation. Chicago & Northeast Illinois District Council of Carpenters Apprentice & Trainee Program v. Department of Revenue, 293 Ill. App. 3d 600, 605, 688 N.E.2d 721 (1997). The party seeking an exemption bears the burden of clearly and convincingly proving entitlement to the exemption. Chicago & Northeast Illinois District Council of Carpenters Apprentice & Trainee Program, 293 Ill. App. 3d at 606.

The Code exempts the property at issue here if the Big Ten uses the property for educational purposes. The Code does not further define the educational purposes entitling the property owner to an exemption. Our supreme court has held that property need not be directly devoted to classwork to qualify for an exemption. Association ...


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