APPEAL FROM THE CIRCUIT COURT OF COOK COUNTY. 98 L 50550 HONORABLE THOMAS P. QUINN, JUDGE PRESIDING.
The opinion of the court was delivered by: Justice Wolfson
In 1994 and 1995 Randolph Street Gallery (RSG), a non-profit corporation, served as a public forum for the contemporary arts and for art education activities. All well and good, said the Illinois Department of Revenue (the Department), but RSG is not entitled to real estate charitable tax exemptions for those years. On administrative review, the circuit court held the Department should have granted the exemptions. The Department appealed. We affirm the circuit court.
In 1993, RSG acquired two adjacent three-story buildings on North Milwaukee Avenue in Chicago's West Town neighborhood. RSG occupied the first floors of these buildings, and this space was divided into four areas: three areas for exhibitions, performances, classes or workshops, and one area called a resource room containing around 1,700 books, magazines, and videotapes, as well as a computer with internet access, which was open to the public. RSG generally charged no admission fees to exhibitions, but regularly charged fees to "Time Arts" events or performances. In 1994 and 1995, RSG presented eight exhibitions and more than 50 performances. RSG also presented free lectures and artist workshops for which it charged fees. Several local universities, including the School of the Art Institute of Chicago, Northwestern University, and Columbia College, placed interns at RSG.
RSG also created and managed Team Arts Pursuits (TAP), a community arts education program which integrated resources from a variety of social service agencies to offer workshops for at-risk youths and adults. And RSG allowed other local arts organizations, such as Women in the Director's Chair, Street Level Video, the Women's Action Coalition, the Gay and Lesbian Cultural Workers, the Chicago Public Art Group, and the Chicago Committee of the Day Without Art to use its space for programming and meetings.
On October 19, 1994, RSG filed an "Application for Property Tax Exemption" to avoid paying $164,719 in 1994 property taxes. On February 1, 1996, the Department denied RSG's application, stating, "THE PROPERTY IS NOT IN EXEMPT OWNERSHIP. THE PROPERTY IS NOT IN EXEMPT USE." On March 21, 1996, RSG filed another "Application for Property Tax Exemption" to avoid paying $77,664 in 1995 property taxes. Again, on September 5, 1997, the Department denied RSG's application, repeating, "THE PROPERTY IS NOT IN EXEMPT OWNERSHIP. THE PROPERTY IS NOT IN EXEMPT USE."
RSG requested a formal hearing regarding these denials. The Department, at a hearing before an administrative law judge (ALJ), submitted seven exhibits, including RSG's exemption applications, the Department's denials, RSG's hearing requests, and the ALJ's order consolidating RSG's cases and scheduling a hearing. RSG submitted nine exhibits concerning its activities and finances, called 11 witnesses at the hearing, and submitted a post-hearing brief. On May 4, 1998, the ALJ issued his "RECOMMENDATION FOR DISPOSITION," in which he recommended the Department affirm its earlier denials of RSG's exemption applications. On May 5, the Department accepted the ALJ's recommendation, and, on June 9, RSG filed an administrative review complaint in the circuit court.
On December 8, 1999, the trial court reversed the Department's decision.
This appeal marks the Department's first meaningful participation in this case. The Department did not appear at the hearing before the ALJ. On administrative review before the trial court, the Department never responded to RSG's opening brief.
After the Department's attorney advised he would not file a timely response brief, RSG filed a so-called "REPLY BRIEF." According to RSG, the Department's attorney telephoned RSG's attorney to ask for a month-long briefing extension. RSG's attorney balked, and the parties agreed to discuss the case in a subsequent telephone conversation. When they spoke several days later, the Department's attorney said he would prepare an internal brief supporting his recommendation of concession.
There was no concession. Instead, there was a hearing on RSG's complaint. The Department focused its argument on whether RSG failed to show its expenses were related to charitable purposes. It relied entirely on RSG's purported failure to provide "*** any information as to how the monies were actually spent, any type of breakdown was not provided."
The trial judge's adverse ruling apparently piqued the Department's interest, and now, on appeal, it has abandoned the charitable-expenses issue it relied on in the circuit court. Instead, the Department contends RSG was not a charity because it charged substantial fees for services it offered and did not waive those fees for those who were unwilling to pay. The uncontradicted fact that RSG had a fee-waiver policy in place and used it does not deter the Department. That policy was ineffective, says the Department, because RSG did not make it known to the public.
The Department also now contends RSG was not entitled to a tax exemption because the primary purpose for which the property was used was not charitable. While this second contention is difficult to follow, it seems to be a restatement of the Department's first claim: RSG charged fees for ...