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Salt Creek Rural Park Dist. v. Dep't of Revenue

September 17, 2002


Appeal from the Circuit Court of Cook County No. 99 L 51203 Honorable Joanne Lanigan Judge Presiding.

The opinion of the court was delivered by: Justice Cahill


Plaintiff Salt Creek Rural Park District (the park district) appeals an Illinois Department of Revenue (Department) order denying tax-exempt status for 11 acres of land. We affirm.

The record reveals that the park district filed an application with the Illinois Department of Natural Resources (IDNR) for a matching funds grant to purchase 11 acres of land. The IDNR does not allow a park district to use grant funds to cover the purchase price of land already owned by it. So the park district entered into an "agreement" with the Corporation for Open Lands (Corlands), title-holder of the 11 acres. Under the agreement, Corlands would hold title to the land until the grant was approved.

Corlands had acquired the land under a deed in trust executed on October 9, 1996. Corlands then leased the land to the park district from November 1, 1996, until January 31, 1998. The agreement referred to the parties as "landlord" and "tenant," and structured the payments to be made by the park district. The agreement required the park district to use the land for park district purposes only. The agreement also gave the park district an option to purchase the land, terminating the agreement. The park district exercised this option in June 1997 and acquired full title.

The park district filed a real estate tax exemption complaint for the year 1996 with the Cook County Board of Review on January 27, 1997, six months before acquiring title. This complaint sought a finding that the land was tax exempt under section 15-105(b) of the Property Tax Code (the Code) (35 ILCS 200/15-105(b) (West 2000)). This section reads:

"(b) All property belonging to any park or conservation district with less than 2,000,000 inhabitants is exempt. All property leased to such park district for $1 or less per year and used exclusively as open space for recreational purposes not exceeding 50 acres in the aggregate for each district is exempt." 35 ILCS 200/15-105(b) (West 2000).

The Board of Review recommended that a partial exemption be granted from November 1 through December 31, 1996, the two-month period the Corlands agreement was in effect. The Department overruled the Board of Review and denied the request for tax-exempt status.

An administrative hearing was held on June 24, 1999. The park district submitted evidence of the Corlands agreement, characterizing the arrangement as a "pass through" to allow the park district to purchase land with government funds. The park district analogized the agreement to a constructive trust.

An administrative law judge affirmed the Department's denial of tax-exempt status on October 12, 1999. He found that the park district did not own the land in November and December, but leased it. The administrative law judge rejected the constructive trust argument of the park district. He also rejected the argument that the option to purchase the land made the agreement something other than a lease.

The administrative law judge then found that the statutory requirements for a leasehold exemption were not met. The lease between the park district and Corlands required rent payments of more than $1 per year. No evidence was presented that the land was used for tax-exempt purposes during the 1996 tax year. 35 ILCS 200/15-105(b) (West 2000).

The park district filed a complaint for administrative review in the circuit court on November 16, 1999. An amended complaint was filed on May 2, 2000. The amended complaint added Cook County as a defendant and sought additional relief for taxes levied against the lots since 1997. The trial court granted a motion to strike Cook County as a defendant and the newly added counts. The court then affirmed the denial of tax-exempt status for 1996.

On appeal, the park district argues that the land is tax exempt under sections 15-105(b) and 15-80 of the Code (35 ILCS 200/15-105(b), 15-80 (West 2000)). The park district also contends that the trial court improperly denied alternative and prospective relief. We first consider our standard of review.

The park district suggests a de novo review. The Department argues for a clearly erroneous standard, claiming that the park district's right to a tax exemption turns on a showing that the lease was a constructive trust, an installment contract or that the land was used for recreational purposes. The Department cites to Lutheran Church of the Good Shepherd of Bourbonnais v. Department of ...

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