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Du Page County Board of Review v. Department of Revenue

May 29, 2003


Appeal from the Circuit Court of Du Page County. No. 01-MR-266 Honorable Bonnie M. Wheaton, Judge, Presiding.

The opinion of the court was delivered by: Justice Grometer


Plaintiff, the Du Page County Board of Review (Board), appeals a judgment affirming a decision by the Department of Revenue of the State of Illinois (Department) granting a tax exemption for real property owned by Good Shepherd Evangelical Lutheran Church (Good Shepherd or the church). The Board contends that the Department erred insofar as it held that a house for one of the church's schoolteachers is exempt under section 15--40 of the Property Tax Code (35 ILCS 200/15--40 (West 1998)). We agree. Therefore, we affirm in part and reverse in part.

On May 11, 1999, Good Shepherd, a member of the Wisconsin Evangelical Lutheran Synod, bought land improved with a detached garage and a house. The land is near the church's other property. On August 13, 1999, the church petitioned the Department to exempt its new property from taxation for 66% of the 1999 tax year. The Board contested the petition. We summarize the evidence from the hearing before the administrative law judge (ALJ).

Good Shepherd's first witness was Erik Guldberg, the president of its congregation. He testified as follows. When the congregation wishes to "call" a new teacher, it obtains a list of candidates from the synod. The voters' assembly then chooses a candidate, and the church sends her a "call letter." On March 8, 1999, the church sent a letter to Ellen Zank, "solemnly charg[ing]" her to instruct her students in "the chief truths of the Word of God[]" and otherwise to follow Christian principles. Also, the letter requires Zank to assist as the school's athletic director and to conduct the vacation Bible school. In return, the church promises to receive Zank as "a servant of Jesus Christ," to treat her accordingly, and (more mundanely) to pay her salary and provide her housing. On May 10, 1999, the congregation voted to require Zank to live in the house.

David Rutschow, Good Shepherd's senior pastor, testified that the "ministry" includes both the church and the school. He stated that "we're calling [pastors and teachers] to the ministry of our congregation, whether it be preaching or whether it be teaching ministry." A synod yearbook for 2001 lists Zank among the "Women in the Teaching Ministry."

A letter Rutschow wrote his attorney in August 2000 explains that the church calls pastors to the "preaching ministry" and teachers to the "teaching ministry." The teachers must instruct students in the standard secular subjects and in the Bible. Teachers must teach all subjects and administer all discipline in the light of the Bible.

The synod operates Martin Luther College in Minnesota, which trains pastors and teachers, both of whom are "presented to the church as candidates for the ministry" and receive their initial assignments from the synod. Teachers and pastors are called by the method Guldberg described.

Rutschow recounted that, on August 8, 1999, Zank was installed during a church service. The installation was conducted according to a form entitled "A Rite of Installation/Ordination of Teachers." Zank professed her faith in scripture and promised that her teaching would follow the appropriate religious doctrines.

Ellen Zank testified as follows. At Martin Luther College, she received religious education but no pastoral training. She arrived at Good Shepherd a month before her installation. Zank teaches kindergarten through second grade. Good Shepherd's teachers teach "all the subjects that you would find in any other school" and do so "in the light of God's word." Zank teaches specifically religious subjects an hour each day. She is the athletic director and helps with vacation Bible school.

Zank uses one of the two bedrooms in her house as a "school office," where she grades papers and does teaching-related work. However, the house is never used for meetings or other school activities. Unlike Zank, the principal and the other teachers reside in private homes.

The Board called David Rutschow. Asked why only Zank lives in church-owned housing, Rutschow replied that the other teachers already had their residences and that "we had a single teacher previously who left us through death ***---she had been housed in an apartment because she was a single teacher." The congregation had paid this teacher's rent. Were Zank not living in the church-owned house, the congregation would give her a reasonable housing allowance. There were nearby apartment houses that the congregation believed were safe and well run.

The ALJ recommended exempting the property at issue under section 15--40, which at the pertinent time read:

"All property used exclusively for religious purposes, or used exclusively for school and religious purposes, or for orphanages and not leased or otherwise used with a view to profit, is exempt, including all such property owned by churches or religious institutions or denominations and used in conjunction therewith as housing facilities provided for ministers *** performing the duties of their ...

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