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Eden Retirement Center, Inc. v. Department of Revenue

January 21, 2004

EDEN RETIREMENT CENTER, INC., PLAINTIFF-APPELLEE,
v.
THE DEPARTMENT OF REVENUE, THE VILLAGE OF GLEN CARBON, AND EDWARDSVILLE COMMUNITY UNIT SCHOOL DISTRICT NO. 7, DEFENDANTS-APPELLANTS, AND THE COUNTY OF MADISON, DEFENDANT.



Appeal from the Circuit Court of Madison County. No. 01-MR-241 Honorable Daniel J. Stack, Judge, presiding.

The opinion of the court was delivered by: Justice Welch

PUBLISHED

Rule 23 order filed December 15, 2003; Motion to publish granted January 21, 2004.

The Department of Revenue of the State of Illinois, Edwardsville Community Unit School District No. 7, and the Village of Glen Carbon (collectively the defendants) appeal an order of the circuit court of Madison County granting the plaintiff, Eden Retirement Center, Inc., a charitable-use exemption for certain real property owned by the plaintiff for the tax year 1996. For the reasons that follow, we affirm the ruling of the circuit court.

The plaintiff is incorporated in Illinois as a not-for-profit corporation and is a qualified tax-exempt corporation pursuant to section 501(c)(3) of the Internal Revenue Code (26 U.S.C. §501(c)(3) (1994)). The bylaws of the plaintiff contain the following language:

"All entrance fees, monthly maintenance charges, routine service charges, nursing care charges, and non[]rated charges may be waived in full, reduced in part, or liability for payment postponed based upon the individual's inability to pay and the Association's financial circumstances."

The plaintiff's property consists of a skilled-care nursing home, an apartment building containing independent living apartments, and single-story duplexes containing independent living units.

In 1996, the plaintiff applied to the Department of Revenue for a property tax exemption on a parcel of property containing five single-story duplex buildings containing 10 independent living residence units owned by the plaintiff and leased to individuals. The Madison County Board of Review (Board) sent out notices of a hearing on the application, and Edwardsville Community School District No. 7 and the Village of Glen Carbon, taxing districts with tax revenue interests in the subject properties, petitioned to intervene. The Board recommended a denial of the plaintiff's application. After an administrative hearing, the Department of Revenue adopted the Board's recommendation and denied the application, finding that the plaintiff did not meet the requirements necessary for the exemption. The circuit court reversed, holding that pursuant to section 15-65 of the Property Tax Code (35 ILCS 200/15-65 (West 2000)), the plaintiff was entitled to the exemption by virtue of the above-quoted language in its bylaws and its federal tax-exempt status. The defendants filed a motion to modify the judgment, which the circuit court denied. The defendants now appeal.

Neither party contests the administrative agency's findings of fact. Rather, this appeal involves a review of the agency decision on a pure question of law. Accordingly, we conduct a de novo review of the decision. Carpetland U.S.A., Inc. v. Illinois Department of Employment Security, 201 Ill. 2d 351, 369, 776 N.E.2d 166, 177 (2002). The legal positions of the parties and the decision of the administrative agency may be summarized as follows. The plaintiff contends that pursuant to section 15-65 of the Property Tax Code (35 ILCS 200/15-65 (West 2000)), which sets forth the requirements for a charitable-use tax exemption, the plaintiff is entitled as a matter of law to an exemption for the property at issue. The defendants contend that in addition to the requirements of section 15-65(c) of the Property Tax Code (35 ILCS 200/15-65(c) (West 2000)), the plaintiff must also demonstrate actual and exclusive charitable use of the property as set forth in the opening sentence of section 15-65 and as defined in Methodist Old Peoples Home v. Korzen, 39 Ill. 2d 149, 233 N.E.2d 537 (1968). The administrative law judge (ALJ) who rendered the agency decision agreed with the position advocated by the defendants. Because we believe that the defendants misconstrue the plain language of section 15-65 by adding the Korzen requirement, we agree with the position advocated by the plaintiff.

The present version of the statute in question states in pertinent part:

"All property of the following is exempt when actually and exclusively used for charitable or beneficent purposes[] and not leased or otherwise used with a view to profit:

(c) Old people's homes *** if, upon making application for the exemption, the applicant provides affirmative evidence that the home or facility or organization is an exempt organization under paragraph (3) of Section 501(c) of the Internal Revenue Code or its successor, and either: (i) the bylaws of the home or facility or not-for-profit organization provide for a waiver or reduction, based on an individual's ability to pay, of any entrance fee, assignment of assets, or fee for services, or (ii) the home or facility is qualified, built[,] or financed under Section 202 of the National Housing Act ***, as amended." 35 ILCS 200/ 15-65(c) (West 2002).

The plaintiff contends that because the plaintiff is an exempt organization under paragraph (3) of section 501(c) of the Internal Revenue Code and because the plaintiff's bylaws provide for a waiver or reduction, based on an individual's ability to pay, of the plaintiff's entrance fee, the plaintiff meets the requirements of the Property Tax Code and is entitled as a matter of law to the requested property tax exemption. The defendants contend that in addition to the requirements of section 15-65(c), the plaintiff must also demonstrate the actual and exclusive charitable use of the property as set forth in the opening sentence of section 15-65 and as defined in Korzen.

When Korzen was decided in 1968, the predecessor to the present section 15-65 included in its enumeration of property ...


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