Appeal from Circuit Court of Sangamon County No. 08MR718 Honorable Leo J. Zappa, Jr., Judge Presiding.
The opinion of the court was delivered by: Justice Pope
JUSTICE POPE delivered the judgment of the court, with opinion. Presiding Justice Knecht and Justice Turner concurred in the judgment and opinion.
For the 2007 tax year, an approximately seven-acre parcel owned by plaintiff, Grace Community Church Assemblies of God, was reassessed from agricultural to commercial property. Consequently, plaintiff's property-tax liability rose from $60 per year to over $15,000 per year. Plaintiff challenged the assessment, claiming its property was exempt from taxation as it was used exclusively for religious purposes. The Sangamon County board of review agreed with plaintiff and determined the property should be exempt. After review of the board's decision, defendants, the Illinois Department of Revenue (Department) and its Director, Brian A. Hamer, denied the exemption. Plaintiff requested a formal hearing. After a hearing before an administrative law judge (ALJ), the ALJ recommended the exemption be denied, and her determination was accepted by the Department and its Director. On administrative review, the circuit court reversed, finding the property was exempt.
The Department and its Director appeal, arguing the agency determination the property was not exempt should be upheld and the circuit court's judgment reversed. Specifically, these defendants argue (1) plaintiff submitted insufficient evidence its land qualified for exemption and (2) the evidence actually submitted shows plaintiff's land is not entitled to exemption. Plaintiff responds its land should be found exempt because either (1) the land was actually used exclusively for religious purposes or (2) the land was being developed toward use for religious purposes. As the land in question was used exclusively for religious purposes, insofar as it was at least minimally used for religious purposes, was not used for secular purposes, and was in the actual process of development and adaptation for religious use in the tax year in question, we affirm.
Plaintiff's land in question is approximately seven acres at the intersection of Westchester Boulevard and Chatham Road in Springfield, Illinois. In May 1996, plaintiff acquired the parcel by quitclaim deed from the Illinois District Council of the Assemblies of God. Until tax year 2007, the parcel was assessed as agricultural land for property-tax purposes as approximately four of the seven acres were farmed by a nearby farmer. In 2005, this agricultural use ceased when plaintiff sold off approximately one acre of the parcel. For tax year 2007, the parcel was reassessed as commercial property. This resulted in an increase in plaintiff's annual property-tax liability from $60 to more than $15,000. Plaintiff's budget could not cover the increased liability.
In May 2007, plaintiff's pastor, Danny L. Shaner, sent a letter to taxing authorities listing plaintiff's activities on the property in question. The activities listed are: "Services"; "Prayer Walks"; "Youth activities: Camping, launching rockets, observing the wildlife, various sports/games"; "Picnics/Fellowship meals"; "Kid's Day (outreach into the neighborhood)"; "Work day"; "School Supplies/Free Lunch outreach"; and "Use of property (no charge) to other nonprofit groups (Sojourn Shelter)." In June 2007, plaintiff applied for a religious exemption for the property taxes sought to be collected with the Sangamon County board of review. Later that month, the board of review recommended the exemption be granted.
After the board of review made its recommendation, as a matter of course, the Department inquired into plaintiff's use of the land in question. Specifically, the Department requested plaintiff (1) submit a list of all activities that took place on the property after January 1, 2007, (2) describe where the property was located in relation to the church, and (3) indicate whether the property was "the location for the new church in the floor plans submitted with the application." In September 2007, plaintiff responded to the Department's inquiry. In response to the Department's first request, plaintiff stated "[t]here is only a small shed for maintenance equipment on the property" and listed 12 specific dates between January and September 2007 on which the property was used other than for storage. According to plaintiff, the property was used for eight prayer walks with participation by Pastor Shaner and, variously, plaintiff's "leadership," the "Capitol section leadership," and plaintiff's congregation. The property was also used for three "leadership meeting[s]," a "sectional meeting," three "property development meeting[s]," and a "leadership and maintenance training." In response to the Department's second request, plaintiff stated it was "presently" meeting for church services at the Illinois Retired Teacher's Association building on North Walnut Street. In response to the Department's third request, plaintiff stated the property in question was intended to be the site of the new church. Specifically, plaintiff responded, "We would like construction to begin as soon as possible, sometime late in 2008 is our best hope. We cannot begin until the tax issue is resolved and won't begin until we can build debt free." In October 2007, the Department denied the exemption, finding "[t]he property is not in exempt use."
In December 2007, plaintiff requested a formal hearing with the Department on the exemption. In May 2008, the parties appeared at a hearing before an ALJ. On the Department's motion, the ALJ admitted a group of documents containing plaintiff's request for a formal hearing, the Department's denial of plain- tiff's application for exemption, the board of review application and recommendation, the quitclaim deed by which plaintiff acquired the property, an "Affidavit of Purpose of Plat," an "Affidavit of Use" (plaintiff's response to the Department's request for further information), plaintiff's constitution and bylaws, a 2006 notification from the Department of plaintiff's exemption from sales and use taxes, Pastor Shaner's May 2007 letter listing uses of the property, and a photograph of the property.
In relevant part, plaintiff's constitution states plaintiff's purpose is "[t]o conduct, in a Scriptural manner, the work of world-wide evangelism and discipleship in obedience to the command of the Lord Jesus." Under its constitution, plaintiff may "own, hold in trust, use, sell[,] convey, mortgage, lease or otherwise dispose of any real estate or chattels as may be necessary for the furtherance of its purposes." The constitution further sets forth procedural prerequisites to plaintiff's mortgaging real property.
Plaintiff's case at the hearing consisted relevantly of Pastor Shaner's testimony and a copy of blueprints for a new church facility, dated March 2000. Pastor Shaner testified he had worked as plaintiff's pastor since 1991. Until plaintiff acquired sole ownership of the property in 1996 by quitclaim deed, it was held jointly by plaintiff and the Illinois District Council of the Assemblies of God. The land at the intersection of Westchester Boulevard and Chatham Road was initially acquired by the district council for no "purpose other than to construct a church at that corner." When Pastor Shaner began working for plaintiff, plaintiff had in place a three-phase, $3 million building plan for constructing a new church facility on the land in question. After plaintiff acquired sole ownership of the land, plaintiff scaled back its $3 million development plan to "a lot less than $3 million." Plaintiff maintained a "building fund that the people contribute to on a regular basis" but did not raise funds specifically for developing the new church facility for theological reasons. Plaintiff preferred, if possible, to build its new facilities without incurring any debt. Pastor Shaner testified, "It's not that we can't [borrow money for that purpose], but we don't want to make a payment where money can be better used somewhere else." There was no testimony to establish how much money had accumulated in the building fund.
Eventually, plaintiff engaged an architect to develop plans for the new church facility, which were drafted in March 2000. However, after a tornado struck plaintiff's land in 2006, plaintiff discovered these plans were obsolete and required revision. Pastor Shaner stated whether the architectural changes would be pursued depended on the exemption status of plaintiff's land. Until plaintiff could be certain of the land's status, the reassessment had "ground [development plans] to a halt." Plaintiff was "not prepared to be investing more finances into updating the blueprints" until its tax liability was determined.
The only improvement ever actually built on the land was a shed used to store plaintiff's tractor, supplies, and records. Occasionally, church leadership met and Pastor Shaner did "some counseling" in the shed. This counseling was "sometimes [of] a religious nature." The shed was destroyed by the 2006 tornado, and "about everything" stored in the shed except the tractor was lost. The shed was rebuilt within days of the tornado.
In 2005, plaintiff sold approximately one acre of its land to Sojourn Shelter and Services, Inc. (Sojourn), a nonprofit women's shelter for abused women and children. As a condition of the sale and of annexing plaintiff's land to the City of Springfield, plaintiff was required to construct a new sewer line. The construction of the sewer line cost between $18,000 and $20,000. In connection with the land sale and annexation, plaintiff incurred approximately $3,000 or $3,500 in legal ...