Appeal from the Circuit Court of Cook County 09 CH 26405 Honorable Sanjay Tailor,Judge Presiding
The opinion of the court was delivered by: Justice McBRIDE
2011 IL App. (1st) 102249
JUSTICE McBRIDE delivered the judgment of the court, with opinion.
Presiding Justice Garcia and Justice R.E. Gordon concurred in the judgment and opinion.
¶ 1 The Department of Revenue of the State of Illinois granted the plaintiff property owner's application for a religious-use real estate tax exemption for the 2007 tax year, despite Lake County's recommendation that the application be denied. The Village of Lake Bluff and Lake Bluff Elementary School District 65 objected to the decision by seeking administrative review; however, while the review was pending, the Department issued a superseded, contrary decision. The administrative hearing officer subsequently also ruled against the exemption. The circuit court affirmed. In this appeal, the property owner contends the Department's superseded decision was an arbitrary denial of due process, the hearing officer's decision was improperly based on religious criteria, and the tax exemption should be granted either because the property was primarily used to conduct public religious worship services or because it was the site of a ¶ 2 Our role is to review the administrative decision rather than the circuit court's decision. Grace Community Church Assemblies of God v. Department of Revenue, No. 4--10--0445, slip op. at 9 (Ill. App. April 18, 2011). Here, where the historical facts are admitted or established and the rule of law is undisputed, we are resolving whether the facts satisfy a statutory standard for tax exemption. Grace Community Church, No. 4--10--0445, slip op. at 10 (Ill. App. April 18, 2011). This is considered a mixed question of law and fact. Grace Community Church, No. 4--10--0445, slip op. at 10 (Ill. App. April 18, 2011). Decisions on mixed questions of fact and law are reversible only if they are clearly erroneous, which is a " 'significantly deferential' " standard of review. Grace Community Church, No. 4--10--0445, slip op. at 10 (Ill. App. April 18, 2011) (citing Provena Covenant Medical Center v. Department of Revenue, 236 Ill. 2d 368, 387, 925 N.E.2d 1131, 1143 (2010)). We will set aside an administrative decision as clearly erroneous only when we are left with the definite and firm conviction that a mistake was made. Grace Community Church, No. 4--10--0445, slip op. at 11 (Ill. App. April 18, 2011).
¶ 3 Taxation is the rule and tax exemption is the exception. Provena Covenant, 236 Ill. 2d at 388, 925 N.E.2d at 1143. Every presumption is against the intention of the state to exempt property from taxation. Provena Covenant, 236 Ill. 2d at 388, 925 N.E.2d at 1144. Accordingly, statutes granting exemption are strictly construed in favor of taxation and questions of fact or "debatable" questions are similarly resolved in favor of taxation. Provena Covenant, 236 Ill. 2d at 388, 925 N.E.2d at 1144. Section 15--40(a) of the Illinois Property Tax Code exempts from taxation property which is "used exclusively" for "religious purposes." 35 ILCS 200/15--40(a) (West 2006). Section 15--40(b) exempts from taxation:
"Property that is owned by
(2) religious institutions or
(3) religious denominations and that is used in conjunction therewith as housing facilities provided for ministers ***, their spouses, children and domestic workers, performing the duties of their vocation as ministers at such churches or religious institutions or for such religious denominations ***.
A parsonage, convent or monastery or other housing facility shall be considered under this Section to be exclusively used for religious purposes when the persons who perform religious related activities shall, as a condition of their employment or association, reside in the facility." 35 ILCS 200/15--40(b) (West 2006).
¶ 4 See, e.g., Our Savior Lutheran Church v. Department of Revenue, 204 Ill. App. 3d 1055, 562 N.E.2d 1198 (1990) (parsonage and carport which were temporarily vacant after 40 years due to church pastor's retirement were still exempt from taxation); Ada County Assessor v. Roman Catholic Diocese, 849 P.2d 98 (Idaho 1993) (property occupied by semi-retired priest without a designated congregation and church officials who worked mainly as administrators without regular ministries did not qualify for parsonage exemption). Courts have interpreted the term "exclusively" in the context of religious exemptions to mean "primarily, and will not deem incidental or secondary use which is not for profit as grounds for denying exemption." Grace Community Church, No. 4--10--0445, slip op. at 13 (Ill. App. April 18, 2011) (citing Faith Builders Church, Inc. v. Department of Revenue, 378 Ill. App. 3d 1037, 1043, 882 N.E.2d 1256, 1262 (2008) (finding church preschool was a daycare center instead of a facility used primarily for religious purposes)). There is no all-inclusive definition of religious purpose for tax cases and relevant considerations include facts and circumstances indicating how in actuality or practice the property is used. Provena Covenant, 236 Ill. 2d at 409, 925 N.E.2d at 1155.
¶ 5 The subject five-acre property at 1955 Shore Acres Road, Lake Bluff, Illinois, 60044 (Lake County PIN 12--09--401--002), was sold to Susan Michael for $3 million in October 2004, as a residence for herself, her husband George Michael, and their three daughters. George Michael has described Lake Bluff as a small community of about 7,500 people located north of Chicago, and the property itself as a heavily-wooded, private and tranquil site which abuts the shores of Lake Michigan. At a deposition in 2008, Susan Michael stated she "really [did not] know" about the purchase, because her husband "handle[d] all" the family's property matters, including deeds, construction, mortgages, and taxes, and would obtain her signature on documents as needed. George Michael is a real estate broker and the president of Michael Realty L.L.C., a Chicago real estate brokerage that is devoted to selling, leasing, and managing residential and commercial property. He is also the founder of Citizens Bank and Trust, which was chartered in January 2000, and is vice chair of its board of directors and chair of its audit committee. Although the Lake Bluff property was improved with a single-family dwelling, between 2004 and 2006, the Michaels performed significant demolition and construction ...