Chicago & Northeastern Illinois District Council v. Department of Revenue
Annotate this Case
THIRD DIVISION
November 26, 1997
No. 1-96-1834
CHICAGO AND NORTHEAST ILLINOIS )
DISTRICT COUNCIL OF CARPENTERS )
APPRENTICE AND TRAINEE PROGRAM, )
)
Plaintiff-Appellant, )
) Appeal from the Circuit
v. ) Court of Cook County.
)
THE ILLINOIS DEPARTMENT OF )
REVENUE, KENNETH E. ZEHNDER, )
Acting Director of the Illinois )
Department of Revenue, ) Honorable
) Lester A. Bonaguro,
Defendants-Appellees, ) Judge Presiding.
)
and )
)
COMMUNITY CONSOLIDATED SCHOOL )
DISTRICT 59 and ARLINGTON HEIGHTS )
TOWNSHIP HIGH SCHOOL DISTRICT 214, )
)
Defendants. )
JUSTICE GORDON delivered the opinion of the court:
BACKGROUND:
This appeal arises from a circuit court order, entered on administrative
review, which affirmed the Illinois Department of Revenue's denial of the
plaintiff's request for a property tax exemption from 1989 property taxes.
The plaintiff, Chicago and Northeast Illinois District Council of Carpenters
Apprentice and Trainee Program (hereinafter referred to as the Council), is a
not-for-profit entity which was established solely for the purpose of
operating a carpentry training program. The Council offers such a training
program on an improved parcel of property which it owns, located at 1256 Estes
Avenue in Elk Grove Village, Illinois, and sought an exemption for that
property from 1989 property taxes under section 500.1 of the Revenue Act of
1939 (Ill. Rev. Stat. 1989, ch. 120, par. 500.1, now repealed, amended and
recodified in the Property Tax Act at 35 ILCS 200/15-35 (West 1996)). The
Council filed a real estate tax exemption application with the Board of
Appeals of Cook County (see 35 ILCS 200/15-5 (West 1996)), alleging that
because it operated a school on the subject property, it was entitled to tax-
exempt status under section 500.1. After reviewing the Council's application,
the Board of Appeals recommended to the Department of Revenue that the Council
receive the requested exemption from its 1989 property taxes. See 35 ILCS
200/16-130 (West 1996) (stating that decisions of Board of Appeals regarding
tax liabilities are not final and that the Illinois Department of Revenue
shall make all final liability determinations). However, the Department of
Revenue denied the Council's request for tax-exempt status on the grounds that
the primary use of the subject property was not educational.
Thereafter, the Council requested and received an administrative hearing
before the Department of Revenue (see 35 ILCS 200/8-35 (West 1996)). At the
conclusion of that hearing, the administrative law judge rejected the
requested exemption, and the Council sought administrative review in the
Circuit Court of Cook County. See 35 ILCS 200/8-40 (West 1996). The circuit
court remanded the case for a new administrative hearing due to
inconsistencies in the record and because the plaintiff had failed to give
proper notice of its application for tax exemption to all municipalities and
school districts in which the subject property was located (see 35 ILCS
200/16-130 (West 1996)). Pursuant to that remand and prior to the new
hearing, defendants Community Consolidated School District 59 and Arlington
Heights Township High School District 214 intervened in this dispute and
opposed the granting of the requested tax exemption.
On July 27, 1995, the Department of Revenue held its final
administrative hearing in this matter, and denied the Council's request for a
real estate tax exemption from 1989 property taxes. Thereafter, the Council
filed another complaint seeking administrative review in the Circuit Court of
Cook County, which affirmed the decision of the Department of Revenue. The
Council now appeals from that decision.
FACTS:
The facts are undisputed. The Council is a not-for-profit trust which
was created in 1965 by the International Brotherhood of Carpenters (a union)
and the Builders' Association of Chicago (a group of general contractors) for
the exclusive purpose of providing education and training for carpenters. The
Council has received not-for-profit tax exemption status from the United
States Internal Revenue Service under section 501(c)(5) of the Internal
Revenue Code (see 26 U.S.C. 501(c)(5) (1988)), which exempts labor
organizations from federal taxation. The Council is also exempt from
occupation tax, service occupation tax, use tax and service use tax in
Illinois, pursuant to the 1987 finding of the Illinois Department of Revenue
that the Council "is organized and operated exclusively for educational
purposes." Pursuant to the Declaration of Trust, the Council is governed by
four members of the Brotherhood of Carpenters and by four members of the
Builders' Association. A collective bargaining agreement between those groups
requires the Builders' Association to contribute sufficient funds to the
Council to finance its creation and maintenance.
According to the undisputed testimony presented at the final
administrative hearing, the goal of the Apprentice Training Program is to
enable students enrolled in the program to complete a job properly by bringing
their skills up to the level at which they could work competitively for
contractors. The program consists of four years of instruction, which
includes both the pre-apprentice and apprentice training programs. To qualify
for the pre-apprentice program, a person must be at least 17 years old and
must have completed at least two years of high school.
The pre-apprentice training course lasts 12 weeks, and is conducted
eight hours per day during that period. Approximately one-third of each day
(i.e., approximately 2 1/2 hours per day) is spent in the classroom, and two-
thirds of each day is spent in the shop. During the first three weeks of the
pre-apprentice program classroom time, the training is divided into
instruction in improving the math skills of the students and in blueprint
reading. The shop work in the pre-apprentice program was designed to
introduce the students to the major divisions of carpentry. After completing
the pre-apprentice program, the students are required to join the
International Brotherhood of Carpenters, to pay union dues, and to get a job
as a carpenter's apprentice with a union contractor. The Council assists its
students in securing such carpenter positions, which are prerequisites to
continued enrollment in the Apprentice Program.
Upon completion of the pre-apprentice program, students enter the second
phase of instruction--the apprentice program. In each of the remaining three
to four years of training, the students are required to complete at least
1,200 hours of on-the-job training. During each quarter, an apprentice is
also required to attend one five-day class on some subject concerning
carpentry. Those classes include courses on concrete, drywalling,
construction of stairs, roof framing, vinyl and carpeting floor-covering, and
framing structural steel. The students are also required to complete a ten-
hour course regarding compliance with the Occupational Safety and Health Act
of 1970 (see 29 U.S.C 651 et seq. (1982)). Besides the limited instruction
in math skills previously noted, no other traditional academic subjects are
taught in the program. (During the administrative hearing, the coordinator of
the Apprentice Program testified that the "general educational" subjects
taught at the Elk Grove Village property included "Math, drafting, sketching,
and welding. I am not sure you could call that a general education."
Upon completion of the pre-apprentice and apprentice programs, students
receive a certificate from the United States Department of Labor stating that
they have completed those programs, and also receive a journeymen's
certificate from the United Brotherhood of Carpenters. However, students are
not awarded either a diploma or a degree for completing their carpentry
training.
Between 1965 and 1988, the carpentry training program now offered by the
Council was offered by the Chicago Board of Education at the Washburne Trade
School in Chicago, Illinois. While the program was at Washburne, it was
financed by the Board of Education, which received reimbursement or
contribution for that financing from the State of Illinois. During the 1987-
88 school year, the Board of Education budgeted 18 carpentry teaching
positions at Washburne, had a total carpentry training program budget at
Washburne of approximately $800,000, and had an overall Washburne budget of
$4,708,768 (the Board of Education offered courses in other areas besides
carpentry at Washburne).
In 1986, the Council purchased the subject parcel of real estate in Elk
Grove Village, Illinois and constructed a building thereon for both pre-
apprentice and apprentice training. The Elk Grove Village facility included a
pre-apprentice training area, and, in addition, contained a millwright shop, a
welding lab, a millwork area, a lathing area, a floor-covering area, a
concrete-forms-construction area, carpentry shops, a stair-construction area,
a rafter-construction area, a lunchroom and restrooms. In 1988, the Board of
Education terminated all apprentice training at Washburne, and the Council
alone began to fund and operate that same program at its Elk Grove Village
facility. However, pursuant to a written agreement between the Council and
the Chicago Board of Education, the Board of Education continued to offer pre-
apprentice training at Washburne until 1991. After 1991, the Board of
Education also terminated all pre-apprentice training at Washburne, and the
instruction in carpentry that had been provided at Washburne was thereafter
offered and funded exclusively by the Council at its Elk Grove Village
facility (the Elk Grove Village facility began to offer both pre-apprentice
and apprentice training in 1989).
As noted, the circuit court affirmed the Department of Revenue's denial
of the Council's application for an exemption from 1989 property taxes
otherwise owing on its Elk Grove Village parcel. For the following reasons,
we affirm.
DISCUSSION:
The sole issue on appeal is whether the circuit court erred in affirming
the Department of Revenue's denial of the Council's request for a property tax
exemption. All property is subject to taxation unless specifically exempted
by statute, and it is well-settled that "taxation is the rule[, and t]ax
exemption is the exception." The Chicago Bar Ass'n v. Department of Revenue,
163 Ill. 2d 290, 301, 644 N.E.2d 1166, 1171-72 (1994). Accord City of Chicago
v. Illinois Department of Revenue, 147 Ill. 2d 484, 590 N.E.2d 478 (1992);
Illini Media Co. v. Department of Revenue, 279 Ill. App. 3d 432, 664 N.E.2d 706 (1996); County of Boone v. Department of Revenue, 215 Ill. App. 3d 453,
574 N.E.2d 1227 (1991); Girl Scouts of Du Page County Council, Inc. v.
Department of Revenue, 189 Ill. App. 3d 858, 545 N.E.2d 784 (1989). Thus,
statutes granting tax exemptions must be construed strictly in favor of
taxation, and all debatable questions must be resolved in favor of taxation.
City of Chicago, 147 Ill. 2d 484, 590 N.E.2d 478; Harrisburg-Raleigh Airport
Authority v. Department of Revenue, 126 Ill. 2d 326, 533 N.E.2d 1072 (1989);
Coyne Electrical School v. Paschen, 12 Ill. 2d 387, 146 N.E.2d 73 (1957);
Illini Media Co., 279 Ill. App. 3d 432, 664 N.E.2d 706; Winona School of
Professional Photography v. Department of Revenue, 211 Ill. App. 3d 565, 570 N.E.2d 523 (1991).
The party claiming an exemption has the burden of proving clearly and
conclusively that the subject property falls within both the constitutional
authorization and the terms of the statute under which the exemption is
claimed. City of Chicago, 147 Ill. 2d 484, 590 N.E.2d 478; Harrisburg-Raleigh
Airport Authority, 126 Ill. 2d 326, 533 N.E.2d 1072; Coyne, 12 Ill. 2d 387,
146 N.E.2d 73; Illini Media Co., 279 Ill. App. 3d 432, 664 N.E.2d 706; Winona
School of Professional Photography, 211 Ill. App. 3d 565, 570 N.E.2d 523.
Where, as here, the facts are undisputed, a determination of whether property
is exempt from taxation is a question of law, in which the reviewing court
must apply the appropriate legal standard to the undisputed facts. City of
Chicago, 147 Ill. 2d 484, 590 N.E.2d 478; Board of Certified Safety
Professionals, Inc. v. Johnson, 112 Ill. 2d 542, 494 N.E.2d 485 (1986); Winona
School of Professional Photography, 211 Ill. App. 3d 565, 570 N.E.2d 523.
Each claim for an exemption must be determined from the facts presented, on a
case-by-case basis. Coyne, 12 Ill. 2d 387, 146 N.E.2d 73; Winona School of
Professional Photography, 211 Ill. App. 3d 565, 570 N.E.2d 523.
The current Illinois constitution authorizes the legislature to provide
statutory exemptions from property taxes, as follows:
"The General Assembly may exempt from taxation only the property
of the State, units of local government and school districts and
property used exclusively for agricultural and horticultural
societies, and for school, religious, cemetery and charitable
purposes." Ill. Const. 1970, art. IX, 6.
This provision for school property tax exemptions has existed in essentially
the same form in the Illinois constitution since 1870. See Ill. Const. 1870,
art. IX, 3 (stating that the General Assembly may enact laws which exempt
from taxation such "property as may be used exclusively *** for school ***
purposes").
In 1989, the tax year in question, section 500.1 of the Revenue Act of
1939 (Ill. Rev. Stat. 1989, ch. 120, par. 500.1, now repealed, amended and
recodified in the Property Tax Act at 35 ILCS 200/15-35 (West 1996)), under
which the plaintiff claims an exemption, provided in pertinent part that tax
exemptions would be granted for
"all property of schools, *** including the real estate on which
the schools are located and any other real property used by such
schools exclusively for school purposes, not leased by such
schools or otherwise used with a view to profit *** and all lands
heretofore or hereafter *** used for *** educational purposes and
the proceeds thereof, whether held in trust or absolutely; and
including, in counties of over 200,000 population which classify
real property, property *** on or adjacent to *** the grounds of a
school which property is used by *** [an] association or
organization which serves the advancement of learning in a field
or fields of study taught by the school and which property is not
used with a view to profit."
This provision, too, has existed in essentially the same statutory form in
Illinois since at least 1877. See Rev. Stat. 1877, ch. 120, 2 ("All
property described in this section *** shall be exempt from taxation ***
[including] [a]ll property of institutions of learning").
The Council contends that even though its carpentry training program is
predominantly vocational, it is nevertheless entitled to a school exemption
under section 500.1 of the Revenue Act of 1939 (Ill. Rev. Stat. 1989, ch. 120,
par. 500.1, now repealed, amended and recodified in the Property Tax Act at 35
ILCS 200/15-35 (West 1996)). In support, it argues that, pursuant to the
requirements of section 500.1, its Elk Grove Village carpentry training
facility is used solely for educational purposes, and duplicates the carpentry
program formerly offered by the Board of Education at the Washburne Trade
School, thereby saving the state hundreds of thousands of dollars in tax
revenue. However, for the reasons discussed below, we believe that the
Council's construction of section 500.1 is overbroad.
As is apparent from its face, section 500.1 provides a property tax
exemption for property used as a school or for educational purposes, but does
not define the scope of either of those terms. Resultantly, as will be shown,
there has been an ongoing series of attempts to qualify for the exemption by
schools in the private sector purporting to teach any number of subjects,
ranging from schools offering the full gamut of traditional academic courses,
to schools offering instruction in highly specialized vocational and
recreational skills and activities.
Our review of those decisions reveals that only a small percentage of
these private applicants met with success before our courts. For cases
denying the exemption, see Board of Certified Safety Professionals, 112 Ill. 2d 542, 494 N.E.2d 485; Milward v. Paschen, 16 Ill. 2d 302, 157 N.E.2d 1
(1959); Coyne, 12 Ill. 2d 387, 146 N.E.2d 73 (1957); Ray Schools-Chicago, Inc.
v. Cummins, 12 Ill. 2d 376, 146 N.E.2d 42 (1957); People ex rel. Brenza v.
Turnverein Lincoln, 8 Ill. 2d 198, 132 N.E.2d 499 (1956); People ex rel.
McCullough v. Deutsche Evangelisch Lutherische Jehovah Gemeinde Ungeanderter
Augsburgische Confession, 249 Ill. 132, 94 N.E. 162 (1911); Winona School of
Professional Photography, 211 Ill. App. 3d 565, 570 N.E.2d 523; American
College of Chest Physicians v. Department of Revenue, 202 Ill. App. 3d 59, 559 N.E.2d 774 (1990); Oasis Midwest Center for Human Potential v. Rosewell, 55
Ill. App. 3d 851, 370 N.E.2d 1124 (1977). For cases granting the exemption,
see Illinois College of Optometry v. Lorenz, 21 Ill. 2d 219, 171 N.E.2d 620
(1961); People ex rel. Thompson v. St. Francis Xavier Female Academy, 233 Ill. 26, 84 N.E. 55 (1908).
In reaching their determinations, our courts have looked to two primary
factors and several ancillary factors to determine whether a given property
constitutes a school or facility used for educational purposes to qualify for
an exemption under section 500.1 and its statutory predecessors and
successors. First, our courts have looked to whether the property in question
contained a school which offered an established, commonly accepted program of
academic instruction. This prerequisite was articulated by our supreme court
in the early case of People ex rel. McCullough v. Deutsche Evangelisch
Lutherische Jehovah Gemeinde Ungeanderter Augsburgische Confession, 249 Ill. 132, 94 N.E. 162 (1911), wherein the court stated as follows:
"A school, within the meaning of the constitutional provision, is
a place where systematic instruction in useful branches is given
by methods common to schools and institutions of learning, which
would make the place a school in the common acceptation of the
word. What are called schools are conducted for teaching dancing,
riding deportment and other things, which are not schools in the
ordinary sense" Deutsche Evangelisch, 249 Ill. at 137, 94 N.E. at
164.
Thus, to the extent Deutsche Evangelisch looks to the "common
acceptation" (Deutsche Evangelisch, 249 Ill. at 137, 94 N.E. at 164) of the
word "school," it favors schools offering traditional courses of academic
instruction. This same standard was again invoked in the more recent
appellate court decision in Oasis Midwest Center for Human Potential v.
Rosewell, 55 Ill. App. 3d 851, 370 N.E.2d 1124 (1977), wherein the court
stated that
"[w]hile the programs [in humanistic psychology] offered at Oasis
may be deemed 'educational' in a broad sense, it cannot be
maintained that plaintiff's course of study fits into the scheme
of education currently in vogue in Illinois and against which the
Oasis program must be measured. That plaintiff's members may
appreciate this fact as plaintiff's virtue rather than its vice
does not serve to alter the fact that plaintiff's use of its
property does not qualify it for tax exempt status." 55 Ill. App.
3d at 857, 370 N.E.2d at 1129.
Under this standard, the courts have been inhospitable towards granting
a school exemption to schools whose curriculum did not consist of traditional
subject matter common to accepted schools and institutions of learning, but
was vocational or recreational in nature. See Board of Certified Safety
Professionals, 112 Ill. 2d 542, 494 N.E.2d 485 (exemption denied for school
which issued safety certificates to students who passed basic exams in areas
such as fire safety); Milward, 16 Ill. 2d 302, 157 N.E.2d 1 (exemption denied
for short-term mortuary management school); Coyne, 12 Ill. 2d 387, 146 N.E.2d 73 (exemption denied for school which provided technical courses of study in
electricity, radio, radar, and electronics); Ray Schools, 12 Ill. 2d 376, 146 N.E.2d 42 (exemption denied for school which offered brief classes in dress
design, commercial art, and window display skills); Turnverein Lincoln, 8 Ill. 2d 198, 132 N.E.2d 499 (exemption denied for school which offered classes in
swimming and gymnastics); Winona School of Professional Photography, 211 Ill.
App. 3d 565, 570 N.E.2d 523 (exemption denied for school which offered courses
in photography); American College of Chest Physicians, 202 Ill. App. 3d 59,
559 N.E.2d 774 (exemption denied for entity which offered courses in pulmonary
medicine not taught on subject property and not required for continued
licensure or certification in Illinois); Oasis Midwest Center for Human
Potential, 55 Ill. App. 3d 851, 370 N.E.2d 1124 (exemption denied for school
which taught humanistic psychology and "personal growth" through religion and
philosophies such as gestalt and Eastern meditation). But see School of
Domestic Arts & Science v. Carr, 322 Ill. 562, 153 N.E. 669 (1926) (holding
property tax exemption appropriate for residential cooking, serving, sewing
and household management school under statutory exemptions for property used
for both charitable and educational purposes). See also Illinois College of
Optometry, 21 Ill. 2d 219, 171 N.E.2d 620 (exemption allowed for nonprofit
optometry school, but where the court specifically found that the course of
instruction echoed a traditional medical school course of study which was a
prerequisite to degree in ophthalmology at University of Illinois medical
school); St. Francis Xavier Female Academy, 233 Ill. 26, 84 N.E. 55 (exemption
allowed for a school which offered a full array of traditional academic high
school courses).
Secondly, in determining whether to permit the subject exemption, our
courts have looked to whether the program in question substantially lessened
what would otherwise have been a governmental obligation, i.e., whether the
state was otherwise required to offer such a program of study in a tax-
supported public school. See Milward, 16 Ill. 2d 302, 157 N.E.2d 1 (exemption
denied since state not required to offer mortuary management course of study);
Ray Schools, 12 Ill. 2d 376, 146 N.E.2d 42 (exemption denied since commercial
art, advertising, dress design, fashion merchandising and window display
courses were substantially more specialized than those which the state was
required to offer); Winona School of Professional Photography, 211 Ill. App.
3d 565, 570 N.E.2d 523 (exemption denied where state not required to offer
photography courses in question); American College of Chest Physicians, 202
Ill. App. 3d 59, 559 N.E.2d 774 (exemption denied where state not required to
offer continuing medical education); Oasis Midwest Center for Human Potential,
55 Ill. App. 3d 851, 370 N.E.2d 1124 (exemption denied where state not
required to offer courses in humanistic psychology or self-improvement).
Both of these criteria receive full articulation in the supreme court
decision in Coyne Electrical School v. Paschen, 12 Ill. 2d 387, 146 N.E.2d 73
(1957). In Coyne, the taxpayer seeking an exemption was a not-for-profit
vocational training school which provided technical courses of study in
electricity, radio, radar, and electronics through classes entitled, inter
alia, Electrical and Refrigeration, Radio and Refrigeration, Radio-Television,
and General Electrical Technicians. The courses of study available at the
school lasted from 18 to 66 weeks in duration and classes were 35 hours per
week. The Coyne court held that there should be no tax exemption under the
statutory predecessor to section 500.1, noting that the plaintiff school did
not provide traditional courses in math, rhetoric, language, science or
history, and did not lessen the burden of taxation by offering courses which
the state would otherwise have to offer in a tax-supported public school. In
summary, the Coyne court stated as follows:
"On the basis of the foregoing decisions it is manifest that two
things are necessary to qualify a private institution for tax
exemption as a school: first, a course of study which fits into
the general scheme of education founded by the State and supported
by public taxation; second, a course of study which substantially
lessens what would otherwise be a governmental function and
obligation." Coyne, 12 Ill. 2d at 392-93, 146 N.E.2d at 77.
Lastly, in determining whether to award the property tax exemption in
question for schools/educational programs, our courts have looked to such
factors as the duration of the course of study, whether classroom instruction
was given, and whether degrees or diplomas were awarded. See generally
Milward, 16 Ill. 2d 302, 157 N.E.2d 1 (exemption denied since, inter alia,
four-week mortuary management courses were too brief and superficial); Ray
Schools, 12 Ill. 2d 376, 146 N.E.2d 42 (exemption denied because, inter alia,
monthly interior decorating and fashion courses were too short); St. Francis
Xavier Female Academy, 233 Ill. 26, 84 N.E. 55 (granting exemption where
diplomas were awarded after completion of course of study including
traditional academic subjects as well as training in languages, musical
instruments, and painting); Winona School of Professional Photography, 211
Ill. App. 3d 565, 570 N.E.2d 523 (exemption denied since, inter alia, no
degrees were awarded and one-week courses were too short); American College of
Chest Physicians, 202 Ill. App. 3d 59, 559 N.E.2d 774 (exemption denied to
entity which held five-day medical seminars at locations other than the
property for which the exemption was sought).
In the instant case, under the two-pronged test as articulated by the
court in Coyne, the Council is not entitled to a property tax exemption under
section 500.1. First, under the first prong of that test, it is clear that
the Council's carpentry program does not offer courses in traditional academic
subjects, but, rather, offers solely vocational training, with the exception
of some brief and otherwise limited instruction in math skills geared towards
enhancing the student's carpentry skills. Secondly, under the second prong of
the test articulated in Coyne, the Council's carpentry training program does
not provide a course of study which substantially lessens a governmental
function or obligation. In that regard, although the state paid for the
operation of the Washburne Trade School, it was not required to fund or to
offer such a program in the first instance. See Board of Certified Safety
Professionals, 112 Ill. 2d 542, 494 N.E.2d 485 (no exemption since Illinois
does not license safety professionals); American College of Chest Physicians,
202 Ill. App. 3d 59, 559 N.E.2d 774 (no exemption because, inter alia, no
Illinois requirement for continuing medical education); Oasis Midwest Center
for Human Potential, 55 Ill. App. 3d 851, 370 N.E.2d 1124 (no exemption since,
inter alia, state not required to offer course of study in humanistic
psychology). Thus, despite the fact that the Council funds the costly
apprentice program in an amount roughly equal to that which the state formerly
paid to operate that program, that funding does not relieve the state of any
burden which it carried to offer any such program. While the Board of
Education and the state may well have saved money by discontinuing the
carpentry program in question, they were not obligated to provide such a
program even if no enterprise in the private sector had undertaken to provide
one.
Moreover, pursuant to the other aforementioned factors commonly
considered by our courts in determining whether to grant the subject
exemption, as noted, throughout the four-year program, students received only
a few hours of classroom instruction in math skills during the pre-apprentice
program, and thereafter received only five days of classroom instruction each
quarter (or 20 days of such instruction each year), which consisted solely of
carpentry-related topics. Rather than training students in traditional
academic subjects in a classroom setting which lasted through the normal
course of an academic year, students were primarily prepared to become
carpenters through on-the-job training at locations other than the Elk Grove
Village facility. As such, they were required to join the International
Brotherhood of Carpenters union, to pay union dues, and to get a job as a
carpenter's apprentice with a union contractor where they were required to
spend 1,200 hours each year. Furthermore, the program, which requires only
two years of high school for admission thereto, does not lead to any high
school or other type of degree or diploma, but, rather, leads to a certificate
from the United States Department of Labor stating that the student had
completed the program, and to a journeymen's certificate from the United
Brotherhood of Carpenters.
The Council contends that the state was in fact required to provide
vocational training (and that therefore, the carpentry program here relieved
the state of a substantial tax burden) since the Illinois School Code (105
ILCS 5/1-1 et seq. (West 1996)) requires public school students to
successfully complete, inter alia, one year chosen from music, art, foreign
languages, or vocational training (see 105 ILCS 5/27-22(5) (West 1996)). See
also 105 ILCS 5/27-22.2 (West 1996) (providing that vocational training
courses must be included in any list of elective courses from which high
school students must choose); 105 ILCS 5/10-22.20a (empowering the School
Board to provide vocational programs). We disagree. We first note that these
provisions merely require the state to offer limited vocational courses as
elective subjects adjunctive to the otherwise traditional course of academic
study which would lead to the award of a high school diploma. They do not
require the state to offer an intensive, extended and exclusive vocational
training program over a two-to-four year period such as the one offered here
in preparation for receipt of a journeymen's certificate from the United
Brotherhood of Carpenters. Moreover, consistent with this conclusion that the
Washburne program was never an obligatory one is the fact that as the
appellant concedes, Washburne no longer offers any such program, and the
further fact that no evidence has been presented in this record to show that
this program or one similar to it has ever been offered by any other public
school. See generally Deutsche Evangelisch, 249 Ill. 132, 94 N.E. 162 (no
school/educational use exemption for religious school entity because no
affidavit presented to establish such property use).
The Council appears to contend that regardless whether the state would
originally have had the burden of offering the carpentry training program, the
mere fact that it is duplicating a program previously offered in a publicly
exempted school is sufficient to establish that the program "fits into the
general scheme of education founded by the State and supported by public
taxation *** [and] substantially lessens what would otherwise be a
governmental function and obligation." Coyne, 12 Ill. 2d at 392-93, 146 N.E.2d at 77. We disagree.
The mere fact that a private organization or institution teaches a
subject that is also taught in the public schools, or for that matter, even
takes over a public school program, is not sufficient to justify a school
property tax exemption, since the mere fact that a course of study was offered
in a publicly funded school is insufficient by itself to establish that that
subject fits within the general scheme of education. The case of People ex
rel. Brenza v. Turnverein Lincoln, 8 Ill. 2d 198, 132 N.E.2d 499 (1956) is
directly in point. There, an exemption was denied to a gymnastics and
swimming school which duplicated courses offered in tax-supported public
schools. In denying that exemption, the court stated:
"[i]n the ordinary school, physical education is a part, but only
a part, of the curriculum. And while instruction in swimming and
gymnastics is educational in the broad sense, it is not
sufficient, standing alone, to bring an institution within the
scope of our statute, where, as aforesaid, a restrictive meaning
is intended". Turnverein Lincoln, 8 Ill. 2d at 202, 132 N.E.2d at
501.
Likewise, in Ray Schools-Chicago, Inc. v. Cummins, 12 Ill. 2d 376, 146 N.E.2d 42 (1957), the court denied an exemption to a school of commercial art,
advertising, interior decoration, window display, photography, dress design
and fashion merchandising, despite the fact that courses duplicated those
offered in public schools, stating:
"the teaching of but a small part of the instruction given in
ordinary schools does not suffice to constitute appellee an
educational institution for which exemption was intended. ***
[T]he instruction given by appellee *** is not as commonplace in
ordinary schools, and perhaps not [even] as important to the
public well-being generally, as [the] instruction in physical
education [which did not qualify for a tax exemption in Turnverein
Lincoln]". Ray Schools, 12 Ill. 2d at 384-85, 146 N.E.2d at 47.
Moreover, as previously noted, whether a private school program substantially
lessened what would otherwise have been a governmental obligation is
determined by considering whether the state was otherwise required to offer
such a program of study in a tax-supported public school. See Milward, 16 Ill. 2d 302, 157 N.E.2d 1; Ray Schools, 12 Ill. 2d 376, 146 N.E.2d 42; Winona
School of Professional Photography, 211 Ill. App. 3d 565, 570 N.E.2d 523;
American College of Chest Physicians, 202 Ill. App. 3d 59, 559 N.E.2d 774;
Oasis Midwest Center for Human Potential, 55 Ill. App. 3d 851, 370 N.E.2d 1124.
The Council contends that the decisions of Ass'n of American Medical
Colleges v. Lorenz, 17 Ill. 2d 125, 160 N.E.2d 763 (1959); People ex rel.
Goodman v. University of Illinois Foundation, 388 Ill. 363, 58 N.E.2d 33
(1944); and Illini Media Co. v. Department of Revenue, 279 Ill. App. 3d 432,
664 N.E.2d 706 (1996) support its argument, since in those cases, exemptions
were granted to entities which offered no courses of instruction whatsoever,
traditionally academic or otherwise. However, those decisions are fully
distinguishable. While the decisions in those cases would seem to permit
exemptions even where the entities did not offer traditional classroom
instruction in common academic areas of study, those entities in fact provided
essential services to students enrolled in academic programs which themselves
fully and unquestionably qualified for the school/educational use tax
exemption.
Thus, in Ass'n of American Medical Colleges, the plaintiff, whose
governing members constituted all United States medical schools, used the
subject property to compile student information to help develop programs of
instruction; to publish a directory of admission requirements and a journal
regarding admissions requirements at the various medical schools; to sponsor
admission tests and teaching institutes; to appraise the curricula of medical
schools and colleges; and to evaluate prospective medical students.
Similarly, in University of Illinois Foundation and in Illini Media, the
plaintiffs used the subject property for the University of Illinois student
union, residence halls, and an arcade, which collectively contained university
offices and student services including a bookstore, a restaurant, and a barber
shop, and for operating the University of Illinois radio station and for
publishing its newspaper and one of its technical journals. As noted by the
court in University of Illinois Foundation, these services entitled the
plaintiffs to the subject exemption because they were "necessary and proper in
conducting an educational institution." 388 Ill. at 371, 58 N.E.2d at 37.
In those cases, each entity seeking the exemption functioned in a manner
wholly subservient to the students attending the institutions which it served,
which themselves offered the full range of traditional academic curricula in
programs resulting in degrees and programs which the state was required to
offer by law.
The Council also relies on the decisions of Illinois College of
Optometry v. Lorenz, 21 Ill. 2d 219, 171 N.E.2d 620 (1961) and School of
Domestic Arts & Science v. Carr, 322 Ill. 562, 153 N.E. 669 (1926) in support
of its position on appeal that the variable involving the subject matter of
the curriculum is not dispositive of the exemption issue. However, those
decisions, too, offer the plaintiff little or no help. Although the school
curriculum in Illinois College of Optometry (where the exemption was allowed)
was, at first glance, more akin to that of a vocational school than to a
school offering a traditional academic course of study, the court there noted
that the Illinois College of Optometry did in fact offer a traditional
curriculum in that many tax-supported universities in other states include
schools or departments of optometry as part of their university curriculum.
The court went on to say that
"[t]he University of Illinois, on the other hand, has no school,
department or college of optometry. However, the courses taught
by plaintiff are taught at the university and any medical doctor
undertaking to specialize in ophthalmology, must have in his
course of study the courses offered by plaintiff. In either case,
the same courses are necessary before one may become qualified to
practice optometry. To this extent then, and the number of
optometry students is substantial, plaintiff is providing a course
of instruction which duplicates that provided in the tax-supported
university and its medical school." 21 Ill. 2d at 223, 171 N.E.2d
at 622.
Similarly, although the decision in School of Domestic Arts & Science
would appear to contradict the line of cases which would grant the subject
exemption only to schools which offer traditional, academic courses of study,
the supreme court in Coyne expressly repudiated this aspect of that decision.
The entity in School of Domestic Arts & Science was granted its exemption on a
dual basis--both as a charitable and as an educational institution--insofar as
it offered free courses in residential cooking, serving, sewing and household
management. The Coyne court stated that the finding in School of Domestic
Arts & Science that the entity there was entitled to an exemption as a school
in addition to being entitled to an exemption as a charitable institution was
mere surplusage, stating as follows:
"In view of the *** finding that [the] appellant [there] was a
charitable organization exempt from taxation under the seventh
paragraph of section 2 of the Revenue Act, it would appear that
the finding of exemption as a school was surplusage.
Additionally, we find no reason to say that the court's assumption
in that case, without any analysis of the issue, serves either to
broaden the constitutional definition of a school earlier
established, or to bind us in this case. Each individual claim
for tax exemption must be determined from the facts presented."
Coyne, 12 Ill. 2d at 394, 146 N.E.2d at 77.
Thus, the pattern of precedents with respect to entitlement to a school
exemption, while not always fully consistent, nevertheless adheres to the
basic standard articulated in Coyne. That standard would restrict the grant
of the school exemption in the private sector to those programs which offer
traditionally accepted academic subjects in the context of an established
academic environment. This in turn would lessen the burden of taxation by
offering courses which the state would otherwise be required to offer in a
tax-supported public school. Under this standard, private schools offering
commonly accepted grammar school, high school, college, and post-graduate
courses of study could avail themselves of the exemption. The alternative of
offering a wider window of exemption would run the risk of permitting the
exemption for any commercial venture offering any training in singular skills
and hobbies under the guise of self-improvement, and would ultimately lead to
the inclusion of enterprises such as karate, dance, and horseback-riding
schools, as well as admittedly more useful, vocationally-oriented schools such
as those in beauty care, television repair, and refrigeration repair, or other
similar courses of instruction such as those offered here in carpentry. In
any event, such an extension of the school exemption would require a
legislative initiative. Presumably, legislation could be drafted, if the
legislature so chose, to extend the exemption to vocational schools without
opening the door to every other so-called educational venture so as to bring
about an unwarranted erosion of the tax base.
For the foregoing reasons, the judgment of the Circuit Court of Cook
County is affirmed.
AFFIRMED.
COUSINS, P.J. and CAHILL, J., concur.
November 26, 1997
No. 1-96-1834
CHICAGO AND NORTHEAST ILLINOIS )
DISTRICT COUNCIL OF CARPENTERS )
APPRENTICE AND TRAINEE PROGRAM, )
)
Plaintiff-Appellant, )
) Appeal from the Circuit
v. ) Court of Cook County.
)
THE ILLINOIS DEPARTMENT OF )
REVENUE, KENNETH E. ZEHNDER, )
Acting Director of the Illinois )
Department of Revenue, ) Honorable
) Lester A. Bonaguro,
Defendants-Appellees, ) Judge Presiding.
)
and )
)
COMMUNITY CONSOLIDATED SCHOOL )
DISTRICT 59 and ARLINGTON HEIGHTS )
TOWNSHIP HIGH SCHOOL DISTRICT 214, )
)
Defendants. )
JUSTICE GORDON delivered the opinion of the court:
BACKGROUND:
This appeal arises from a circuit court order, entered on administrative
review, which affirmed the Illinois Department of Revenue's denial of the
plaintiff's request for a property tax exemption from 1989 property taxes.
The plaintiff, Chicago and Northeast Illinois District Council of Carpenters
Apprentice and Trainee Program (hereinafter referred to as the Council), is a
not-for-profit entity which was established solely for the purpose of
operating a carpentry training program. The Council offers such a training
program on an improved parcel of property which it owns, located at 1256 Estes
Avenue in Elk Grove Village, Illinois, and sought an exemption for that
property from 1989 property taxes under section 500.1 of the Revenue Act of
1939 (Ill. Rev. Stat. 1989, ch. 120, par. 500.1, now repealed, amended and
recodified in the Property Tax Act at 35 ILCS 200/15-35 (West 1996)). The
Council filed a real estate tax exemption application with the Board of
Appeals of Cook County (see 35 ILCS 200/15-5 (West 1996)), alleging that
because it operated a school on the subject property, it was entitled to tax-
exempt status under section 500.1. After reviewing the Council's application,
the Board of Appeals recommended to the Department of Revenue that the Council
receive the requested exemption from its 1989 property taxes. See 35 ILCS
200/16-130 (West 1996) (stating that decisions of Board of Appeals regarding
tax liabilities are not final and that the Illinois Department of Revenue
shall make all final liability determinations). However, the Department of
Revenue denied the Council's request for tax-exempt status on the grounds that
the primary use of the subject property was not educational.
Thereafter, the Council requested and received an administrative hearing
before the Department of Revenue (see 35 ILCS 200/8-35 (West 1996)). At the
conclusion of that hearing, the administrative law judge rejected the
requested exemption, and the Council sought administrative review in the
Circuit Court of Cook County. See 35 ILCS 200/8-40 (West 1996). The circuit
court remanded the case for a new administrative hearing due to
inconsistencies in the record and because the plaintiff had failed to give
proper notice of its application for tax exemption to all municipalities and
school districts in which the subject property was located (see 35 ILCS
200/16-130 (West 1996)). Pursuant to that remand and prior to the new
hearing, defendants Community Consolidated School District 59 and Arlington
Heights Township High School District 214 intervened in this dispute and
opposed the granting of the requested tax exemption.
On July 27, 1995, the Department of Revenue held its final
administrative hearing in this matter, and denied the Council's request for a
real estate tax exemption from 1989 property taxes. Thereafter, the Council
filed another complaint seeking administrative review in the Circuit Court of
Cook County, which affirmed the decision of the Department of Revenue. The
Council now appeals from that decision.
FACTS:
The facts are undisputed. The Council is a not-for-profit trust which
was created in 1965 by the International Brotherhood of Carpenters (a union)
and the Builders' Association of Chicago (a group of general contractors) for
the exclusive purpose of providing education and training for carpenters. The
Council has received not-for-profit tax exemption status from the United
States Internal Revenue Service under section 501(c)(5) of the Internal
Revenue Code (see 26 U.S.C. 501(c)(5) (1988)), which exempts labor
organizations from federal taxation. The Council is also exempt from
occupation tax, service occupation tax, use tax and service use tax in
Illinois, pursuant to the 1987 finding of the Illinois Department of Revenue
that the Council "is organized and operated exclusively for educational
purposes." Pursuant to the Declaration of Trust, the Council is governed by
four members of the Brotherhood of Carpenters and by four members of the
Builders' Association. A collective bargaining agreement between those groups
requires the Builders' Association to contribute sufficient funds to the
Council to finance its creation and maintenance.
According to the undisputed testimony presented at the final
administrative hearing, the goal of the Apprentice Training Program is to
enable students enrolled in the program to complete a job properly by bringing
their skills up to the level at which they could work competitively for
contractors. The program consists of four years of instruction, which
includes both the pre-apprentice and apprentice training programs. To qualify
for the pre-apprentice program, a person must be at least 17 years old and
must have completed at least two years of high school.
The pre-apprentice training course lasts 12 weeks, and is conducted
eight hours per day during that period. Approximately one-third of each day
(i.e., approximately 2 1/2 hours per day) is spent in the classroom, and two-
thirds of each day is spent in the shop. During the first three weeks of the
pre-apprentice program classroom time, the training is divided into
instruction in improving the math skills of the students and in blueprint
reading. The shop work in the pre-apprentice program was designed to
introduce the students to the major divisions of carpentry. After completing
the pre-apprentice program, the students are required to join the
International Brotherhood of Carpenters, to pay union dues, and to get a job
as a carpenter's apprentice with a union contractor. The Council assists its
students in securing such carpenter positions, which are prerequisites to
continued enrollment in the Apprentice Program.
Upon completion of the pre-apprentice program, students enter the second
phase of instruction--the apprentice program. In each of the remaining three
to four years of training, the students are required to complete at least
1,200 hours of on-the-job training. During each quarter, an apprentice is
also required to attend one five-day class on some subject concerning
carpentry. Those classes include courses on concrete, drywalling,
construction of stairs, roof framing, vinyl and carpeting floor-covering, and
framing structural steel. The students are also required to complete a ten-
hour course regarding compliance with the Occupational Safety and Health Act
of 1970 (see 29 U.S.C 651 et seq. (1982)). Besides the limited instruction
in math skills previously noted, no other traditional academic subjects are
taught in the program. (During the administrative hearing, the coordinator of
the Apprentice Program testified that the "general educational" subjects
taught at the Elk Grove Village property included "Math, drafting, sketching,
and welding. I am not sure you could call that a general education."
Upon completion of the pre-apprentice and apprentice programs, students
receive a certificate from the United States Department of Labor stating that
they have completed those programs, and also receive a journeymen's
certificate from the United Brotherhood of Carpenters. However, students are
not awarded either a diploma or a degree for completing their carpentry
training.
Between 1965 and 1988, the carpentry training program now offered by the
Council was offered by the Chicago Board of Education at the Washburne Trade
School in Chicago, Illinois. While the program was at Washburne, it was
financed by the Board of Education, which received reimbursement or
contribution for that financing from the State of Illinois. During the 1987-
88 school year, the Board of Education budgeted 18 carpentry teaching
positions at Washburne, had a total carpentry training program budget at
Washburne of approximately $800,000, and had an overall Washburne budget of
$4,708,768 (the Board of Education offered courses in other areas besides
carpentry at Washburne).
In 1986, the Council purchased the subject parcel of real estate in Elk
Grove Village, Illinois and constructed a building thereon for both pre-
apprentice and apprentice training. The Elk Grove Village facility included a
pre-apprentice training area, and, in addition, contained a millwright shop, a
welding lab, a millwork area, a lathing area, a floor-covering area, a
concrete-forms-construction area, carpentry shops, a stair-construction area,
a rafter-construction area, a lunchroom and restrooms. In 1988, the Board of
Education terminated all apprentice training at Washburne, and the Council
alone began to fund and operate that same program at its Elk Grove Village
facility. However, pursuant to a written agreement between the Council and
the Chicago Board of Education, the Board of Education continued to offer pre-
apprentice training at Washburne until 1991. After 1991, the Board of
Education also terminated all pre-apprentice training at Washburne, and the
instruction in carpentry that had been provided at Washburne was thereafter
offered and funded exclusively by the Council at its Elk Grove Village
facility (the Elk Grove Village facility began to offer both pre-apprentice
and apprentice training in 1989).
As noted, the circuit court affirmed the Department of Revenue's denial
of the Council's application for an exemption from 1989 property taxes
otherwise owing on its Elk Grove Village parcel. For the following reasons,
we affirm.
DISCUSSION:
The sole issue on appeal is whether the circuit court erred in affirming
the Department of Revenue's denial of the Council's request for a property tax
exemption. All property is subject to taxation unless specifically exempted
by statute, and it is well-settled that "taxation is the rule[, and t]ax
exemption is the exception." The Chicago Bar Ass'n v. Department of Revenue,
163 Ill. 2d 290, 301, 644 N.E.2d 1166, 1171-72 (1994). Accord City of Chicago
v. Illinois Department of Revenue, 147 Ill. 2d 484, 590 N.E.2d 478 (1992);
Illini Media Co. v. Department of Revenue, 279 Ill. App. 3d 432, 664 N.E.2d 706 (1996); County of Boone v. Department of Revenue, 215 Ill. App. 3d 453,
574 N.E.2d 1227 (1991); Girl Scouts of Du Page County Council, Inc. v.
Department of Revenue, 189 Ill. App. 3d 858, 545 N.E.2d 784 (1989). Thus,
statutes granting tax exemptions must be construed strictly in favor of
taxation, and all debatable questions must be resolved in favor of taxation.
City of Chicago, 147 Ill. 2d 484, 590 N.E.2d 478; Harrisburg-Raleigh Airport
Authority v. Department of Revenue, 126 Ill. 2d 326, 533 N.E.2d 1072 (1989);
Coyne Electrical School v. Paschen, 12 Ill. 2d 387, 146 N.E.2d 73 (1957);
Illini Media Co., 279 Ill. App. 3d 432, 664 N.E.2d 706; Winona School of
Professional Photography v. Department of Revenue, 211 Ill. App. 3d 565, 570 N.E.2d 523 (1991).
The party claiming an exemption has the burden of proving clearly and
conclusively that the subject property falls within both the constitutional
authorization and the terms of the statute under which the exemption is
claimed. City of Chicago, 147 Ill. 2d 484, 590 N.E.2d 478; Harrisburg-Raleigh
Airport Authority, 126 Ill. 2d 326, 533 N.E.2d 1072; Coyne, 12 Ill. 2d 387,
146 N.E.2d 73; Illini Media Co., 279 Ill. App. 3d 432, 664 N.E.2d 706; Winona
School of Professional Photography, 211 Ill. App. 3d 565, 570 N.E.2d 523.
Where, as here, the facts are undisputed, a determination of whether property
is exempt from taxation is a question of law, in which the reviewing court
must apply the appropriate legal standard to the undisputed facts. City of
Chicago, 147 Ill. 2d 484, 590 N.E.2d 478; Board of Certified Safety
Professionals, Inc. v. Johnson, 112 Ill. 2d 542, 494 N.E.2d 485 (1986); Winona
School of Professional Photography, 211 Ill. App. 3d 565, 570 N.E.2d 523.
Each claim for an exemption must be determined from the facts presented, on a
case-by-case basis. Coyne, 12 Ill. 2d 387, 146 N.E.2d 73; Winona School of
Professional Photography, 211 Ill. App. 3d 565, 570 N.E.2d 523.
The current Illinois constitution authorizes the legislature to provide
statutory exemptions from property taxes, as follows:
"The General Assembly may exempt from taxation only the property
of the State, units of local government and school districts and
property used exclusively for agricultural and horticultural
societies, and for school, religious, cemetery and charitable
purposes." Ill. Const. 1970, art. IX, 6.
This provision for school property tax exemptions has existed in essentially
the same form in the Illinois constitution since 1870. See Ill. Const. 1870,
art. IX, 3 (stating that the General Assembly may enact laws which exempt
from taxation such "property as may be used exclusively *** for school ***
purposes").
In 1989, the tax year in question, section 500.1 of the Revenue Act of
1939 (Ill. Rev. Stat. 1989, ch. 120, par. 500.1, now repealed, amended and
recodified in the Property Tax Act at 35 ILCS 200/15-35 (West 1996)), under
which the plaintiff claims an exemption, provided in pertinent part that tax
exemptions would be granted for
"all property of schools, *** including the real estate on which
the schools are located and any other real property used by such
schools exclusively for school purposes, not leased by such
schools or otherwise used with a view to profit *** and all lands
heretofore or hereafter *** used for *** educational purposes and
the proceeds thereof, whether held in trust or absolutely; and
including, in counties of over 200,000 population which classify
real property, property *** on or adjacent to *** the grounds of a
school which property is used by *** [an] association or
organization which serves the advancement of learning in a field
or fields of study taught by the school and which property is not
used with a view to profit."
This provision, too, has existed in essentially the same statutory form in
Illinois since at least 1877. See Rev. Stat. 1877, ch. 120, 2 ("All
property described in this section *** shall be exempt from taxation ***
[including] [a]ll property of institutions of learning").
The Council contends that even though its carpentry training program is
predominantly vocational, it is nevertheless entitled to a school exemption
under section 500.1 of the Revenue Act of 1939 (Ill. Rev. Stat. 1989, ch. 120,
par. 500.1, now repealed, amended and recodified in the Property Tax Act at 35
ILCS 200/15-35 (West 1996)). In support, it argues that, pursuant to the
requirements of section 500.1, its Elk Grove Village carpentry training
facility is used solely for educational purposes, and duplicates the carpentry
program formerly offered by the Board of Education at the Washburne Trade
School, thereby saving the state hundreds of thousands of dollars in tax
revenue. However, for the reasons discussed below, we believe that the
Council's construction of section 500.1 is overbroad.
As is apparent from its face, section 500.1 provides a property tax
exemption for property used as a school or for educational purposes, but does
not define the scope of either of those terms. Resultantly, as will be shown,
there has been an ongoing series of attempts to qualify for the exemption by
schools in the private sector purporting to teach any number of subjects,
ranging from schools offering the full gamut of traditional academic courses,
to schools offering instruction in highly specialized vocational and
recreational skills and activities.
Our review of those decisions reveals that only a small percentage of
these private applicants met with success before our courts. For cases
denying the exemption, see Board of Certified Safety Professionals, 112 Ill. 2d 542, 494 N.E.2d 485; Milward v. Paschen, 16 Ill. 2d 302, 157 N.E.2d 1
(1959); Coyne, 12 Ill. 2d 387, 146 N.E.2d 73 (1957); Ray Schools-Chicago, Inc.
v. Cummins, 12 Ill. 2d 376, 146 N.E.2d 42 (1957); People ex rel. Brenza v.
Turnverein Lincoln, 8 Ill. 2d 198, 132 N.E.2d 499 (1956); People ex rel.
McCullough v. Deutsche Evangelisch Lutherische Jehovah Gemeinde Ungeanderter
Augsburgische Confession, 249 Ill. 132, 94 N.E. 162 (1911); Winona School of
Professional Photography, 211 Ill. App. 3d 565, 570 N.E.2d 523; American
College of Chest Physicians v. Department of Revenue, 202 Ill. App. 3d 59, 559 N.E.2d 774 (1990); Oasis Midwest Center for Human Potential v. Rosewell, 55
Ill. App. 3d 851, 370 N.E.2d 1124 (1977). For cases granting the exemption,
see Illinois College of Optometry v. Lorenz, 21 Ill. 2d 219, 171 N.E.2d 620
(1961); People ex rel. Thompson v. St. Francis Xavier Female Academy, 233 Ill. 26, 84 N.E. 55 (1908).
In reaching their determinations, our courts have looked to two primary
factors and several ancillary factors to determine whether a given property
constitutes a school or facility used for educational purposes to qualify for
an exemption under section 500.1 and its statutory predecessors and
successors. First, our courts have looked to whether the property in question
contained a school which offered an established, commonly accepted program of
academic instruction. This prerequisite was articulated by our supreme court
in the early case of People ex rel. McCullough v. Deutsche Evangelisch
Lutherische Jehovah Gemeinde Ungeanderter Augsburgische Confession, 249 Ill. 132, 94 N.E. 162 (1911), wherein the court stated as follows:
"A school, within the meaning of the constitutional provision, is
a place where systematic instruction in useful branches is given
by methods common to schools and institutions of learning, which
would make the place a school in the common acceptation of the
word. What are called schools are conducted for teaching dancing,
riding deportment and other things, which are not schools in the
ordinary sense" Deutsche Evangelisch, 249 Ill. at 137, 94 N.E. at
164.
Thus, to the extent Deutsche Evangelisch looks to the "common
acceptation" (Deutsche Evangelisch, 249 Ill. at 137, 94 N.E. at 164) of the
word "school," it favors schools offering traditional courses of academic
instruction. This same standard was again invoked in the more recent
appellate court decision in Oasis Midwest Center for Human Potential v.
Rosewell, 55 Ill. App. 3d 851, 370 N.E.2d 1124 (1977), wherein the court
stated that
"[w]hile the programs [in humanistic psychology] offered at Oasis
may be deemed 'educational' in a broad sense, it cannot be
maintained that plaintiff's course of study fits into the scheme
of education currently in vogue in Illinois and against which the
Oasis program must be measured. That plaintiff's members may
appreciate this fact as plaintiff's virtue rather than its vice
does not serve to alter the fact that plaintiff's use of its
property does not qualify it for tax exempt status." 55 Ill. App.
3d at 857, 370 N.E.2d at 1129.
Under this standard, the courts have been inhospitable towards granting
a school exemption to schools whose curriculum did not consist of traditional
subject matter common to accepted schools and institutions of learning, but
was vocational or recreational in nature. See Board of Certified Safety
Professionals, 112 Ill. 2d 542, 494 N.E.2d 485 (exemption denied for school
which issued safety certificates to students who passed basic exams in areas
such as fire safety); Milward, 16 Ill. 2d 302, 157 N.E.2d 1 (exemption denied
for short-term mortuary management school); Coyne, 12 Ill. 2d 387, 146 N.E.2d 73 (exemption denied for school which provided technical courses of study in
electricity, radio, radar, and electronics); Ray Schools, 12 Ill. 2d 376, 146 N.E.2d 42 (exemption denied for school which offered brief classes in dress
design, commercial art, and window display skills); Turnverein Lincoln, 8 Ill. 2d 198, 132 N.E.2d 499 (exemption denied for school which offered classes in
swimming and gymnastics); Winona School of Professional Photography, 211 Ill.
App. 3d 565, 570 N.E.2d 523 (exemption denied for school which offered courses
in photography); American College of Chest Physicians, 202 Ill. App. 3d 59,
559 N.E.2d 774 (exemption denied for entity which offered courses in pulmonary
medicine not taught on subject property and not required for continued
licensure or certification in Illinois); Oasis Midwest Center for Human
Potential, 55 Ill. App. 3d 851, 370 N.E.2d 1124 (exemption denied for school
which taught humanistic psychology and "personal growth" through religion and
philosophies such as gestalt and Eastern meditation). But see School of
Domestic Arts & Science v. Carr, 322 Ill. 562, 153 N.E. 669 (1926) (holding
property tax exemption appropriate for residential cooking, serving, sewing
and household management school under statutory exemptions for property used
for both charitable and educational purposes). See also Illinois College of
Optometry, 21 Ill. 2d 219, 171 N.E.2d 620 (exemption allowed for nonprofit
optometry school, but where the court specifically found that the course of
instruction echoed a traditional medical school course of study which was a
prerequisite to degree in ophthalmology at University of Illinois medical
school); St. Francis Xavier Female Academy, 233 Ill. 26, 84 N.E. 55 (exemption
allowed for a school which offered a full array of traditional academic high
school courses).
Secondly, in determining whether to permit the subject exemption, our
courts have looked to whether the program in question substantially lessened
what would otherwise have been a governmental obligation, i.e., whether the
state was otherwise required to offer such a program of study in a tax-
supported public school. See Milward, 16 Ill. 2d 302, 157 N.E.2d 1 (exemption
denied since state not required to offer mortuary management course of study);
Ray Schools, 12 Ill. 2d 376, 146 N.E.2d 42 (exemption denied since commercial
art, advertising, dress design, fashion merchandising and window display
courses were substantially more specialized than those which the state was
required to offer); Winona School of Professional Photography, 211 Ill. App.
3d 565, 570 N.E.2d 523 (exemption denied where state not required to offer
photography courses in question); American College of Chest Physicians, 202
Ill. App. 3d 59, 559 N.E.2d 774 (exemption denied where state not required to
offer continuing medical education); Oasis Midwest Center for Human Potential,
55 Ill. App. 3d 851, 370 N.E.2d 1124 (exemption denied where state not
required to offer courses in humanistic psychology or self-improvement).
Both of these criteria receive full articulation in the supreme court
decision in Coyne Electrical School v. Paschen, 12 Ill. 2d 387, 146 N.E.2d 73
(1957). In Coyne, the taxpayer seeking an exemption was a not-for-profit
vocational training school which provided technical courses of study in
electricity, radio, radar, and electronics through classes entitled, inter
alia, Electrical and Refrigeration, Radio and Refrigeration, Radio-Television,
and General Electrical Technicians. The courses of study available at the
school lasted from 18 to 66 weeks in duration and classes were 35 hours per
week. The Coyne court held that there should be no tax exemption under the
statutory predecessor to section 500.1, noting that the plaintiff school did
not provide traditional courses in math, rhetoric, language, science or
history, and did not lessen the burden of taxation by offering courses which
the state would otherwise have to offer in a tax-supported public school. In
summary, the Coyne court stated as follows:
"On the basis of the foregoing decisions it is manifest that two
things are necessary to qualify a private institution for tax
exemption as a school: first, a course of study which fits into
the general scheme of education founded by the State and supported
by public taxation; second, a course of study which substantially
lessens what would otherwise be a governmental function and
obligation." Coyne, 12 Ill. 2d at 392-93, 146 N.E.2d at 77.
Lastly, in determining whether to award the property tax exemption in
question for schools/educational programs, our courts have looked to such
factors as the duration of the course of study, whether classroom instruction
was given, and whether degrees or diplomas were awarded. See generally
Milward, 16 Ill. 2d 302, 157 N.E.2d 1 (exemption denied since, inter alia,
four-week mortuary management courses were too brief and superficial); Ray
Schools, 12 Ill. 2d 376, 146 N.E.2d 42 (exemption denied because, inter alia,
monthly interior decorating and fashion courses were too short); St. Francis
Xavier Female Academy, 233 Ill. 26, 84 N.E. 55 (granting exemption where
diplomas were awarded after completion of course of study including
traditional academic subjects as well as training in languages, musical
instruments, and painting); Winona School of Professional Photography, 211
Ill. App. 3d 565, 570 N.E.2d 523 (exemption denied since, inter alia, no
degrees were awarded and one-week courses were too short); American College of
Chest Physicians, 202 Ill. App. 3d 59, 559 N.E.2d 774 (exemption denied to
entity which held five-day medical seminars at locations other than the
property for which the exemption was sought).
In the instant case, under the two-pronged test as articulated by the
court in Coyne, the Council is not entitled to a property tax exemption under
section 500.1. First, under the first prong of that test, it is clear that
the Council's carpentry program does not offer courses in traditional academic
subjects, but, rather, offers solely vocational training, with the exception
of some brief and otherwise limited instruction in math skills geared towards
enhancing the student's carpentry skills. Secondly, under the second prong of
the test articulated in Coyne, the Council's carpentry training program does
not provide a course of study which substantially lessens a governmental
function or obligation. In that regard, although the state paid for the
operation of the Washburne Trade School, it was not required to fund or to
offer such a program in the first instance. See Board of Certified Safety
Professionals, 112 Ill. 2d 542, 494 N.E.2d 485 (no exemption since Illinois
does not license safety professionals); American College of Chest Physicians,
202 Ill. App. 3d 59, 559 N.E.2d 774 (no exemption because, inter alia, no
Illinois requirement for continuing medical education); Oasis Midwest Center
for Human Potential, 55 Ill. App. 3d 851, 370 N.E.2d 1124 (no exemption since,
inter alia, state not required to offer course of study in humanistic
psychology). Thus, despite the fact that the Council funds the costly
apprentice program in an amount roughly equal to that which the state formerly
paid to operate that program, that funding does not relieve the state of any
burden which it carried to offer any such program. While the Board of
Education and the state may well have saved money by discontinuing the
carpentry program in question, they were not obligated to provide such a
program even if no enterprise in the private sector had undertaken to provide
one.
Moreover, pursuant to the other aforementioned factors commonly
considered by our courts in determining whether to grant the subject
exemption, as noted, throughout the four-year program, students received only
a few hours of classroom instruction in math skills during the pre-apprentice
program, and thereafter received only five days of classroom instruction each
quarter (or 20 days of such instruction each year), which consisted solely of
carpentry-related topics. Rather than training students in traditional
academic subjects in a classroom setting which lasted through the normal
course of an academic year, students were primarily prepared to become
carpenters through on-the-job training at locations other than the Elk Grove
Village facility. As such, they were required to join the International
Brotherhood of Carpenters union, to pay union dues, and to get a job as a
carpenter's apprentice with a union contractor where they were required to
spend 1,200 hours each year. Furthermore, the program, which requires only
two years of high school for admission thereto, does not lead to any high
school or other type of degree or diploma, but, rather, leads to a certificate
from the United States Department of Labor stating that the student had
completed the program, and to a journeymen's certificate from the United
Brotherhood of Carpenters.
The Council contends that the state was in fact required to provide
vocational training (and that therefore, the carpentry program here relieved
the state of a substantial tax burden) since the Illinois School Code (105
ILCS 5/1-1 et seq. (West 1996)) requires public school students to
successfully complete, inter alia, one year chosen from music, art, foreign
languages, or vocational training (see 105 ILCS 5/27-22(5) (West 1996)). See
also 105 ILCS 5/27-22.2 (West 1996) (providing that vocational training
courses must be included in any list of elective courses from which high
school students must choose); 105 ILCS 5/10-22.20a (empowering the School
Board to provide vocational programs). We disagree. We first note that these
provisions merely require the state to offer limited vocational courses as
elective subjects adjunctive to the otherwise traditional course of academic
study which would lead to the award of a high school diploma. They do not
require the state to offer an intensive, extended and exclusive vocational
training program over a two-to-four year period such as the one offered here
in preparation for receipt of a journeymen's certificate from the United
Brotherhood of Carpenters. Moreover, consistent with this conclusion that the
Washburne program was never an obligatory one is the fact that as the
appellant concedes, Washburne no longer offers any such program, and the
further fact that no evidence has been presented in this record to show that
this program or one similar to it has ever been offered by any other public
school. See generally Deutsche Evangelisch, 249 Ill. 132, 94 N.E. 162 (no
school/educational use exemption for religious school entity because no
affidavit presented to establish such property use).
The Council appears to contend that regardless whether the state would
originally have had the burden of offering the carpentry training program, the
mere fact that it is duplicating a program previously offered in a publicly
exempted school is sufficient to establish that the program "fits into the
general scheme of education founded by the State and supported by public
taxation *** [and] substantially lessens what would otherwise be a
governmental function and obligation." Coyne, 12 Ill. 2d at 392-93, 146 N.E.2d at 77. We disagree.
The mere fact that a private organization or institution teaches a
subject that is also taught in the public schools, or for that matter, even
takes over a public school program, is not sufficient to justify a school
property tax exemption, since the mere fact that a course of study was offered
in a publicly funded school is insufficient by itself to establish that that
subject fits within the general scheme of education. The case of People ex
rel. Brenza v. Turnverein Lincoln, 8 Ill. 2d 198, 132 N.E.2d 499 (1956) is
directly in point. There, an exemption was denied to a gymnastics and
swimming school which duplicated courses offered in tax-supported public
schools. In denying that exemption, the court stated:
"[i]n the ordinary school, physical education is a part, but only
a part, of the curriculum. And while instruction in swimming and
gymnastics is educational in the broad sense, it is not
sufficient, standing alone, to bring an institution within the
scope of our statute, where, as aforesaid, a restrictive meaning
is intended". Turnverein Lincoln, 8 Ill. 2d at 202, 132 N.E.2d at
501.
Likewise, in Ray Schools-Chicago, Inc. v. Cummins, 12 Ill. 2d 376, 146 N.E.2d 42 (1957), the court denied an exemption to a school of commercial art,
advertising, interior decoration, window display, photography, dress design
and fashion merchandising, despite the fact that courses duplicated those
offered in public schools, stating:
"the teaching of but a small part of the instruction given in
ordinary schools does not suffice to constitute appellee an
educational institution for which exemption was intended. ***
[T]he instruction given by appellee *** is not as commonplace in
ordinary schools, and perhaps not [even] as important to the
public well-being generally, as [the] instruction in physical
education [which did not qualify for a tax exemption in Turnverein
Lincoln]". Ray Schools, 12 Ill. 2d at 384-85, 146 N.E.2d at 47.
Moreover, as previously noted, whether a private school program substantially
lessened what would otherwise have been a governmental obligation is
determined by considering whether the state was otherwise required to offer
such a program of study in a tax-supported public school. See Milward, 16 Ill. 2d 302, 157 N.E.2d 1; Ray Schools, 12 Ill. 2d 376, 146 N.E.2d 42; Winona
School of Professional Photography, 211 Ill. App. 3d 565, 570 N.E.2d 523;
American College of Chest Physicians, 202 Ill. App. 3d 59, 559 N.E.2d 774;
Oasis Midwest Center for Human Potential, 55 Ill. App. 3d 851, 370 N.E.2d 1124.
The Council contends that the decisions of Ass'n of American Medical
Colleges v. Lorenz, 17 Ill. 2d 125, 160 N.E.2d 763 (1959); People ex rel.
Goodman v. University of Illinois Foundation, 388 Ill. 363, 58 N.E.2d 33
(1944); and Illini Media Co. v. Department of Revenue, 279 Ill. App. 3d 432,
664 N.E.2d 706 (1996) support its argument, since in those cases, exemptions
were granted to entities which offered no courses of instruction whatsoever,
traditionally academic or otherwise. However, those decisions are fully
distinguishable. While the decisions in those cases would seem to permit
exemptions even where the entities did not offer traditional classroom
instruction in common academic areas of study, those entities in fact provided
essential services to students enrolled in academic programs which themselves
fully and unquestionably qualified for the school/educational use tax
exemption.
Thus, in Ass'n of American Medical Colleges, the plaintiff, whose
governing members constituted all United States medical schools, used the
subject property to compile student information to help develop programs of
instruction; to publish a directory of admission requirements and a journal
regarding admissions requirements at the various medical schools; to sponsor
admission tests and teaching institutes; to appraise the curricula of medical
schools and colleges; and to evaluate prospective medical students.
Similarly, in University of Illinois Foundation and in Illini Media, the
plaintiffs used the subject property for the University of Illinois student
union, residence halls, and an arcade, which collectively contained university
offices and student services including a bookstore, a restaurant, and a barber
shop, and for operating the University of Illinois radio station and for
publishing its newspaper and one of its technical journals. As noted by the
court in University of Illinois Foundation, these services entitled the
plaintiffs to the subject exemption because they were "necessary and proper in
conducting an educational institution." 388 Ill. at 371, 58 N.E.2d at 37.
In those cases, each entity seeking the exemption functioned in a manner
wholly subservient to the students attending the institutions which it served,
which themselves offered the full range of traditional academic curricula in
programs resulting in degrees and programs which the state was required to
offer by law.
The Council also relies on the decisions of Illinois College of
Optometry v. Lorenz, 21 Ill. 2d 219, 171 N.E.2d 620 (1961) and School of
Domestic Arts & Science v. Carr, 322 Ill. 562, 153 N.E. 669 (1926) in support
of its position on appeal that the variable involving the subject matter of
the curriculum is not dispositive of the exemption issue. However, those
decisions, too, offer the plaintiff little or no help. Although the school
curriculum in Illinois College of Optometry (where the exemption was allowed)
was, at first glance, more akin to that of a vocational school than to a
school offering a traditional academic course of study, the court there noted
that the Illinois College of Optometry did in fact offer a traditional
curriculum in that many tax-supported universities in other states include
schools or departments of optometry as part of their university curriculum.
The court went on to say that
"[t]he University of Illinois, on the other hand, has no school,
department or college of optometry. However, the courses taught
by plaintiff are taught at the university and any medical doctor
undertaking to specialize in ophthalmology, must have in his
course of study the courses offered by plaintiff. In either case,
the same courses are necessary before one may become qualified to
practice optometry. To this extent then, and the number of
optometry students is substantial, plaintiff is providing a course
of instruction which duplicates that provided in the tax-supported
university and its medical school." 21 Ill. 2d at 223, 171 N.E.2d
at 622.
Similarly, although the decision in School of Domestic Arts & Science
would appear to contradict the line of cases which would grant the subject
exemption only to schools which offer traditional, academic courses of study,
the supreme court in Coyne expressly repudiated this aspect of that decision.
The entity in School of Domestic Arts & Science was granted its exemption on a
dual basis--both as a charitable and as an educational institution--insofar as
it offered free courses in residential cooking, serving, sewing and household
management. The Coyne court stated that the finding in School of Domestic
Arts & Science that the entity there was entitled to an exemption as a school
in addition to being entitled to an exemption as a charitable institution was
mere surplusage, stating as follows:
"In view of the *** finding that [the] appellant [there] was a
charitable organization exempt from taxation under the seventh
paragraph of section 2 of the Revenue Act, it would appear that
the finding of exemption as a school was surplusage.
Additionally, we find no reason to say that the court's assumption
in that case, without any analysis of the issue, serves either to
broaden the constitutional definition of a school earlier
established, or to bind us in this case. Each individual claim
for tax exemption must be determined from the facts presented."
Coyne, 12 Ill. 2d at 394, 146 N.E.2d at 77.
Thus, the pattern of precedents with respect to entitlement to a school
exemption, while not always fully consistent, nevertheless adheres to the
basic standard articulated in Coyne. That standard would restrict the grant
of the school exemption in the private sector to those programs which offer
traditionally accepted academic subjects in the context of an established
academic environment. This in turn would lessen the burden of taxation by
offering courses which the state would otherwise be required to offer in a
tax-supported public school. Under this standard, private schools offering
commonly accepted grammar school, high school, college, and post-graduate
courses of study could avail themselves of the exemption. The alternative of
offering a wider window of exemption would run the risk of permitting the
exemption for any commercial venture offering any training in singular skills
and hobbies under the guise of self-improvement, and would ultimately lead to
the inclusion of enterprises such as karate, dance, and horseback-riding
schools, as well as admittedly more useful, vocationally-oriented schools such
as those in beauty care, television repair, and refrigeration repair, or other
similar courses of instruction such as those offered here in carpentry. In
any event, such an extension of the school exemption would require a
legislative initiative. Presumably, legislation could be drafted, if the
legislature so chose, to extend the exemption to vocational schools without
opening the door to every other so-called educational venture so as to bring
about an unwarranted erosion of the tax base.
For the foregoing reasons, the judgment of the Circuit Court of Cook
County is affirmed.
AFFIRMED.
COUSINS, P.J. and CAHILL, J., concur.
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