SECONDDIVISI ON October 30, 2007

No. 1-06-3229

METRO D EVELOP ERS, LLC , an Illinois Limited Liabili ty Com pany, Plaintiff-Appellant,
v. THE CITY O F CHICAGO DEPA RTMENT O F REVE NUE and THECITY OF CHI CAGO DEPA RTMENT O F ADMIN ISTRATIVEHEARI NGS,

Defendants-Appel lees. ) ) ) ) ) ) ) ) ) ) ) ) Appeal fromthe Circuit Court of Cook County
No. 05 L 51051
Hon ora ble Alexander P . W hite, Judge Presiding.

JUSTICE KARNE ZIS delivered the opinion of the court: Plaintiff, Metro Developers, LLC, appeals from an order of the circuit court on administrative review upholding the determination by defendants , City of Chicago Department of Revenue and City of Chi cago Department of Administrati ve Hearings, that plaintiff was not entitled to a property t ransfer tax exem ption. On appeal, plaintiff contends that it w

as entitled to the exem ption because it satisfied all the conditions necessary to qualify for the ex empt ion. For the foregoing reasons, we affirm. Chapter 3-33 of the Ch icago Municipal Code (Code) impos es the Chicago real property transfer tax

(transfer tax ) on "the privilege of transferring title to, or beneficial1-06-3229

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inte rest i n, rea l pro perty loca ted i n the ci ty." Chi cago Muni cipa l Code §3-33 -030( A) (1999). The buyer of property m ust pay the tax , which is $3.75 per $500of the transfer price of the property. Chicago M unicipal Code §3-33-030(A) (1999). The Code provides fo r several e xem ptions, i ncludi ng "[t]ransfer s of title to, or benefi cial i nterest in, real property used primarily for com merc ial or industrial purposes located in an enterprise zone, as defined in Chapter 16-12 of th is Code." Chicago Municipal Code § 3-33-060(L) (1999). An "enterprise zone" is a depres sed area of the city that has been designated a "proposed enterprise zone" by t he city council and approved and certified by the proper state or fe deral authorities as an enterprise zone. Chicago Municipal Code §1 6-12-020(1999). In Decem ber 1998, the Chicago departm ent of revenue issued Revenue Ruling No. 2, effective Janua ry 4, 1999, which clarified that the exem ption was only intended to apply to property that "w as being used primarily for com merc ial or industrial purposes before the transf er, and continued to be used prim arily for comm ercial or industrial purposes after the transfer." On June 29, 1999, plaintiff paid $5.9 m illi on for real property located at 1500 W est Monro e Street in Chi cago. Pl aint iff p urcha sed the prope rty fro m AP& P Manufacturing, Inc., which m anufactured and distributed paper products at that loca tion . The sa les co ntrac t provi ded tha t pla inti ff would leas e the pr opert y to AP & P for a period of 9 m onths after the sale w as com pleted. Plaintiff filed a Chicago real property transfer tax

declaration form, c laiming an exem ption because the property w as1-06-3229

1 The record is clear and the parties agree that the property is located within an enterprise zone. 3 used primaril y for comm ercial or industr ial pu rposes and i t was located in an en terpri se zone, pursuant to sec

tion 3-33-060(L) of the Code. 1 AP & P did lease the property from plaintiff after the sale, but due to an intervening bankruptcy, A P& P had to be evicted from the property approx imately 11 m onths later, on June 9, 2000. Although the property w as zoned only for com merc ial usage, plaintiff purchased the property intending to obtain a zoning classification change and to convert the building located on the p roperty into residen tial condom iniums . Purs uant toplaintiff's lease with AP& P, plaintiff reserved the right to use an area of less than 5% of the property for a sales and m arketing office for the future condom inium developm ent. On August 13, 1999, plaintiff appli ed for a perm it to construct a sales office, and on Decem ber 10, 1 999, plaintiff applied for adem olition perm it. Plaintiff 's application for a zoning classification change and business plan development was approved on June 27, 2000. On M arch 14, 2001, plaintiff was issued apermit to convert the ex isting building to residential condom iniums. The property w as developed into 175 residential condom iniums, and on N ovem ber 6, 2001, plaintiff sold its first condominium

. On August 27, 2 004, the departm ent of revenue issued plaintiff a notice of tax determ ination and assessm ent in the am ount of $86,142.93. The s um included
amoun ts for $44,250 tax due, $28,617.93 interest due, $2 ,212.50 late penalty and1-06-3229

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$11 ,06 2.5 0 ne glige nce/w ilfuln esspen alty . P laint iff p rotested t he tax , cl aim ing t hat it
was ex empt fromthe tax because the property w as located in an enterprise zone and, because of the lease agreem ent with AP & P, the property was

used primarily for
com merc ial or industrial purposes both before and imm ediately after the sale. Af ter a he arin g, t he d epa rtm ent of a dm inist rat ive h earings(De par tm ent ) up held the assessm ent because "there is no quest ion, based on the stipulated facts, that [plaintiff] purchased this property intending to develop it into condominiumresidences." Plaintiff filed an appeal i n the circuit court and the circuit court affirm ed the jud gment of the Department. Plainti ff now appeals. Our sta nda rd of review

for rev iew ing a n ad m inist rat ive a gen cy' s de cis ion is governed by the Ad ministrative Review Law. 735 ILCS 5/3-101 et s eq. (W est 1996). "[It] provides that our review extends to all questions of law and fact pres ented by the entire record." Abraham son v. Illinois Department of Professional Regulation , 15 3 Ill. 2d 76, 8 8 (1992). Our role as an appell ate court is to review the administrat ive decision, not the circuit court decision. Denton v. Civil S ervice C om m 'n , 277 Ill. App. 3d 770, 773 (1996). If t he record contains evidence supporting the agenc y's decision, it should be affirmed. Abraham son , 153 Ill. 2d at 88. W e review the De partm ent's interpretation of a municipal ordinance de novo

. Branson v. Dep artmen t of Revenue , 168 Ill. 2d 247, 254 (1995). W e note that a taxpayer bears the burden of prov ing he is entitled to an
exem ption. Balmoral Racing Cl ub, Inc. v. Topi nka , 334 Ill. App. 3d 454, 457 (2002).1-06-3229

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Statutes ex

empt ing property fromtaxation are to be strictly construed in favor of taxation. Balmoral , 334 Ill. App. 3d at 457-58. On a ppe al, p laint iff contend s th at it is exe m pt f

rompay ing t he tax

becaus e it satisfied all the conditions necessary in the ordinance to qualify for the exem ption. Specifically, plainti ff m aintains that it obtained a transfer of title to the property, the property was

used primarily for com merc ial or industrial purposes before and for 11 mont hs after the transfer, and the property w as located in an enterprise zone. W e look to this court's opinion in W est Belm ont, L.L.C. v. City of Chicago , 349 Ill. App. 3d 46 (2004), for guidance. In W es t B el mon t , the plaintiff, a developer, bought property that had been occ upied by a furniture retailer, wholesaler and rental comp any. The developer imm ediately demolished the building on the property and began constructing and selling residential townhouses on the property. The developer sought
an exem ption from t he transfer tax , claiming that it purchased real property us ed primarily for com merc ial purposes located in an enterprise zone. This court found on appeal that the developer was not entitled to the exem ption because the property w as no longer used for com merc ial or industrial purposes. W es t B el mon t , 349 Ill. App. 3d at 51. The court determ ined that the word "used" in the ordinance wasam biguous be ca us e i t c ou l d r ef erei th erto pa st us e o f t he pr op er ty , u se of th e p ro pe rt y a t t he ti me of transfer, or the use the transferee intended to m ake of the property. W es t B el mon t , 349 Ill . App. 3d at 50. Therefo re, the court l ooked to the in tent of the ordi nance, which it noted was to encourage com merc ial or industrial use of property located in an1-06-3229

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enterprise zone. The court determ ined that because the buyer of the property pays the transfer tax or recei ves the exemption, the exem ption was not inte nded to reward past use of the property. W es t B el mon t , 34 9 Ill. Ap p. 3 d at 51. The ref

ore , th e co urt

held that a determ ination of whether the ex empt ion applies depends upon the future use of the property. W es t B el mon t , 349 Ill. App. 3d at 51. Applying the principles set forth in W es t B el mon tto the facts in this case, we find that whet her the exem ption applies depends upon plaintiff's intended future use of the property. Pla inti ff admitted that its i ntent for purch asing the pr operty was to construct
res iden tial cond om iniums. Pla intif f'sact ionssub seq uen t tothepur cha se w ereclea rly
con sis ten t w ith t his i nte nt. Pla intif f co nst ruc

ted a s alesoff

ice o n th e pr

ope rty sho rtly after the sale, applied for a zoning classification change, applied for demolition and construction perm its and ultimately constructed and sold residential condominium s on the property. Therefore, w e find that plaintiff was not ex empt fromthe transfer tax because plaintiff intended to build residential condom iniums on the property and subsequently did so. Plainti ff maintains that becau se it lea sed the proper ty to AP & P, which
con tinu ed its com m erc ial ac tivi ty f or n early 11 m ont hs s ubs equ ent to t he s ale, it satisfied all the conditions necessary to qualify for the exem ption. Plaintiff notes that neither the ordinance nor Revenue Ruling No. 2 contains a t ime fram e in which the property m ust continue to be used fo r com merc ial or industrial purposes. W e do not find the lack of a spec ific time fram e that the property m ust continue1-06-3229

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to be used for com merc ial or industrial purposes to be problem atic. As stated above, we look to the buyer's i ntended and futu re use of the prop erty. Plai ntiff's i ntended use of the property w

as always to

construct residential condom iniums and plaintiff successfully did so. Merely becau se the property w as used for com merc ial purposes for a brief period of time after the sale cannot negate plaintiff's intent to build the condom iniums and the fac t that the condom iniums were actually constructed on the property. Plaintiff further maintains that it w as entitled to the exem ption because there was no guara ntee th at w hen plaintiff purchas ed the p roperty it wo uld receive the necessary zoning clas sification c hange an d perm its to co nstruc t the condom iniums . How ever, plain tiff 's t heo ry ig nor

es t he f acts of this cas e th at p laint iff' s intend ed u se w as to bu ild residential condominiums and plaintiff actually did bui ld the condom iniums. As stated in W es t B el mon t , the exem ption depends upon the future useof the property, and here, the future use of the property was for residential purposes. Accordingly, we af

firm the j udgme nt of the circuit court and the D epartm ent. Affirme d. THEIS, J. , and CUNNI NGHAM , J., concur.