Illinois Official Reports

Appellate Court

Meridian Village Ass’n v. Hamer, 2014 IL App (5th) 130078

Appellate Court 

Caption

MERIDIAN VILLAGE ASSOCIATION and MERIDIAN VILLAGE 

ASSOCIATION II, Plaintiffs-Appellants, v. BRIAN A. HAMER, 

Director of Revenue, THE DEPARTMENT OF REVENUE, 

MADISON COUNTY BOARD OF REVIEW, EDWARDSVILLE 

COMMUNITY UNIT SCHOOL DISTRICT NO. 7, and THE 

VILLAGE OF GLEN CARBON, Defendants-Appellees.

District & No. Fifth District

Docket No. 5-13-0078

Filed March 28, 2014

Held

(Note: This syllabus 

constitutes no part of the 

opinion of the court but 

has been prepared by the 

Reporter of Decisions 

for the convenience of 

the reader.)

The Department of Revenue’s denial of plaintiffs’ application for 

property tax exemptions based on the charitable and religious uses of 

their senior housing facility was affirmed, since plaintiffs failed to 

meet the guidelines set out in Methodist Old Peoples Home, they did 

not establish that their funds came from public and private charity, 

obstacles were placed in the way of those seeking charity from 

plaintiffs, and plaintiffs did not show that the primary use of the 

property was for charity.

Decision Under 

Review

Appeal from the Circuit Court of Madison County, No. 09-MR-340; 

the Hon. Barbara L. Crowder, Judge, presiding.

Judgment Affirmed.
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Counsel on

Appeal

Edward T. McCarthy, of McCarthy & Allen, of Edwardsville, for 

appellants.

Lisa Madigan, Attorney General, of Chicago (Michael A. Scodro, 

Solicitor General, and Timothy K. McPike, Assistant Attorney 

General, of counsel), for appellees Brian A. Hamer and Department of

Revenue.

Ellen M. Edmonds, of Edmonds Law Office, P.C., and Jack H. 

Humes, Jr., of Sivia Business & Legal Services, P.C., both of 

Edwardsville, for appellee Edwardsville Community Unit School 

District No. 7.

Terry I. Bruckert, of Bruckert, Gruenke & Long, P.C., of O’Fallon, for 

appellee Village of Glen Carbon.

Panel PRESIDING JUSTICE WELCH delivered the judgment of the court, 

with opinion.

Justices Goldenhersh and Cates concurred in the judgment and 

opinion.

OPINION

¶ 1 This is an appeal from administrative review by the circuit court of Madison County of a 

decision of the Illinois Department of Revenue (the Department) denying the application of 

Meridian Village Association and Meridian Village Association II (the appellants) for property 

tax exemptions based on charitable and religious uses of the property for tax years 2003 

through 2006. Edwardsville Community Unit School District No. 7 and the Village of Glen 

Carbon intervened to oppose the appellants’ application for an exemption. On January 24, 

2013, the circuit court entered an order affirming the decision of the Department. It now comes 

before us on further review pursuant to the Administrative Review Law (735 ILCS 5/3-101 to 

3-113 (West 2012)).

¶ 2 As always in matters of administrative review, we review the decision of the Department 

rather than the decision of the circuit court. See Three Angels Broadcasting Network, Inc. v. 

Department of Revenue, 381 Ill. App. 3d 679, 692 (2008). The amount of deference given to 

the agency on review depends on whether the issue presented is a question of fact, a question of 

law, or a mixed question of law and fact. Three Angels Broadcasting Network, Inc., 381 Ill. 

App. 3d at 693. Where the resolution of the case requires determining the legal effect of a 

given set of facts, the agency’s determination should be affirmed unless clearly erroneous.
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Three Angels Broadcasting Network, Inc., 381 Ill. App. 3d at 693. As was the case in Three 

Angels Broadcasting Network, Inc., the determinative facts in the case at bar–that is, the actual 

uses to which the subject property was put–are not in dispute. See Three Angels Broadcasting 

Network, Inc., 381 Ill. App. 3d at 693. The issue is whether, given the undisputed facts 

presented, the appellants are entitled to a charitable-use or religious-use property tax 

exemption. Three Angels Broadcasting Network, Inc., 381 Ill. App. 3d at 693. We will reverse 

the decision of the Department only if that decision was clearly erroneous. See Three Angels 

Broadcasting Network, Inc., 381 Ill. App. 3d at 693.

¶ 3 When reviewing an agency’s decision for clear error, we give significant deference to the 

agency’s experience in construing and applying the statutes that it administers. Three Angels 

Broadcasting Network, Inc., 381 Ill. App. 3d at 693. An agency’s decision will be deemed 

clearly erroneous only where the reviewing court, on the entire record, is left with the definite 

and firm conviction that a mistake has been committed. Three Angels Broadcasting Network, 

Inc., 381 Ill. App. 3d at 693. The burden of proving the right to an exemption is on the party 

seeking it, and in determining whether property is included within the scope of an exemption, 

all the facts are to be construed and all the debatable questions resolved in favor of taxation.

Methodist Old Peoples Home v. Korzen, 39 Ill. 2d 149, 155 (1968).

¶ 4 The appellants operate a senior housing facility comprising 133 independent-living units, 

66 assisted-living units, and 32 skilled-nursing units located in Glen Carbon. They applied for 

charitable-use and religious-use property tax exemptions for tax years 2003 through 2006.

These applications were denied by the Department on April 30, 2009. We turn first to the 

question of the appellants’ entitlement to a property tax exemption on the basis of their 

“charitable use” of the property.

¶ 5 Section 6 of article IX of the Illinois Constitution permits the legislature to exempt certain 

property from taxation only if it is “used exclusively for *** charitable purposes.” Ill. Const. 

1970, art. IX, § 6. The legislature has seen fit to so exempt property “when actually and 

exclusively used for charitable or beneficent purposes, and not leased or otherwise used with a 

view to profit.” 35 ILCS 200/15-65 (West 2012). The legislature has specifically included

“[o]ld people’s homes” if the home is exempt from federal income tax and if its bylaws provide 

for a waiver or reduction, based on an individual’s ability to pay, of any entrance fee, 

assignment of assets, or fee for services. 35 ILCS 200/15-65(c) (West 2012).

¶ 6 Even if an “old people’s home” meets the statutory requirements for exemption, it must 

also meet the constitutional requirements for charitable use. Eden Retirement Center, Inc. v. 

Department of Revenue, 213 Ill. 2d 273, 287 (2004). In Methodist Old Peoples Home v. 

Korzen, 39 Ill. 2d 149, 156-57 (1968), the supreme court articulated six guidelines or criteria 

that must be met in order to satisfy the constitutional requirements for a charitable use. Unless 

these six criteria are met, the property may be found not to be used exclusively for charitable 

purposes within the meaning of our constitution and therefore not entitled to an exemption 

from taxation. Eden Retirement Center, Inc., 213 Ill. 2d at 287.

¶ 7 The six criteria articulated in Methodist Old Peoples Home, 39 Ill. 2d at 156-57, as restated 

by the supreme court in Eden Retirement Center, Inc., 213 Ill. 2d at 287, for determining 

whether a property meets the constitutional requirement for a charitable use are as follows: (1) 

the benefits derived are for an indefinite number of persons for their general welfare or in some 

way reducing the burdens on government; (2) the organization has no capital stock or 

shareholders and does not profit from the enterprise; (3) funds are derived mainly from private 
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and public charity, and the funds are held in trust for the objects and purposes expressed in the 

organization’s charter; (4) charity is dispensed to all who need and apply for it; (5) no obstacles 

are placed in the way of those seeking the benefits; and (6) the exclusive, i.e., primary, use of 

the property is for charitable purposes. The supreme court further stated that the statements of 

the agents of an institution and the wording of its governing legal documents evidencing an 

intention to use the property exclusively for charitable purposes do not relieve the institution of 

the burden of proving that its property actually and factually is so used. Methodist Old Peoples 

Home, 39 Ill. 2d at 157. The court further clarified that the term “exclusively used” means the 

primary purpose for which the property is used and not any secondary or incidental purpose.

Methodist Old Peoples Home, 39 Ill. 2d at 157.

¶ 8 In its order denying the exemption, the Department found that the evidence presented at the 

hearing before the Department failed to establish that the appellants met the guidelines set 

forth in Methodist Old Peoples Home. The evidence did not indicate that the appellants’

charity benefits an indefinite number of people, because the appellants place limits on the 

amount of charity given. The appellants’ bylaws provide that they may deny benevolent care to 

any resident if that care would jeopardize the appellants’ ability to meet their obligations and to 

continue to operate in a financially stable manner. Furthermore, any benevolent care is limited 

to existing residents and does not extend to those who wish to become residents. Accordingly, 

the appellants do not dispense charity to all who need it. Providing charitable care only to its 

residents, placing limits on the amount of charitable care, and giving it only to the extent the 

appellants speculate they have the financial ability to provide it warrants a finding that the 

appellants’ policy does not benefit an indefinite number of people. See Wyndemere Retirement 

Community v. Department of Revenue, 274 Ill. App. 3d 455, 460-61 (1995) (charity provided 

in relation to financial circumstances is not provided to an indefinite number of people and not 

dispensed to all who need it). Nor, the Department found, did the appellants’ operation lessen 

the burden on government any more than does a for-profit retirement facility.

¶ 9 Additionally, the appellants failed to establish that their funds are derived mainly from 

private and public charity. To the contrary, the primary source of the appellants’ income is 

from fees paid for services rendered. The Department rejected the appellants’ argument that 

their funds came largely as donations from Lutheran Senior Services, which derives its funds 

mainly from private and public charity. The appellants’ audited financial statements indicate 

that these funds received from Lutheran Senior Services were loans and not donations.

Furthermore, Lutheran Senior Services is a separate entity from the appellants, and the 

appellants cannot acquire charitable status through the acts of a separate entity. The charitable 

acts of Lutheran Senior Services cannot be attributed to the appellants.

¶ 10 The Department found that the appellants place obstacles in the way of people seeking 

charity from it. The rental fees it charges are substantial and the evidence did not establish that 

the appellants charge less than similar for-profit entities operating in the area. The appellants 

require large security deposits from all of their residents and any fees that are not timely paid 

accrue a finance charge of 10% per annum. Neither the late fee nor the security deposit has 

ever been waived for any resident. Renters are also required to maintain renters insurance 

including Lutheran Senior Services as an additional insured.

¶ 11 Finally, the Department found that the appellants had failed to establish that the primary 

use of the property was charitable. In order to live in the units, residents must pay substantial 

monthly fees that vary depending on the size and desirability of the unit. Residents must 
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complete an application that shows they have the physical ability to live in the units. The 

security deposit and late fee have never been waived. The appellants’ primary source of 

income is from fees rather than donations. Similar facts were found in Methodist Old Peoples 

Home to be suggestive of a noncharitable use of the property. Accordingly, the Department 

determined that the appellants had not met their burden of showing clearly and convincingly 

that they are entitled to the charitable-use property tax exemption.

¶ 12 We have carefully reviewed the record of the proceedings before the Department and 

conclude that its decision is not clearly erroneous. The Department’s findings of fact are well 

supported by the evidence and, after reviewing constitutional, statutory, and case law, we are 

not left with the definite and firm conviction that the Department has made a mistake in its 

application of that law to the facts. The appellants’ use of the property does not satisfy even a 

majority of the criteria set forth in Methodist Old Peoples Home, and the appellants have not 

established that their property is used exclusively for charitable purposes and therefore entitled 

to the exemption.

¶ 13 The appellants argue that the Department had previously determined that one of the 

appellants is exempt from retailers’ occupation and use taxes on the basis that it is organized 

and operated exclusively for charitable purposes and that the Department cannot, therefore, 

deny the appellants a property tax exemption for charitable use. The appellants correctly point 

out that the same criteria set forth in Methodist Old Peoples Home for determining charitable 

exemptions apply equally to exemptions from both property taxes and retailers’ occupation 

and use taxes. See Wyndemere Retirement Community v. Department of Revenue, 274 Ill. App. 

3d 455, 459 (1995). Nevertheless, the Department held that having a charitable exemption 

from income taxes or from retailers’ occupation and use taxes is not determinative of whether 

an applicant is entitled to a charitable exemption from property taxes and that, in any event, the 

Department may review the tax-exempt status of a corporation at any time.

¶ 14 Our supreme court has held that the fact that an applicant has been granted a charitable 

exemption from state retailers’ occupation, service occupation, use, and service use taxes does 

not mean that the applicant must likewise be granted an exemption from paying tax on real 

property it owns. Provena Covenant Medical Center v. Department of Revenue, 236 Ill. 2d 

368, 389 (2010). The appellants argue that this opinion has no precedential value because it 

was not a majority opinion of the supreme court. The appellants are mistaken. Five justices 

concurred in that section of the opinion which made the above statement of law. Two of those 

justices dissented from other specific holdings of the court while concurring in its judgment.

We find Provena to be not only persuasive, but precedential. Accordingly, we reject the 

appellants’ argument that it is necessarily entitled to a charitable-use property tax exemption 

based on its charitable-use exemption from retailers’ occupation and use taxes. The 

Department did not err in similarly rejecting this argument.

¶ 15 We turn now to the question of the appellants’ entitlement to a property tax exemption 

based on their “religious use” of the property. Section 15-40 of the Property Tax Code provides 

that property used exclusively for religious purposes qualifies for an exemption as long as it is 

not used with a view to profit. 35 ILCS 200/15-40 (West 2006). Again, in this context, the term 

“exclusively” means the primary purpose for which the property is used. McKenzie v. Johnson, 

98 Ill. 2d 87, 98 (1983). For purposes of this section, a religious purpose means a use of 

property by a religious society or body of persons as a stated place for public worship, Sunday 

schools, and religious instruction. Three Angels Broadcasting Network, Inc. v. Department of 
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Revenue, 381 Ill. App. 3d 679, 694 (2008). While this is not inclusive of everything that might 

be regarded as a religious use, it is illustrative of the nature of a religious use in the context of 

property tax exemptions. Three Angels Broadcasting Network, Inc., 381 Ill. App. 3d at 695.

¶ 16 The Department held that the primary purpose of the appellants’ property is to care for the 

elderly. While the retirement community allows members of the Lutheran Church an 

opportunity to act out and evangelize their religion in the context of caring for seniors, the 

operation of the facility is not necessary to promote their religion, because that can be 

accomplished through other means. Other than caring for the elderly in a faith-inspired 

manner, there was little evidence of actual religious activity on the property.

¶ 17 The Department’s conclusion that the appellants’ property is not used as a stated place for 

public worship, Sunday schools, or religious instruction, or anything of that nature is not 

clearly erroneous. To the contrary, the primary or exclusive use to which the appellants’

property is put is housing for the elderly. We are reminded that when determining whether 

property is within the scope of an exemption, all facts are to be construed and all the debatable 

questions resolved in favor of taxation. Three Angels Broadcasting Network, Inc., 381 Ill. App. 

3d at 697. The Department’s decision that the subject property is not used exclusively for 

religious purposes and that the appellants are not entitled to a religious-use exemption from 

property tax is not clearly erroneous.

¶ 18 Nevertheless, the appellants argue that the Department and this court must defer to the 

religious beliefs and characterization of the appellants’ activities by the Lutheran Church and 

the appellants as exclusively for religious purposes, in accordance with the Illinois and United 

States Constitutions’ protection of the free exercise of religion. We believe this argument is 

best answered by simply quoting from Provena Covenant Medical Center v. Department of 

Revenue, 384 Ill. App. 3d 734, 766-67 (2008):

“If ‘religious purpose’ meant whatever one did in the name of religion, it would be 

an unlimited and amorphous concept. Exemption would be the rule, and taxation the 

exception. ‘In a sense, everything a deeply devout person does has a religious purpose.’ 

Faith Builders, 378 Ill. App. 3d at 1046, 882 N.E.2d at 1264. In Fairview Haven v. 

Department of Revenue, 153 Ill. App. 3d 763, 768-69, 506 N.E.2d 341, 345 (1987), we 

were unpersuaded by the reasoning that a nursing home had a religious purpose 

because taking care of the elderly was a way of ‘tying preaching to action.’ ‘Religious 

purpose’ within the meaning of section 15-40(a)(1) (35 ILCS ILCS 200/15-40(a)(1) 

(West 2002)) has to be narrower than ‘Christian service,’ or else ‘religious purpose’

would mean everything (and, therefore, nothing). In People ex rel. McCullough v. 

Deutsche Gemeinde, 249 Ill. 132, 136-37, 94 N.E. 162, 164 (1911), the supreme court 

stated: ‘[A] religious purpose means a use of such property by a religious society or 

body of persons as a stated place for public worship, Sunday schools[,] and religious 

instruction.’ In People ex rel. Carson v. Muldoon, 306 Ill. 234, 238, 137 N.E. 863, 864 

(1922), overruled in part on other grounds by McKenzie v. Johnson, 98 Ill. 2d 87, 100, 

456 N.E.2d 73, 79 (1983), the supreme court said, with reference to the quoted passage 

from Deutsche Gemeinde: ‘This was not stated as inclusive of everything that might in 

the future be regarded as a use for religious purposes but as illustrative of the nature of 

such use.’ If, as Muldoon said, public worship, Sunday schools, and religious 

instruction are ‘illustrative of the nature of [religious] use,’ it must follow that 
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‘religious use’ has a determinable nature and that to be a religious use, the activity must 

somehow resemble the activities listed in Deutsche Gemeinde.”

¶ 19 Clearly, the primary activities conducted by the appellants on their property of housing the 

elderly do not resemble the activities listed in Deutsche Gemeinde. They are not of the type 

intended to be exempted by the statute. While the appellants and the Lutheran Church remain 

free to characterize their activities on the subject property as of a religious nature, neither the 

Department nor this court is bound by that characterization. The Department’s denial of the 

appellants’ application for a religious-use property tax exemption is not clearly erroneous.

¶ 20 For the foregoing reasons we affirm the decision of the circuit court of Madison County

and the decision of the Department of Revenue which denied the appellants’ application for 

property tax exemptions.

¶ 21 Affirmed.