Opinion ID: 2103431
Heading Depth: 1
Heading Rank: 4

Heading: the homestead improvement exemptions are constitutional

Text: Section 19.23-2 of the Revenue Act of 1939 establishes a homestead-improvement exemption in counties with less than one million inhabitants: In counties with less than 1,000,000 inhabitants, a homestead improvement exemption pursuant to Article IX, Section 6 of the 1970 Constitution limited to an annual maximum of $25,000 in actual value when that property is owned and used exclusively for a residential purpose upon demonstration that a proposed increase in assessed value is attributable solely to a new improvement of an existing structure. The amount of the exemption shall be limited to the actual value added by the new improvement up to an annual maximum of $25,000 and shall continue for 4 years from the date the improvement is completed and occupied, or until the next following quadrennial assessment of such property, whichever is later. (Ill. Rev. Stat. 1981, ch. 120, par. 500.23-2.) In essentially identical language, section 19.23-3 establishes the same exemption in counties with one million or more inhabitants. (Ill. Rev. Stat. 1981, ch. 120, par. 500.23-3.) The legislature added these sections to the Revenue Act in two 1975 acts. (Pub. Act 79-630 and Pub. Act 79-913, 1975 Ill. Laws 2000, 2785.) The circuit court in this case held that these homestead-improvement exemptions are unconstitutional because they do not qualify as homestead exemptions authorized by the language of article IX, section 6, which states: The General Assembly by law may grant homestead exemptions or rent credits. Ill. Const. (1970), art. IX, sec. 6. The circuit court relied in part on Proviso Township High School District No. 209 v. Hynes (1980), 84 Ill.2d 229, which dealt with a homestead-improvement exemption that permitted an exemption of up to $15,000 in actual value of improvements per dwelling unit on real property containing less than 55 units and which is owned and used primarily for a residential purpose by either the owner or other persons who rent or lease such property or portions thereof. (Emphasis added.) (Ill. Rev. Stat. 1979, ch. 120, par. 500.23-4.) The exemption in that case was held unconstitutional because it did not require that the owner be a natural person who resides in the building to be eligible for the homestead-improvement exemption. 84 Ill.2d 229, 243. It has often been said that it is our duty to construe acts of the legislature so as to uphold their constitutionality and validity if it can reasonably be done, and, further, that if their construction is doubtful, the doubt will be resolved in favor of the validity of the law attacked. ( Illinois Crime Investigating Com. v. Buccieri (1967), 36 Ill.2d 556, 561, cert. denied (1967), 389 U.S. 848, 19 L.Ed.2d 117, 88 S.Ct. 75; see also Follett's Illinois Book & Supply Store, Inc. v. Isaacs (1963), 27 Ill.2d 600, 604; MacMurray College v. Wright (1967), 38 Ill.2d 272, 277.) The circuit court held, on the authority of Proviso Township, that no reasonable interpretation of sections 19.23-2 and 19.23-3 could supply the necessary ingredient for a valid homestead exemption  that the owner be a natural person who resides in the improved dwelling. We disagree. The statute declared unconstitutional in Proviso Township could not possibly have been construed as complying with the limits of article IX, section 6, because it specifically authorized a home-improvement exemption for improved property which was occupied by lessors or renters of the owner. The present statute, on the other hand, only authorizes the homestead-improvement exemption if the property is owned and used exclusively for a residential purpose. (Emphasis added.) Ill. Rev. Stat. 1981, ch. 120, pars. 500.23-2, 500.23-3. In opinion No. S-1045 the Attorney General has interpreted this language to limit the homestead-improvement exemption to property that is occupied by the owner and used exclusively by him for residential purposes: Since all property is, in fact, owned by someone, any other construction would render the word `owned' meaningless. (1976 Ill. Att'y Gen. Op. 85.) In this opinion the Attorney General also observed that the homestead-improvement exemption is unavailable on an apartment building where the owner leases some units to lessees who use the units only for residential purposes. The exemption does not apply in such cases because the building is not owned exclusively for residential purposes as required by the statute; although the lessees may use their units for residential purposes, they do not own them, and even though the owner resides in the building, he also uses it for commercial purposes. (1976 Ill. Att'y Gen. Op. 85.) Although not controlling, this interpretation of the statute is entitled to deference ( City of Springfield v. Allphin (1978), 74 Ill.2d 117, 130-31), and we choose to adopt it here where it reasonably interprets the statutory language and thereby gives it a construction which is consistent with the Constitution. This interpretation is also consistent with the construction that the Board has placed on the statute as related in the affidavits of the defendant Board members which were submitted with their motion for summary judgment. Finally, we also hold that sections 19.23-2 and 19-23-3 require that the owner of the property be a natural person, for only such persons can own and occupy the property for a residential purpose. (See Proviso Township High School District 209 v. Hynes (1980), 84 Ill.2d 229, 240-41.) Corporations or other entities which rent housing units or which conduct business or professional affairs from them would be using the properties for business and commercial purposes and not for residential purposes. Cf. N.H. Engle & Sons, Inc. v. Laurich (1968), 98 Ill. App.2d 18, 26-27 (use of property as doctor's office violates covenant restricting use to residential purposes). The circuit court, however, relied upon an additional and independent ground in declaring sections 19.23-2 and 19.23-3 unconstitutional. It held that while article IX, section 6, of the Constitution authorizes homestead exemptions it does not authorize homestead- improvement exemptions. The language in article IX, section 6, of the 1970 Constitution that permits homestead exemptions was adopted by the constitutional convention essentially in the form that was recommended by the Committee on Revenue and Finance. In its report the committee described the provision in some detail: The final sentence permitting the granting of homestead exemptions or rent credits represents a major change. The Committee is acutely aware of the hardships which the payment of property taxes on residential property can cause  especially when the homeowner, by reason of retirement or a change in family circumstance, has a greatly reduced income. Many States have moved to meet this problem by providing for the exemption from taxation of the assessed value of owner-occupied homes. In some cases, the exemptions are available to all those who occupy a homestead. In other cases, benefits are limited to those who are elderly or in need. Unfortunately, this kind of exemption provides no relief to renters who directly pay no real estate taxes but whose rent payments are higher by reason of property taxes paid by the owners of property which they occupy. The Committee proposal will permit the General Assembly to develop a system whereby credits for real estate tax payments are passed through to the renter so that he may receive a benefit comparable to the homeowner. The Committee considered adding language which would limit the homestead exemptions to those who are elderly and/or needy. Although many members of the Committee felt that benefits should be limited in this way, it was deemed wiser not to write the limitations into the constitution. (Emphasis added.) 7 Proceedings of the Sixth Constitutional Convention 2158-59 (hereafter referred to as Proceedings). A dissent to the report argued that homestead exemptions should be limited to property owned and occupied by elderly persons with limited means. (7 Proceedings 2160-63 (Under the Committee proposal the entire assessed value of all homesteads in Illinois could be exempted).) An amendment to the committee's proposal was offered on the floor of the convention which would have limited homestead exemptions to the elderly on limited means, and some delegates expressed a preference for this more limited type of homestead preference. (3 Proceedings 2080-81.) Delegate Karns opposed the limiting amendment stating: I think in 1870 when our present constitution was adopted and did not provide for a homestead exemption, it was not contemplated that the  the heavy burden of taxation on residential real estate. The language does not require or mandate any particular form of exemption but is a rather broad grant of power to the General Assembly to devise an equitable system of exemptions [and] rent credits. I would point out to the Convention that when you limit the credit to the elderly needy, there are many, many people in our society today that are not elderly but are needy. I submit that the General Assembly might want to provide some relief to widows, regardless of age, with families. This provision is a flexible one, and I think in a day and age where the burden of taxation is so great on residential real estate, it should be in the constitution granting this power to the General Assembly. There are disabled people. We heard much testimony from various groups-blinded veterans and so forth. They are not necessarily elderly, but many are needy. I suggest that this is an area where we should make a broad grant of authority to the General Assembly to deal with this problem. (Emphasis added.) (3 Proceedings 2080-81; see also 3 Proceedings 1919-20 (remarks of Delegate Scott).) The convention rejected the limiting amendment, leaving the legislature with the broad powers provided in the Committee's draft. 3 Proceedings 2082. We believe that the homeowner's improvement exemptions provided in sections 19.23-2 and 19.23-3 are valid homestead exemptions under article IX, section 6, of the 1970 Constitution. At the very least article IX, section 6, authorizes the legislature to grant exemptions to specific classes of needy homeowners who are threatened with the loss of their residence through high property taxes. ( Proviso Township High School District 209 v. Hynes (1980), 84 Ill.2d 229, 240.) The homestead-improvement exemption authorizes an exemption of a portion of the assessed value of a homestead, specifically the value up to $25,000 per year which is added to the home by an improvement. The legislature may have concluded that homeowners who add a substantial improvement to their homes may often incur debt to do so, and that such homeowners should be granted an exemption for the value added by the improvement for the limited period of four years in order to give them an opportunity to make a substantial beginning toward paying off their improvement loans. The debates of the convention, however, also indicate that it was the intention of the delegates by adopting article IX, section 6, to grant the legislature broad powers to fashion homestead exemptions that would promote other legitimate social policies as well, such as rewarding the patriotic service of veterans who have been obliged to drop their own affairs to take up the burdens of the nation. ( Boone v. Lightner (1943), 319 U.S. 561, 575, 87 L.Ed. 1587, 1596, 63 S.Ct. 1223, 1231.) The legislature might have assumed that by encouraging the improvement of existing housing units, the homestead-improvement exemption would advance conservation, promote jobs, and add to the value of the local property tax base. Thus, we hold that homestead improvement exemptions are permissible homestead exemptions authorized by article IX, section 6, of the Constitution.