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FIFTH DIVISION

December 31, 1998

No. 1-97-3831

JUSTICE THEIS delivered the opinion of the court:

Mount Calvary Baptist Church, Inc. (Mount Calvary), an Illinois not-for-profit corporation, seeks reversal of the circuit court's order of September 16, 1997, affirming the final administrative decision of the Illinois Department of Revenue (the Department), which had denied, in part, Mount Calvary's request for a religious-use tax exemption for several parcels of property for the 1991 tax year. The properties at issue comprise a burned-out church building, a storage building, and several parking lots. We reverse and remand with directions.

On July 2, 1992, Mount Calvary filed a real estate tax exemption complaint with the Board of (Tax) Appeals of Cook County (the Board), seeking a religious-use property tax exemption under section 19.2 of the Revenue Act of 1939 (Ill. Rev. Stat. 1991, ch. 120, par. 500.2) for various parcels of real estate in Chicago for the 1991 tax year. The Board recommended that the exemption be granted. The Department denied the application, and Mount Calvary requested a formal hearing before the administrative law judge (the ALJ) to determine whether the parcels warranted exemption. At the hearing, the ALJ noted that Mount Calvary's application did not include all parcels owned by it and admitted into evidence an exhibit, identifying all the parcels on which were located a burned church building, Mount Calvary Christian Academy, a storage building, and various parking lots.

The burned church building (the burned church) is an 8,692 square-foot building located on three lots at 1251, 1253, and 1257 West 111th Street, identified by permanent index numbers (PIN) 25-20-105-001 through and including 25-20-105-003. Mount Calvary Christian Academy (the academy), a Christian school at 1237, 1239, 1241, 1243, 1245, 1249 West 111th Street, is located directly east of the burned church, also on West 111th Street, and is identified by PIN 25-20-105-004 through and including 25-20-105-009. A 7,260 square-foot storage building is located at 1322 West 111th Street on PIN 25-17-333-036.

Parking lots were located on the following parcel numbers: PIN 25-20-105-010 through and including 25-20-105-012, and 25-20-105-045 located directly east of the academy on 111th Street; PIN 25-20-105-019 through and including 25-20-105-023 located at least five parcels east of but still on the same block as the academy; PIN 25-20-105-047 located at 1256 West 111th Street; PIN 25-17-333-024 through 25-17-333-025 located at least 10 parcels west of but on the same block as the storage building; and PIN 17-333-024-037, a parking lot located directly east of the storage building on 111th Street.

The church building was damaged by a fire in September 1989. The fire resulted in the relocation of worship services and other church activities to the academy building. Prior to the fire, the academy building was used as a school known as the Mount Calvary Christian Academy. Immediately after the fire, Mount Calvary filed a claim with its insurance carrier, and the claim was denied for lack of coverage. On September 18, 1989, Mount Calvary filed for protection under the United States Bankruptcy Code.

In November of 1989, Mount Calvary sought a declaratory judgment on the issue of insurance coverage in the United States District Court for the Northern District of Illinois. Mount Calvary ultimately prevailed on appeal to the United States Court of Appeals for the Seventh Circuit, which found Mount Calvary was entitled to insurance coverage. After the United States Supreme Court denied the insurer's writ of certiorari, the matter was returned to the bankruptcy court for determination of the amount owed. A settlement was reached in March of 1998 in the amount of $2,000,000.

The following persons testified at the hearing before the ALJ on behalf of Mount Calvary: Theodore Peters (Peters), a deacon and trustee of Mount Calvary; Dr. Robert Johnson (Johnson), chairman of Mount Calvary's Board of Trustees; and Greg Kenner (Kenner), manager at John E. Wilson, Ltd., Certified Public Accountants. In addition, the Department and Mount Calvary submitted exhibits, which included deeds for the property establishing Mount Calvary's ownership and two maps showing the location of the property.

The record on appeal indicates that Peters testified that he had been a member of Mount Calvary Baptist Church since 1946. Peters explained that, in September 1989, the church building burned and after the fire the church building was closed because no roof remained. In 1991, the burned structure remained standing, but was not rebuilt.

Peters stated that Mount Calvary did not actually use the burned church building for religious services, but explained "[s]ometimes we would go there and pray." Peters explained that, after the fire, Mount Calvary conducted its religious services at the academy building just east of the burned church building. Peters further testified that insurance coverage litigation ongoing in 1991 prevented the church from being rebuilt as it formerly stood. Peters attested that no business was conducted for profit that year in the burned church building or in any of the parking lots. Peters also testified that in 1991 Mount Calvary's parking lots were used by parishioners attending church. When asked whether during 1991, given its various activities, the church used all of its parking facilities, Peters answered: "Not all of the time, but most of the time."

Johnson testified that in 1991, in his capacity as chairman of the Board of Trustees and registered agent of Mount Calvary, he became aware of the church's need to maintain its not-for-profit corporate status and to make applications for religious-use exemptions with respect to the subject property. Johnson stated that Mount Calvary had established a building fund, which was a special savings account designated for the following purpose: "We had to try to rebuild our church after it had burned in '89."

With respect to the storage building, Johnson testified that in 1991 "[a]ccess was restricted because the building needed repair so we didn't let anyone go into it." Johnson further explained: "We just used it for storage" because of Mount Calvary's insurance, fines and violations on the building. Johnson stated that in 1991 people did go into the building, "but not for any church activities, just to get things in and out of it." Johnson testified that Mount Calvary stored desks, chairs, and air conditioners in the storage building.

Johnson stated that the burned church building was not actually being used during 1991 by Mount Calvary because of its condition. When asked about the activities conducted in the academy building in lieu of the church building in 1991, Johnson stressed that "there is activity at the church seven days a week." Johnson explained that, when the former pastor left Mount Calvary in 1991 and took approximately half of the congregation with him, Mount Calvary found it difficult to comply with the bankruptcy plan approved by the court in 1990. Johnson explained that in 1991 Mount Calvary began to restructure its affairs. Johnson testified that, but for the fire in 1989, Mount Calvary would have been operating in the actual church building in 1991 and that the use of the academy building for religious services resulted solely from the fire. Kenner established Mount Calvary's financial position.

The ALJ found that the burned church and the storage building were not in exempt use in 1991. The ALJ also found that, because it could not use the church, Mount Calvary daily conducted numerous activities during the 1991 tax year at the academy building and relocated its services there. The ALJ also found that Mount Calvary had approximately 1,000 members at the beginning of the 1991 tax year but that membership decreased to approximately 500 persons later in the year due to internal conflict. The ALJ further found that Mount Calvary had established a building fund in order to raise money for rebuilding the church, which at the time the ALJ entered his findings of fact amounted to $8,161.

The ALJ recommended that Mount Calvary's request for exemption be granted for the 1991 tax year for those parcels of property on which the academy building and its adjacent parking lots were located. The ALJ identified those parcels by the following parcel numbers: 25-20-105-004 through and including 25-20-105-009; 25-20-105-010 through and including 25-20-105-012 and 25-20-105-045; and 25-20-105-019 through and including 25-20-105-023. However, the ALJ recommended that Mount Calvary's request for exemption be denied for the other parcels of property on which the burned church, the storage building, and the remaining parking areas were located.

In reaching these recommendations, the ALJ concluded that this case was "factually similar" to the case of Antioch Missionary Baptist Church v. Rosewell, 119 Ill. App. 3d 981, 457 N.E.2d 500 (1983). In Antioch, this court held that the church failed to meet its burden of showing that boarded-up, vacant property it acquired was actually used for an exempt purpose during the years in question, though it was ultimately developed for an exempt purpose. Here, as in Antioch, the ALJ concluded that "the applicant did not actually use its church building throughout the entire 1991 tax year." The ALJ further concluded that the church's "burned out" condition prohibited the applicant from using it for religious purposes for the time period in question. The ALJ reasoned that "although applicant clearly intended to use the church for religious purposes, such intent, standing alone, does not establish that the church was in fact in exempt use under current Illinois law." Based upon his reading of section 19.16 of the Revenue Act of 1939 (Ill. Rev. Stat. 1991, ch. 120, par. 500.16) (currently 35 ILCS 200/15-125 (West 1996)), which exempts parking areas, not leased or used for profit, when used as part of a use for which an exemption is provided, the ALJ then concluded that because the church building was not in exempt use during 1991, the parking lot adjacent to it was similarly nonexempt.

Having found that the academy building was primarily and actually used for religious services during the 1991 tax year, the ALJ concluded that the academy building and its adjacent parking lots were used for a religious purpose within the meaning of section 19.2 (Ill. Rev. Stat. 1991, ch. 120, par. 500.2) and were exempt from taxation for that year.

As to the storage building, the ALJ found that the record established it was "in a dilapidated condition that rendered it unsuitable for regular use during the 1991 tax year" and concluded that, because its condition mirrored that found in Antioch, it was not in exempt use during 1991. The ALJ further noted that the evidence pertaining to the storage building's use was inconsistent and supported the conclusion of taxation.

The ALJ explained that Mount Calvary had failed to show how the storage facility furthered its exempt purpose and concluded that the storage building was not reasonably necessary to further Mount Calvary's exempt operations during the tax year 1991. Finally, because the ALJ concluded that the storage building was not entitled to exemption, he concluded that "the plain meaning of paragraph 500.16 mandates that the adjacent parking lots are likewise non-exempt."

The facts upon which the Department's decision and the circuit court's order rest are not in dispute. "When the facts upon which a decision of tax exempt status rests are undisputed, whether property is exempt is a question of law." Cook County Masonic Temple Ass'n v. Department of Revenue, 104 Ill. App. 3d 658, 660, 432 N.E.2d 1240, 1242 (1982). In such cases, the decision as to whether the property is entitled to exemption "depends solely upon an application of the appropriate legal standard to the undisputed facts." Illinois Central Gulf R.R. Co. v. Department of Local Government Affairs, 95 Ill. 2d 111, 129, 447 N.E.2d 315, 323 (1983).

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,