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                                                                                                           THIRD DIVISION
                                                                                                           AUGUST 09, 2000

No. 1-00-0237

JUSTICE WOLFSON delivered the opinion of the court:

In 1994 and 1995 Randolph Street Gallery (RSG), a non-profitcorporation, served as a public forum for the contemporary artsand for art education activities. All well and good, said theIllinois Department of Revenue (the Department), but RSG is notentitled to real estate charitable tax exemptions for thoseyears. On administrative review, the circuit court held theDepartment should have granted the exemptions. The Departmentappealed. We affirm the circuit court.

In 1993, RSG acquired two adjacent three-story buildings onNorth Milwaukee Avenue in Chicago's West Town neighborhood. RSGoccupied the first floors of these buildings, and this space wasdivided into four areas: three areas for exhibitions,performances, classes or workshops, and one area called aresource room containing around 1,700 books, magazines, andvideotapes, as well as a computer with internet access, which wasopen to the public. RSG generally charged no admission fees toexhibitions, but regularly charged fees to "Time Arts" events orperformances. In 1994 and 1995, RSG presented eight exhibitionsand more than 50 performances. RSG also presented free lecturesand artist workshops for which it charged fees. Several localuniversities, including the School of the Art Institute ofChicago, Northwestern University, and Columbia College, placedinterns at RSG.

RSG also created and managed Team Arts Pursuits (TAP), acommunity arts education program which integrated resources froma variety of social service agencies to offer workshops for at-risk youths and adults. And RSG allowed other local artsorganizations, such as Women in the Director's Chair, StreetLevel Video, the Women's Action Coalition, the Gay and LesbianCultural Workers, the Chicago Public Art Group, and the ChicagoCommittee of the Day Without Art to use its space for programmingand meetings.

On October 19, 1994, RSG filed an "Application for PropertyTax Exemption" to avoid paying $164,719 in 1994 property taxes. On February 1, 1996, the Department denied RSG's application,stating, "THE PROPERTY IS NOT IN EXEMPT OWNERSHIP. THE PROPERTYIS NOT IN EXEMPT USE." On March 21, 1996, RSG filed another"Application for Property Tax Exemption" to avoid paying $77,664in 1995 property taxes. Again, on September 5, 1997, theDepartment denied RSG's application, repeating, "THE PROPERTY ISNOT IN EXEMPT OWNERSHIP. THE PROPERTY IS NOT IN EXEMPT USE."

RSG requested a formal hearing regarding these denials. TheDepartment, at a hearing before an administrative law judge(ALJ), submitted seven exhibits, including RSG's exemptionapplications, the Department's denials, RSG's hearing requests,and the ALJ's order consolidating RSG's cases and scheduling ahearing. RSG submitted nine exhibits concerning its activitiesand finances, called 11 witnesses at the hearing, and submitted apost-hearing brief. On May 4, 1998, the ALJ issued his"RECOMMENDATION FOR DISPOSITION," in which he recommended theDepartment affirm its earlier denials of RSG's exemptionapplications. On May 5, the Department accepted the ALJ'srecommendation, and, on June 9, RSG filed an administrativereview complaint in the circuit court.

On December 8, 1999, the trial court reversed theDepartment's decision.

DECISION

This appeal marks the Department's first meaningfulparticipation in this case. The Department did not appear at thehearing before the ALJ. On administrative review before thetrial court, the Department never responded to RSG's openingbrief.

After the Department's attorney advised he would not file atimely response brief, RSG filed a so-called "REPLY BRIEF." According to RSG, the Department's attorney telephoned RSG'sattorney to ask for a month-long briefing extension. RSG'sattorney balked, and the parties agreed to discuss the case in asubsequent telephone conversation. When they spoke several dayslater, the Department's attorney said he would prepare aninternal brief supporting his recommendation of concession.

There was no concession. Instead, there was a hearing onRSG's complaint. The Department focused its argument on whetherRSG failed to show its expenses were related to charitablepurposes. It relied entirely on RSG's purported failure toprovide "*** any information as to how the monies were actuallyspent, any type of breakdown was not provided."

The trial judge's adverse ruling apparently piqued theDepartment's interest, and now, on appeal, it has abandoned thecharitable-expenses issue it relied on in the circuit court. Instead, the Department contends RSG was not a charity because itcharged substantial fees for services it offered and did notwaive those fees for those who were unwilling to pay. Theuncontradicted fact that RSG had a fee-waiver policy in place andused it does not deter the Department. That policy wasineffective, says the Department, because RSG did not make itknown to the public.

The Department also now contends RSG was not entitled to atax exemption because the primary purpose for which the propertywas used was not charitable. While this second contention isdifficult to follow, it seems to be a restatement of theDepartment's first claim: RSG charged fees for some of itsperformances and did not publicly announce a fee-waiver policy.

The issues the Department raises before us were not raisedin the circuit court. We could hold the Department has forfeitedour review of these issues. People ex rel. Hartigan v. IllinoisCommerce Comm'n, 117 Ill. 2d 120, 131, 510 N.E.2d 865 (1987); seeSt. James Temple of the A.O.H. Church of God, Inc. v. Board ofAppeals of the City of Chicago, 100 Ill. App. 2d 302, 313, 241N.E.2d 525 (1968)("This court will consider only such questionsas were raised and preserved in the trial court, and thisprinciple likewise applies to review of an administrativedetermination.") Because the parties contest significant taxliability, we will consider the merits of the Department'sappeal.

While "[t]he findings and conclusions of the administrativeagency on questions of fact shall be held to be prima facie trueand correct" (735 ILCS 5/3-110 (West 1998)), a reviewing courtmay revisit the agency's conclusions of law de novo (Branson v.Department of Revenue, 168 Ill. 2d 247, 254, 659 N.E.2d 961(1995)). But our Supreme Court has told us the issues in thiscase cannot be characterized neatly as either questions of factor questions of law, but, more appropriately, as "mixedquestion[s] of fact and law." See City of Belvidere v. IllinoisState Labor Relations Board, 181 Ill. 2d 191, 205, 692 N.E.2d 295(1998). That is, "[w]here a case involves the examination of thelegal effect of a given set of facts, the agency's determinationshould be affirmed unless clearly erroneous." XL Disposal Corp.v. Zehnder, 304 Ill. App. 3d 202, 207, 709 N.E.2d 293 (1999).

"Clearly erroneous" is said to rest somewhere between the"manifest weight of the evidence" and de novo, requiring us toafford some deference to the agency's experience and expertise. City of Belvidere, 181 Ill. 2d at 205; Metropolitan WaterReclamation District of Greater Chicago v. Department of Revenue,No. 1-98-4459, slip op. at 7 (May 17, 2000). Under thisstandard, we must accept the administrative agency's findingsunless we are firmly convinced the agency has made a mistake. Friends of Israel Defense Forces v. Department of Revenue, No. 1-98-4362, slip op. at 7 (June 30, 2000)(citing Concrete Pipe &Products of California, Inc. v. Construction Laborers PensionTrust, 508 U.S. 602, 622, 124 L. Ed. 2d 539, 563-64, 113 S. Ct.2264, 2279 (1993)). We are firmly convinced.

Under the Illinois Constitution the General Assembly mayexempt from taxation property used exclusively for "school,religious, cemetery and charitable purposes." Ill. Const. 1970,art. IX,