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October 15, 2001

Plaintiff, Dundee Township (the Township), purchased a parcelof vacant land under a farm lease pursuant to the open spaceprovisions of the Township Code (60 ILCS 1/115--5 et seq. (West1998)). Plaintiff then sought a property tax exemption for theentire parcel of land pursuant to section 115--115 of the TownshipCode (60 ILCS 1/115--115 (West 1998)). Plaintiff appeals from theportion of the trial court's order on judicial review that affirmedthe decision of the Illinois Department of Revenue that theTownship's leasehold interest in a parcel of land did not qualifyfor a property tax exemption. We affirm.

Under the Township Code, a township may acquire qualifyingtracts of land for open space purposes. 60 ILCS 1/115--5 et seq.(West 1998). On April 15, 1996, plaintiff, Dundee Township,adopted an open space program pursuant to the provisions of theTownship Code. On July 16, 1997, the Township purchased a parcelof approximately 70.34 acres of vacant land for open spacedevelopment. At the time of the Township's acquisition, some orall of the property was leased to individuals for commercialfarming. The Township renewed the farm lease at an annual rent of$3,000.

Section 115--115 of the Township Code provides for a realestate tax exemption of "[a]ll property acquired by any townshipfor open space purposes pursuant to an open space program *** forassessment year 1988 and each assessment year thereafter." 60 ILCS1/115--115 (West 1998). On August 5, 1997, the Township sought anopen space property tax exemption for the entire parcel pursuant tosection 115--115 of the Township Code. The Kane County Board ofReview recommended that the Township's entire fee interest in theproperty was entitled to an exemption for 46% of the year that itwas owned by the Township.

The Department of Revenue (the Department) approved the Boardof Review's recommendation to grant an exemption for the Township'sfee interest for 46% of the 1997 tax year. However, the Departmentfound that a leasehold assessment should be levied against theTownship's leasehold interest pursuant to section 9--195 of theProperty Tax Code (35 ILCS 200/9--195 (West 1998)).

The Township sought an administrative appeal from the decisionof the Department of Revenue. The Department issued a finaladministrative decision that affirmed its earlier decision to grantthe Township an exemption for its fee interest in the property for46% of the 1997 tax year. The Department also found that theTownship lacked standing to seek a tax exemption for the leasehold. The Department found that, under section 9--195 of the Property TaxCode (35 ILCS 200/9--195 (West 1998)), only the lessees were liablefor property taxes on leaseholds. As such, the lessees, and notthe Township, had a pecuniary interest in the leasehold sufficientto confer standing to challenge assessments against the leasehold. Since the Township did not suffer pecuniary or other loss, theDepartment ruled that it lacked standing to challenge the leaseholdassessment.

The Department further found that, even if the Township hadstanding to challenge the leasehold assessment, it was not entitledto the exemption of the leasehold interest as a matter of law. Under section 115--115 of the Township Code, only fee interests inreal property, and not leasehold interests, were exempt. Therefore, under section 9--195 of the Property Tax Code, theleasehold interest of a nonexempt lessee was taxable.

The Township filed a complaint for administrative review ofthe decision from the Department of Revenue. 735 ILCS 5/3--103(West 1998). The complaint alleged that the entire parcel of landwas acquired pursuant to the open space provisions of the TownshipCode and, as such, the entire parcel was exempt from property taxpursuant to section 115--115 of the Township Code.

The trial court ruled that the Township had standing to claima property tax exemption but that the decision of the Department ofRevenue was consistent with the manifest weight of the evidence andnot contrary to existing law. The decision of the Department ofRevenue was affirmed, and the Township's complaint was dismissed. The Township appeals from the trial court's judgment.

The trial court's authority in reviewing administrativedecisions is limited to the powers expressed in the AdministrativeReview Law (735 ILCS 5/3--101 et seq. (West 1998)). The scope ofreview of an administrative agency's factual findings is limited towhether those findings are against the manifest weight of theevidence. American National Bank & Trust Co. v. Department ofRevenue, 242 Ill. App. 3d 716, 721 (1993). When, as here, thefacts are not in dispute, the resolution of the issues is aquestion of law. City of Chicago v. Illinois Department ofRevenue, 147 Ill. 2d 484, 491 (1992).

Initially, we address the Department's contention, raised inits brief, that the Township lacks standing to challenge theDepartment's determination that the farm lease was subject to aleasehold assessment. In the order from which the Townshipappeals, the trial court found that the Township had standing butthat the Department's decision concerning the leasehold interestwas consistent with the manifest weight of the evidence andexisting law. The instant appeal from the trial court's order wasbrought by the Township. The Township challenges the trial court'saffirmance of the decision of the Department of Revenue that theTownship was not entitled to a tax exemption for its leaseholdinterest in the property. To preserve the issue of standing forreview, the Department was required to file a cross-appeal pursuantto Supreme Court Rule 303. 155 Ill. 2d R. 303(a)(3). Raising theissue of standing in its brief without filing a cross-appeal isinsufficient. Since the Department did not file a cross-appealfrom the portion of the trial court's order that found the Townshiphad standing, this court lacks jurisdiction to consider this issueon appeal.

Turning to the merits of the Township's appeal, all propertyis presumed to be subject to taxation. American National Bank, 242Ill. App. 3d at 722. Statutes granting exemptions are construedstrictly in favor of taxation. The party claiming the exemptionhas the burden of proving that the exemption applies. Girl Scoutsof Du Page County Council, Inc. v. Department of Revenue, 189 Ill.App. 3d 858, 861 (1989).

At issue is whether the property acquired pursuant to theTownship's open space program but leased for commercial farmingpurposes was entitled to an exemption pursuant to section 115--115of the Township Code.

Section 115--115 of the Township Code provides as follows:

"All property acquired by any township for open spacepurposes pursuant to an open space program *** shall be exemptfrom real property taxation for assessment year 1988 and eachassessment year thereafter." 60 ILCS 1/115--115 (West 1998).

The Township contends that this section unambiguously providesa real estate tax exemption for their entire parcel of landacquired for open space purposes.

In addition to the tax provisions of the Township Code,however, section 15--60 of the Property Tax Code provides asfollows:

"All property belonging to any county or municipalityused exclusively for the maintenance of the poor is exempt, asis all property owned by a taxing district that is being heldfor future expansion or development, except if leased by thetaxing district to lessees for use for other than publicpurposes.

Also exempt [is]:

* * *

(c) all property owned by any municipality locatedwithin its incorporated limits. Any such property leasedby a municipality shall remain exempt, and the leaseholdinterest of the lessee shall be assessed under Section 9--195 ***." 35 ILCS 200/15-60 (West 1998).

Section 9--195 of the Property Tax Code, referenced above,contains the following provision applicable to leaseholdassessments:

"[W]hen property which is exempt from taxation is leasedto another whose property is not exempt, and the leasing ofwhich does not make the property taxable, the leasehold estateand the appurtenances shall be listed as the property of thelessee ***. *** [T]he lessee shall be liable for thosetaxes." 35 ILCS 200/9--195 (West 1998).

The principles of statutory construction guide us indetermining whether the Township is entitled to a tax exemption forthe leasehold interest in the open space land. The fundamentalprinciple of statutory construction is to ascertain and effectuatethe intent of the legislature. Paciga v. Property Tax AppealBoard, 322 Ill. App. 3d 157 (2001).

Here, there are two allegedly competing statutory provisions. It is presumed that statutes which relate to the same subject aregoverned by one spirit and a single policy. People ex rel. Daleyv. Datacom Systems Corp., 146 Ill. 2d 1, 17 (1991). Thus, indetermining legislative intent when two statutory provisionsaddress the same subject matter, the statutes are read in parimateria, and an interpretation that gives effect to both provisionsmust be adopted. Johnson v. St. Therese Medical Center, 296 Ill.App. 3d 341, 348 (1998); Schaumburg State Bank v. Bank of Wheaton,197 Ill. App. 3d 713, 720 (1990).

The Township's position, that section 115--115 is controlling,ignores these principles of statutory construction. Section 115--115 must be interpreted in light of section 9--195 of the PropertyTax Code, since both statutes are instructive of the legislativeintent on the issue of taxation.

Under section 9--195 of the Property Tax Code, the parcel atissue was acquired for open space purposes and is therefore exemptfrom taxation, subject to restrictions due to the leaseholdinterest. See City of Lawrenceville v. Maxwell, 6 Ill. 2d 42, 49(1955). Contrary to the Township's position, our inquiry does notend here. Under section 9--195, leasehold assessments are to beimposed on an otherwise exempt parcel when that property is leasedto a nonexempt lessee and the act of leasing does not make theproperty taxable. In these circumstances, the leasehold interestis taxable and the lessee is responsible for payment. 35 ILCS200/9--195 (West 2000).

Since section 115--115 is silent concerning the qualifyinguses for the tax-exempt status of a leasehold, the Township Codefills the gap. Open space purposes include "the preservation andmaintenance of open land, scenic roadways, and pathways *** with orwithout public access, for the education, pleasure, and recreationof the public" and "the preservation of portions of that propertyin their natural condition and the development of other portions ofthat property." 60 ILCS 1/115--5 (West 1998). Open space propertymay be leased "for construction, reconstruction, alteration,renewal, equipment, furnishing, extension, development, operationand maintenance of lodges, housekeeping and sleeping cabins,swimming pools, golf courses, campgrounds, sand beaches, marinas,convention and entertainment centers, roads and parking areas, andother related buildings and facilities." 60 ILCS 1/115--90 (West1998). Section 115--95 permits the leasing of buildings andfacilities "constructed, reconstructed, altered, renewed, equipped,furnished, extended, developed, and maintained by the township ***for operation or development *** and maintenance." 60 ILCS 1/115--95 (West 1998). These provisions indicate that any lease of openspace property must fall into one of the specifically identifiedcategories or be related to open space purposes for it to beexempt.

Here, the Township leased a portion of the parcel forcommercial farming purposes. This use is not specificallydelineated as an exempt use for open space property under eithersection 115--90 or 115--95 of the Township Code. In City ofLawrenceville v. Maxwell, 6 Ill. 2d 42, 49 (1955), our supremecourt held that the use to which a property is devoted is decisivein determining whether it is entitled to exempt status, rather thanthe use to which income derived from the property is employed. Since commercial farming is not delineated as an exempt use underthe open space provisions of the Township Code, the leaseholdinterest does not qualify as an exempt use.

Under the Township Code, the property remained exempt as longas it was acquired for open space purposes pursuant to an openspace program. 60 ILCS 1/115--115 (West 1998). The existence ofthe farm lease did not destroy the underlying exemption of the feeinterest in the property since it did not change the character ofthe acquisition of the fee for open space purposes. 35 ILCS 200/9--195 (West 1998). Since the lease did not render the Township's feeinterest taxable under section 9--195, only the leasehold wastaxable. 35 ILCS 200/9--195 (West 1998).

Contrary to the Township's position, the Township Code andProperty Tax Code must be read in pari materia. When the statutesare construed in this fashion, the Department's determination thatthe Township's fee interest in the parcel acquired for open spacepurposes was exempt for 46% of the tax year but that the leaseholdinterest in the parcel was not exempt was consistent with themanifest weight of the evidence, the policy underlying the statutesconcerning tax exemptions, and the case of City of Lawrenceville v.Maxwell, 6 Ill. 2d 42 (1955) (holding that, when property is usedfor two purposes, one of which is exempt from taxation and one ofwhich is not, a tax should be assessed against the part that isdevoted to a nonexempt use).

The Township is seeking the benefits of the tax-exempt statusof the fee and objecting to the tax burden clearly imposed on non-tax-exempt leaseholds. We are not persuaded by the Township'sarguments. The Township has failed to establish that it should beexcluded from the general statutory scheme of taxation, which taxesnonexempt leasehold interests in real estate that have a tax-exemptfee interest.

The judgment of the circuit court of Kane county is affirmed.

Affirmed.

HUTCHINSON, P.J., and BOWMAN, J., concur.