State OK to deny church-affiliated daycare center property tax exemption because too 'businesslike'

By Sara McCleary | May 22, 2017

SPRINGFIELD —  A state appeals court in Springfield has said the state of Illinois was correct to deny a property tax exemption to a church for a day care center owned, staffed and operated by the church and its member, finding the day care center was more "businesslike than religious" in nature.

On May 15, a three-justice panel of the Illinois Fourth District Appellate Court affirmed the decision of both the Illinois Department of Revenue and a Sangamon County judge.

In June 2010, the West Side Christian Church moved its Christian Daycare Center to a Springfield property it had purchased in March of that year, separate from the property on which the church stands. In November, the church applied for a property tax exemption for its new daycare property, but the IDOR denied the application.

The matter then went to a full hearing, at the church’s request, where the request was again denied, followed by proceedings before the Sangamon County Circuit Court, which again denied the exemption.

In its appeal to the Fourth District Court, the church asserted the day care center is used for ministry purposes, so it should be entitled to a property tax exemption. According to the court’s written decision, the church “contends its evidence demonstrates an exclusive religious purpose, as religion is a core tenet of its mission statement and the Center’s daily instruction. The Center was founded and run by plaintiff church, the board members are church members, and the teachers must have a religious affiliation. ... Moreover, plaintiff asserts the evidence demonstrated Christ-centered instruction was part of every lesson, including secular lessons.”

When considering this, however, the court noted, “Although the mission statement explained the curriculum is Christ-centered, it also went on to state the Center provides social interaction, intellectual stimulation, physical development, and emotional growth, which are secular services.”

Furthermore, families and children making use of the day care center do not have to identify as Christian to be able to use the facility, but they do have to make regular, timely tuition payments. Those who failed to do so would be assessed late fees, and more than three missed payments would result in removal of the child from the Center and referral of the account to a collection agency. Therefore, reads the decision, “the arrangement between the Center and parents is more businesslike than religious.”

The appellate court concluded that although the center does offer religious instruction and its activities tend to possess “religious overtones,” the building’s primary purpose was to form businesslike relationships with families in order to provide day care services to children and therefore is ineligible for tax exemptions under the Property Tax Code.

The decision was filed as an unpublished order filed under Supreme Court Rule 23, which limits its use as precedent except under the circumstances permitted by the rule.

The order was authored by Justice Lisa Holder White, with justices Robert J. Steigmann and Thomas R. Appleton concurring, in affirming the decision of Sangamon County Circuit Judge Rudolph M. Braud Jr.

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