In a 46-page decision issued yesterday by the 4th District Appellate Court, a recently enacted provision of the Illinois Property Tax Code, Section 15-86, has been found unconstitutional.  Section 15-86 created a separate procedure for determining whether hospital property qualified for an exemption from property taxes.  Section 15-86 was created to provide a bright line calculation to determine eligibility for exemption.  This came about after years of litigation involving the Provena Covenant Medical Center, which we have reported to you in multiple Alerts over the years.  Very briefly, if the total value of a hospital’s charitable services or activities meets or exceeds the hospital’s estimated property tax liability, the hospital may claim the exemption.  The section provided seven different categories of charitable services.

This ruling that Section 15-86 is unconstitutional is significant to hospitals, school districts, and other public bodies and is likely to be appealed to the Illinois Supreme Court.  If your district includes a hospital that is currently exempt from taxation, this ruling may impact that status and whether the hospital may have to begin paying property taxes and potentially prior years taxes.

We are in the process of analyzing the Court’s ruling and will be providing a more detailed summary next week.  A link to the decision can be found here.