In Franciscan Communities, Inc. v. Hamer, Case No. 2-11-0431, 2012 WL 3757206 (Ill.App. 2d Dist. Aug. 28, 2012), the court affirmed denial of a property tax exemption on religious and charitable grounds for a nonprofit continuing care retirement community associated with the Franciscan Sisters of Chicago Service Corporation, Inc., which is owned by the Franciscan Sisters of Chicago. The court deemed it undisputed that the facility is a means for the Roman Catholic Church and Sisters to carry out the mission of Christ's healing, but added that the facility was not necessary to the fulfillment of their religious mission. The Illinois Property Tax Code (35 ILCS 200/15-40(a)(1) (West 2006) provides, "Property used exclusively for ... religious purposes ... qualifies for exemption as long as it is not used with a view to profit." Property satisfies the exclusive-use requirement if it is "used primarily for the exempted purposes." The court stated as illustrative of a religious purpose (but not inclusive) "a use of such property by a religious society or body of persons as a stated place for public worship, Sunday schools and religious instruction."
In this case, the court held that medical care did not resemble these religious purposes and that the property was used primarily with a view to profit. The court rejected the petitioner's claim that constitutionally the courts cannot inquire into either its stated religious purpose in operating the facility or its stated use of the property as primarily religious; in addition, they could not and cannot deny the exemption on the basis that the facility is operated with a view to a profit because canon law requires the Sisters to be good stewards of their property and, following canon law, stewardship dictates a businesslike operation. In fact, the court held that to accept this argument precluding judicial review would itself constitute an Establishment Clause violation. The court observed that not all employees or residents were Catholic; religious icons or art were placed in common areas, but not residents' units; and no services were offered for free, but paid for by clients. It also found that the primary use of the facility was for upscale senior housing and care with an enhanced lifestyle. Primarily because of the last two factors, the court also denied that the facility qualified for a charitable property tax exemption. In addition, the court balanced against the charitable exemption a lack of evidence that the facility's highest compensated employees were paid salaries commensurate with other nonprofits. Last, the court rejected the petitioner's due process claim that the administrative law judge "evidenced a deep-seated antagonism" against it, bias against Catholicism and prejudice in favor of the intervenor school district and department of revenue.