
                                                   SECOND DIVISION
                                                   September 17, 2002







No. 1-01-0847

SALT CREEK RURAL PARK DISTRICT,

                             Plaintiff-Appellant,

      v.

THE DEPARTMENT OF REVENUE and THE COUNTY OF COOK,

                             Defendants-Appellees. | | | | | |
)))))))))
)
 |Appeal from the
Circuit Court of
Cook County


No. 99 L 51203

Honorable
Joanne Lanigan
Judge Presiding.


      JUSTICE CAHILL delivered the opinion of the court:
      Plaintiff Salt Creek Rural Park District (the park  district)  appeals
an Illinois Department of  Revenue  (Department)  order  denying  tax-exempt
status for 11 acres of land.  We affirm.
      The record reveals that the park district filed  an  application  with
the Illinois Department of Natural Resources (IDNR)  for  a  matching  funds
grant to purchase 11 acres  of  land.   The  IDNR  does  not  allow  a  park
district to use grant funds to cover the  purchase  price  of  land  already
owned by it.  So the park district entered  into  an  "agreement"  with  the
Corporation for Open Lands (Corlands), title-holder of the 11 acres.   Under
the agreement, Corlands would hold title to the land  until  the  grant  was
approved.
      Corlands had acquired the land under  a  deed  in  trust  executed  on
October 9, 1996.  Corlands then leased the land to the  park  district  from
November 1, 1996, until January 31, 1998.  The  agreement  referred  to  the
parties as "landlord" and "tenant," and structured the payments to  be  made
by the park district.  The agreement required the park district to  use  the
land for park district purposes only.  The  agreement  also  gave  the  park
district an option to purchase the land,  terminating  the  agreement.   The
park district exercised this option in June 1997 and acquired full title.
      The park district filed a real estate tax exemption complaint for  the
year 1996 with the Cook County Board of Review  on  January  27,  1997,  six
months before acquiring title.  This complaint sought  a  finding  that  the
land was tax exempt under section 15-105(b) of the Property  Tax  Code  (the
Code) (35 ILCS 200/15-105(b) (West 2000)).  This section reads:
            "(b) All property belonging to any park or conservation district
      with less than 2,000,000 inhabitants is exempt.  All  property  leased
      to such park district for $1 or less per year and used exclusively  as
      open space for recreational purposes not exceeding  50  acres  in  the
      aggregate for each district is exempt."  35 ILCS  200/15-105(b)  (West
      2000).
      The Board of Review recommended that a partial  exemption  be  granted
from November  1  through  December  31,  1996,  the  two-month  period  the
Corlands agreement was in effect.  The Department  overruled  the  Board  of
Review and denied the request for tax-exempt status.
      An administrative hearing  was  held  on  June  24,  1999.   The  park
district submitted evidence of the Corlands  agreement,  characterizing  the
arrangement as a "pass through" to allow the park district to purchase  land
with government funds. The park  district  analogized  the  agreement  to  a
constructive trust.
      An administrative law judge affirmed the Department's denial  of  tax-
exempt status on October 12, 1999.  He found that the park district did  not
own the land in November and December, but leased  it.   The  administrative
law judge rejected the constructive trust argument  of  the  park  district.
He also rejected the argument that the option to purchase the land made  the
agreement something other than a lease.
       The  administrative  law  judge  then  found   that   the   statutory
requirements for a leasehold exemption were not met.  The lease between  the
park district and Corlands required rent  payments  of   more  than  $1  per
year.  No evidence was presented that  the  land  was  used  for  tax-exempt
purposes during the 1996 tax year.  35 ILCS 200/15-105(b) (West 2000).
      The park district filed a complaint for administrative review  in  the
circuit court on November 16, 1999.  An amended complaint was filed  on  May
2, 2000.  The amended complaint added Cook County as a defendant and  sought
additional relief for taxes levied against the lots since 1997.   The  trial
court granted a motion to strike Cook County as a defendant  and  the  newly
added counts.  The court then affirmed the denial of tax-exempt  status  for
1996.
      On appeal, the park district argues that the land is tax exempt  under
sections 15-105(b) and 15-80 of  the  Code  (35  ILCS  200/15-105(b),  15-80
(West 2000)).   The  park  district  also  contends  that  the  trial  court
improperly denied alternative and prospective  relief.   We  first  consider
our standard of review.
      The park district suggests a de novo review.   The  Department  argues
for a clearly erroneous standard, claiming that the  park  district's  right
to a tax exemption turns on a showing that  the  lease  was  a  constructive
trust, an installment contract or that the land was  used  for  recreational
purposes.  The Department cites to Lutheran Church of the Good  Shepherd  of
Bourbonnais v. Department of Revenue, 316 Ill. App. 3d 828, 737 N.E.2d  1075
(2000).  We disagree with the Department's argument.
       The  Lutheran  Church  court's  adoption  of  the  clearly  erroneous
standard in the case before it is based on our  supreme  court's  discussion
of appropriate standards of review in the administrative review  context  in
City of Belvidere v. Illinois State Labor Relations Board, 181 Ill. 2d  191,
692 N.E.2d 295 (1998).  Questions of fact  are  reviewed  under  a  manifest
weight of the evidence standard, while questions of law are  subject  to  de
novo review.  Belvidere, 181 Ill. 2d at 204-05.  But mixed questions of  law
and fact-questions that require an examination of  the  legal  effect  of  a
given set of facts-are reviewed for clear error, a standard in  between  the
manifest weight and de novo standards.   Belvidere,  181  Ill.  2d  at  205.
Applying a clearly erroneous standard to mixed questions  of  law  and  fact
provides the necessary deference to the agency's experience  and  expertise.
Belvidere, 181 Ill. 2d at 205.  This deference stems from an  administrative
agency's power to make informed judgments on the issues based on  experience
and expertise and the agency's role as an informed source  for  ascertaining
the  legislature's   intent.    Abrahamson   v.   Illinois   Department   of
Professional Regulation, 153  Ill.  2d  76,  98,  606  N.E.2d  1111  (1992).
Deference was appropriate in Belvidere, where  the  court  was  reviewing  a
collective bargaining decision by the Illinois State Labor Relations  Board.
 Belvidere, 181 Ill.  2d  at  193.   In  Lutheran  Church,  the  dispositive
question was  whether  the  land  was  being  used  exclusively  for  church
purposes and turned on evidence of how the land  was  being  used,  a  fact-
based inquiry in which "use" has a distinct  meaning  in  the  tax  context.
Lutheran Church, 316 Ill. App. 3d at 833.
      But here, the Department based its decision on  an  interpretation  of
the legal consequences of  the  agreement  between  Corlands  and  the  park
district, an interpretation  of  a  contract  that  did  not  implicate  the
expertise of the Department.
      This conclusion is in keeping with  cases  interpreting  Belvidere  to
require a clearly erroneous standard where the mixed  question  of  law  and
fact implicates questions of law uniquely within the expertise of an  agency
charged  with  administration  of  a   statute.   See   Metropolitan   Water
Reclamation District of Greater Chicago v. Department of Revenue,  313  Ill.
App. 3d 469, 474, 729 N.E.2d 924 (2000) (clearly erroneous standard  applied
to determine property was used "used for public purposes" under section  15-
75 of the Code);  Bloom  Township  High  School  District  206  v.  Illinois
Educational Labor Relations Board, 312 Ill. App. 3d  943,  953,  728  N.E.2d
612 (2000) (clearly  erroneous  standard  applied  to  review  whether   the
Illinois Educational Labor Relations Board properly  granted  extension  and
exercised jurisdiction over the case under the  Illinois  Educational  Labor
Relations Act (115 ILCS 5/1 et seq. (West  1998)));  Devoney  v.  Retirement
Board of the Policemen's Annuity & Benefits Fund, 231 Ill.  App.  3d  1,  5,
746 N.E.2d 836 (2001) (clearly erroneous standard applied to review  finding
that police officer pension benefits were forfeited under section  5-227  of
the Pension Code (40 ILCS 5/5-227 (West 1998))); Carpetland U.S.A., Inc.  v.
Department of Employment Security, 319 Ill. App. 3d 1068, 1072,  746  N.E.2d
738 (2000) (clearly  erroneous  standard  applied  to  review  finding  that
services  provided  amounted  to  "employment"  under  section  206  of  the
Unemployment Insurance Act (820 ILCS 405/206 (West 2000))).
       Unlike  the  collective  bargaining  agreement  in  Belvidere,  which
required the Illinois State Labor Relations Board to interpret  the  meaning
of wages, hours and conditions  of  employment  in  light  of  a  collective
bargaining agreement or  the  facts  about  "use"  in  the  tax  context  in
Lutheran Church, the inquiry here requires an analysis of  the  language  in
the agreement to determine whether it was something other than a lease.   It
did not implicate the  Department's  experience  and  expertise  in  revenue
issues.  While later in this opinion we point out that there is  a  lack  of
evidence of use of the land for tax-exempt purposes by  the  park  district,
we do so only to  distinguish  this  case  from  one  upon  which  the  park
district relied.  The fundamental issue in this case is a  determination  of
the legal nature of the agreement between Corlands and  the  park  district.
The Department read it as a lease.  The park district read it  as  something
other than, or in addition to, a lease.  The Department's finding  that  the
agreement was a lease is one we review de  novo.   In  passing,  we  observe
that even under the more deferential standard the Department urges upon  us,
the result would be the same.
      The park district claims a right  to  a  tax  exemption  under  either
section 15-105(b) or section 15-80 of the Code (35 ILCS  200/15-105(b),  15-
80 (West 2000)).  Section 15-80 exempts land  purchased  by  a  governmental
entity under an installment contract.  35 ILCS 200/15-80  (West  2000).   In
effect, the park district's section 15-80  argument  is  an  alternative  to
section 15-105(b): if the agreement, read as a lease, does not meet  section
15-105(b) requirements for tax exemption, then  it  should  be  read  as  an
installment contract  under  section  15-80.   The  park  district  conceded
during  oral  argument  that  this  issue  was   not   raised   before   the
administrative agency.  The park district  argued  that  waiver  should  not
apply because the Department responded when the  park  district  raised  the
issue on appeal.  We disagree.
      Issues not raised  before  an  administrative  agency  are  waived  on
review.  North Avenue Properties, L.L.C. v. Zoning  Board  of  Appeals,  312
Ill. App. 3d 182, 726 N.E.2d 65 (2000).  While there is some  authority  for
addressing an issue raised for the first time on review  (People v.  Abadia,
328 Ill. App. 3d 669, 675, 767 N.E.2d 341 (2001), citing  People  v.  Hicks,
181 Ill. 2d 541, 544, 693 N.E.2d 373 (1998)), relaxation of the waiver  rule
is premised on the matter being one of first  impression  or  the  need  for
maintaining a sound body of precedent.  That is not the  case  here.   Also,
the park district conceded before the Board of Review the  agreement  was  a
lease.
      Addressing the lease issue, the park district  maintains  that,  since
the lease conferred more rights than a standard  lease,  the  administrative
law judge erred in not considering the true nature of  the  agreement.   The
park  district  contends  that,  "when  examined  in  its   entirety,   [the
agreement] is simply not that of a standard lease.  Rather,  while  Corlands
held naked title to the property during the  terms  of  the  agreement,  the
beneficial interest was actually vested in the  park  district."   The  park
district is using the term "beneficial  interest"  in  a  narrow  way.   The
argument attempts to shape the agreement to fit  section  15-105(b)  of  the
Code.  The park district suggests that  the  land  "belonged"  to  the  park
district as a beneficiary of a land  trust  held  by  Corlands.   A  similar
argument was raised by the park district attorney at the hearing before  the
administrative law judge.  There, the park district attorney analogized  the
agreement to a constructive trust:
            "In essence I believe the law would impose a relationship  of  a
      constructive trust, where one party, Corlands  would  be  holding  the
      property in trust for the park district until a certain  time  period,
      which is the expiration of the lease and after the application for the
      grant is completed."
      A land trust is "any express agreement or arrangement [where]  a  use,
confidence or trust is declared of any land *** for the use  or  benefit  of
any beneficiary, under which the title to  real  property,  both  legal  and
equitable, is held by a trustee" and the beneficiary retains  the  right  to
manage and control the land.  765 ILCS 405/1 (West  2000).   But  the  lease
here makes no declaration of trust and does not declare Corlands as  trustee
or the park district as beneficiary.  Corlands and  the  park  district  are
referred to as "landlord" and "tenant."
      A constructive trust arises by operation of law.   Suttles  v.  Vogel,
126 Ill. 2d 186, 193, 533  N.E.2d  901  (1988).   A  constructive  trust  is
imposed where there is actual or constructive fraud  or  where  there  is  a
breach of a fiduciary duty.  Suttles, 126 Ill. 2d  at  193.   Some  form  of
wrongdoing is needed to impose a constructive trust.  Suttles, 126  Ill.  2d
at 193.  None of these  elements  is  present  here.   The  park  district's
reliance on People ex rel. Goodman v.  University  of  Illinois  Foundation,
388 Ill.  363,  58  N.E.2d  33  (1944),  and  Southern  Illinois  University
Foundation v. Booker,  98 Ill. App. 3d  1062,  425  N.E.2d  465  (1981),  is
misplaced.
      In Goodman, although the University of Illinois Foundation leased  the
land to the Board of Trustees, the lease postdated  an  earlier  transaction
in which the board conveyed the land to  the  foundation  "  'to  hold  said
property in trust.' " Goodman, 388 Ill. at 366.  There is no declaration  of
trust here.
      At issue in Booker was the tax-exempt status of dormitories leased  to
the board of trustees of Southern Illinois University (SIU) by the  Southern
Illinois University Foundation, which held title to the  land.   Booker,  98
Ill. App. 3d at 1063.  Similar to the role Corlands plays  here,  a  purpose
of the foundation in Booker was to acquire and hold title to land which  the
university was prohibited from doing.  Booker, 98  Ill.  App.  3d  at  1067.
But the analogy between the SIU foundation and  Corlands  breaks  down  when
the facts in Booker are examined.  In Booker the court reasoned:
      "Southern Illinois University Foundation is not readily separable from
      the University and, consequently, the State.  Although the  Foundation
      is a corporate entity legally distinct from that  of  the  University,
      the function of the one is expressly 'to  promote  the  interests  and
      welfare' of the other,  and  some  of  the  highest  officers  of  the
      University are required, under the bylaws of the Foundation, to  serve
      in some of the highest positions of the Foundation.  Thus,  a  further
      reality of the ownership of this property is the identification  to  a
      certain extent between the holder of bare legal title and the State as
      holder of the entire equitable interest.  In this case, then, not only
      does the Foundation hold but naked legal title to property  controlled
      and enjoyed by the State,  but  a  certain  identity  exists  as  well
      between the holder of naked legal title  and  the  State.   For  these
      reasons  we  hold  the  property  exempt  from  taxation  as  property
      belonging to the State."  Booker, 98 Ill. App. 3d at 1070-71.
      Corlands had  no  such  relationship  with  the  park  district.   The
undisputed facts show that Corlands  is  an  independent  entity  that  held
title to the land leased to the park district.
      Unlike the land here, the university also used the dormitories  for  a
tax-exempt purpose:  student  housing.   All  incidents  of  ownership  were
vested in and exercised by the university.   Booker,  98  Ill.  App.  3d  at
1066.  As the court noted:
      "With respect  to  control  and  enjoyment  of  the  benefits  of  the
      property, the stipulated facts  show  that  the  University,  not  the
      Foundation, in fact controls the property and has the right  to  enjoy
      the benefits of it in the manner of an owner in fee  simple  absolute.
      The Foundation acquired title to  the  property  from  the  University
      solely as a convenience to the University ***. *** The facilities  are
      controlled, operated and maintained  by  the  University."   (Emphasis
      added.)  Booker, 98 Ill. App. 3d at 1070.
      The relationship between the University and the Foundation it  created
was an important  factor  in  the  Booker  court's  decision  to  read  what
appeared to be a lease as something more than a lease.  But  the  undisputed
evidence  of  actual  use  present  in  Booker  was  significant  and   also
distinguishes Booker from the facts  before  us.   The  park  district  here
presented no evidence  that  it  either  took  possession  of  or  exercised
control over the land during the time for  which  an  exemption  is  sought.
The park district all but  conceded  the  lack  of  this  evidence  at  oral
argument, stressing its future intention to use the land as open  space  for
recreational use.  But "[i]ntention to use is not the  equivalent  of  use."
Skil Corp. v. Korzen, 32 Ill. 2d 249, 252, 204 N.E.2d 738  (1965).   Nor  is
it relevant that the Department failed to present  evidence  that  the  land
was not being used for a tax-exempt purpose.  The  park  district,  not  the
Department, bore the burden of presenting proof of actual use for an  exempt
purpose.  Immanuel Evangelical Lutheran Church of Springfield v.  Department
of Revenue, 267 Ill. App. 3d 678, 642 N.E.2d 1344 (1994); Skil, 32  Ill.  2d
at 252.  The only conclusion that can be drawn from this record is that  the
land was vacant and unused during the  1996  tax  year,  although  the  park
district held a leasehold  interest.   The  arrangement  required  the  park
district to meet the requirements  of  section  15-105(b)  of  the  Code  to
establish tax-exempt status: a lease payment of $1 or  less  per  year,  and
use as open space for recreational purposes.  The record  reveals,  and  the
park district admits, that these requirements were not met.
      We next address the park district's claim that the trial  court  erred
when it denied prospective relief relating to taxes levied after 1997.   The
park district contends that section 3-111(2) of  the  Administrative  Review
Law allows entry of "any" order necessary "for the amendment, completion  or
filing of the record of proceedings  of  the  administrative  agency."   735
ILCS  5/3-111(2)  (West  2000).   The  park  district  overlooks  the  plain
language of section 3-111(2), limiting the  range  of  potential  orders  to
those relating to "proceedings of  the  administrative  agency."   The  only
proceedings before the administrative  agency  here  related  to  tax-exempt
status for the 1996 tax year.  The only orders that  may  be  entered  under
the  authority  granted  in  section  3-111(2)  must  relate  to   the  1996
complaint.  See Straub v. Zollar, 278  Ill.  App.  3d  556,  663  N.E.2d  80
(1996) (strict adherence to administrative procedures  required  to  justify
its application).
      The judgment of the administrative law  judge  denying  tax  exemption
under section 15-105(b)  for the 1996 tax year is affirmed.
      Affirmed.
      McBRIDE, P.J., and BURKE, J., concur.
