Upscale Religiously-Affiliated Retirement Community Does Not Get Tax Exemption

In Franciscan Communities, Inc. v . Hamer, (IL App., Aug. 28, 2012), an Illinois appellate court agreed with the state Department of Revenue that a continuing care retirement community (known as Village at Victory Lake (VL)) operated by the Franciscan Sisters does not (except for the chapel) qualify for a property tax exemption under provisions exempting property used exclusively for religious or charitable purposes. The court said in part:

It is FC’s position that civil authorities must accept not only a religious organization’s characterization of its beliefs but also the entity’s characterization of its use of the subject property. Under this theory, no property taxes could ever be imposed on any property a religious organization declared was used exclusively for religious purposes, regardless of the true facts. This is contrary to established law.....

... [T]he primary use of VL was for upscale senior housing and care with an enhanced lifestyle.  To be sure, there was a religious component, but ... advancing religion was not VL’s primary purpose....  Here, we are not called upon to decide whether the Sisters engage in religious activities.  It is a given that they do, but the evidence overwhelmingly showed that the operation of VL was businesslike and characteristic of a commercial enterprise. VL was not giving care to the  elderly; it was selling care to the  elderly, as well as a certain lifestyle for those in independent living, at competitive market rates.