Eden Retirement Center is a federal tax exempt entity that provides independent living facilities for seniors. It has a bylaw that permits the entity to waive or defer certain fees for impecunious applicants to its facilities. The Center applied for a state property tax exemption on the basis of its federal tax exempt status and its charitable waiver bylaw. The state rejected the application. In Eden Retirement Center V. Department of Revenue, Doc. No. 97703 filed on December 2, 2004, the Illinois Supreme Court reversed decisions by a state trial court and appellate court which had granted and sustained the tax exemption.
In abrogating the exemption, the Court noted that the "waiver" bylaw had been utililzed only once in 15 years at the facility which contained 78 independent living apartments and 22 independent living duplexes. The facility charged an upfront entrance fee of between $65,000 and $77,000.00 and $5,000.00 security deposit. The facility also charged substantial monthly maintenance fees. The facility has the power to cancel the contracts of residents who are unable to pay. The one occasion of waiver involved the waiver of the monthly maintenance fee when the resident was unable to pay. The facility reimbursed itself for the loss from a refundable portion of the fees paid until that fund was exhausted. Thereafter the facility did itself absorb some loss. The Illinois Supreme Court held that the State Constitution required tax exempt facilities to actually be used for charitable purposes to obtain state property tax exemption. The Court determined that the level of actual charity provided by Eden Retirement Center did not rise to the level of expectations under the Illinois Constitution.
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