Illinois Appellate Court Holds That School District Opposition to Property Tax Exemptions Must Be Timely

An Illinois Appellate Court recently held that school districts and other taxing agencies that do not intervene when they first receive notice of a property tax exemption application lose their ability to challenge a circuit court decision granting the exemption. In Housing Authority of the County of Marion v. Department of Revenue, No. 5-07-0260 (5th Dist. April 20, 2009), the court held that districts are not "parties of record" necessary to the proceedings unless they intervene prior to a decision from the Department of Revenue.

In 1999, the Marion County Elderly Housing Corporation applied for a property tax exemption and provided the required notice to the affected districts. As with all property tax exemptions, the County Board of Review held hearings and made a recommendation to the Illinois Department of Revenue. The Department of Revenue denied the exemption, and the applicant appealed the Department's decision to the circuit court. The circuit court overturned the Department's decision and granted the exemption. The districts then attempted for the first time to become involved in the proceedings and oppose the exemption. They claimed that the circuit court's decision was void since the districts were not named as "necessary parties" in the complaint for Administrative Review.

The Appellate Court flatly rejected the notion that the districts were necessary parties to the circuit court proceedings. The Administrative Review Law states that necessary parties are those who were parties of record before the administrative agency. The Property Tax Code specifically allows districts to become parties of record at the Board of Review proceedings; and the Department of Revenue's regulations specifically state that intervention by districts must occur prior to the Department's decision. Therefore, the Court stated that the law does not "allow petitioners to wait and see the results of the Department's decision before filing for judicial review."

As a practical matter, school districts should consider intervening at the local Board of Review because only districts that do so are entitled to notice of decisions made by the Department of Revenue. Districts that have not intervened at the Board of Review will have no indication of whether they should continue to oppose the exemption application in the Department of Revenue proceedings. And only those districts that have intervened before the Department issues a decision are required to be included in any court proceedings on the exemption.

This decision underscores the fact that school districts should carefully review all exemption notices they receive given the potential revenue impact of some exemptions and the relative ease with which intervention can be achieved. Please contact Ares Dalianis, Michael Hernandez, or Scott Metcalf with any questions or comments regarding this eBulletin.