Senior Facility Not Exempt From Property Taxes

Senior Facility Not Exempt From Property Taxes

  Tuesday, April 15, 2014    Julie Tappendorf

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A tax case on tax day - enjoy!

Certain charitable and religious uses are exempt from property taxes in Illinois.  A senior housing facility, Meridian Village Association, applied for a charitable and religious property tax exemption, but was denied an exemption by the Department of Revenue. On appeal, the appellate court first applied the "charitable use" exemption standards for senior housing, and agreed with the Department of Revenue that the senior housing facility did not qualify for an exemption. Although senior housing facilities have qualified for exemptions in the past, they must meet very specific standards, including that the charity benefits an unlimited number of people and that the charity is dispensed to all who need it.  Here, the Meridian Village Association's bylaws allowed it to deny care if necessary to operate in a financial manner.  It also only provided charitable care to its residents, not all in need.  The association also operated for-profit.  Meridian Village Assoc. v. Hamer (Mar. 28, 2014).

As to the senior facility's religious exemption claim, the court determined that the primary use of the facility was to care for the elderly, not as a religious institution.  

Post Authored by Julie Tappendorf, Ancel Glink

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Procedural Errors Doom Administrative Adjudication Hearing

Procedural Errors Doom Administrative Adjudication Hearing

  Monday, April 14, 2014    Julie Tappendorf

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The Illinois Appellate Court recently invalidated a fine imposed by a City of Chicago administrative hearing officer regarding building code violations, because the process used by the City was, in the words of one judge, “a civil-procedure disaster.”  Stone Street Partners v. City of Chicago, 2014 IL App (1st) 123654 (March 31, 2014).  The opinion was authored by Justice Delort, a former municipal attorney, and is instructive for all attorneys involved in municipal administrative adjudication proceedings.

In 1999, a city inspector found several building code violations in plaintiff’s building. Plaintiff is a corporation. The city mailed a “notice of violation and summons” for an administrative hearing to the street address of the building.  The city code (and State law) requires that notice and summons be mailed to the registered agent of a corporation, but the city failed to do so.  The corporation had no knowledge of the code violations or the administrative hearing.  However, someone did receive the notice, because at the scheduled hearing a non-attorney friend of a managerial employee of the corporation (the employee was seriously ill), appeared and presented evidence to the hearing officer.  The hearing officer found the corporate owner liable for the code violations and fined it $1,050.  In 2004 the city “registered” the fine in court.  In 2009 the city filed a lien against the property for the amount of the fine and costs and in 2012 turned the original administrative fine into a “judgment” of the circuit court.  

In 2011, the corporation discovered the lien.  It attempted to get the original administrative fine vacated on the grounds that the city had failed to notify the registered agent of the corporation.  In the meantime, the city had destroyed most of the records of the original hearing, even though it was still attempting to collect the fine.  The hearing officer ruled that, for procedural reasons, the 1999 fine could not be vacated.  The corporation then filed suit in circuit court, raising several arguments.  The circuit court dismissed the complaint and the corporation appealed. 

The appellate court made a careful analysis of the sometimes obscure procedures involved in municipal administrative adjudication proceedings and ruled in favor of the corporation on two points which are key in all such proceedings.  First, the court held that because the city had failed to properly notify the owner of the building, service of process was invalid.  Service of process on a corporation must be made on the registered agent.  Second, the court held that a non-attorney may not represent a corporation in administrative adjudication proceedings.  Representation of a corporation in administrative proceedings constitutes the practice of law and must be made by a licensed attorney.  The appellate court allowed the corporation to nullify the original fine twelve years after it was imposed. 

While most administrative adjudications involve relatively small amounts of money, procedural rules must be followed in every case, or the process could be a waste of time. 

Post Authored by Paul Keller, Ancel Glink

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The Wait is Over - PAC Issues 1st Opinion of 2014

The Wait is Over - PAC Issues 1st Opinion of 2014

  Friday, April 11, 2014    Julie Tappendorf

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As I reported on the blog previously, the PAC has been pretty quiet this year in issuing binding opinions - so quiet, in fact, that it had not issued one binding opinion until April 10th in PAC 14-001.  It will come as no surprise to loyal readers of this blog that the PAC ruled against the public body.

This particular opinion has some history at the PAC.  In 2013, a reporter filed a complaint with the PAC alleging that the Springfield Board of Education had violated the Open Meetings Act when it approved a separation agreement with the former superintendent.  The PAC issued binding opinion PAC 13-007 finding the School District in violation of the OMA because it signed the agreement in executive session.  

The Board appealed to the circuit court, and the court overturned the PAC, finding that the act of signing the agreement in closed session was not a violation of the OMA since the Board had formally acted on the agreement in open session.  The court then remanded back to the PAC the issue of whether the Board's actual vote on the separation agreement was preceded by an adequate "public recital."  You can read about the 2013 PAC ruling and court decision on the blog here.

The PAC reviewed a video recording of the following Board President's recitation of the item before it was voted on:

Item 9.1, approval of a resolution regarding the separation agreement. The Board President recommends that the Board of Education in Springfield School District No. 186 vote to approve the separation agreement and release between Dr. Walter Milton, Jr. and the Board of Education. Do I have a motion?

Although there was also some discussion about the separation agreement by individual Board members before the vote, and the agreement itself was posted on the District's website as part of the meeting agenda, the PAC still determined the Board violated the OMA because it did not publicly discuss or summarize the terms of the agreement, including the amount of the lump sum payment to the superintendent or the reasons leading to the decision to terminate the supervisor. 

The PAC based its decision on Section 2(e) of the OMA requiring a public body to (1) publicly recite the nature of its action; and (2) provide such other information as will inform the public of the business being conducted before taking final action.  In the PAC's opinion, the Board President's statement about the nature of the separation agreement, the individual Board members' discussions about the agreement, and releasing a copy of the agreement to the public in advance, were not an adequate "public recital" before the vote.  

As we noted previously, this interpretation of the OMA by the PAC is problematic for public bodies for a couple of reasons.  

First, the PAC has provided little to no guidance as to what constitutes a "public recital" under the OMA - must a public body publicly summarize each section of an agreement or ordinance before voting on it?  Read an entire document into the record before acting on it?  If providing a full copy of the document in advance is not enough to notify the public of the nature of an item that will be voted on, what will satisfy the PAC?  

Second, does this rule out the ability to use a consent or omnibus agenda to approve multiple agenda items?  

Third, what precedent is the PAC relying on for its interpretation of Section 2(e) of the OMA?  The only case cited in this opinion is directly contrary to the PAC's opinion, and involves a federal district court in Illinois holding that providing a copy of a resolution as part of a meeting agenda was a sufficient "public recital."  The PAC cites no case in support of its opinion that a detailed summary of an item is required before it can be voted on.

It is certainly possible that the School District may appeal this second PAC opinion to the court, particularly where the PAC cites no case law in support of its broad and unprecedented interpretation of "public recital." 

Post Authored by Julie Tappendorf, Ancel Glink 

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Bill Requires Governments to Post Officials' E-Mail Addresses

Bill Requires Governments to Post Officials' E-Mail Addresses

  Thursday, April 10, 2014    Julie Tappendorf

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UPDATE:  The General Assembly did not pass this bill, but did approve a similar bill that became law on January 1, 2015.  You can read more about the new law here.

The Illinois Senate recently passed SB 3106, that would amend the Local Records Act to require all units of local government and school districts that maintain "Internet websites" (but excluding social media sites) to post electronic contact information (presumably e-mail addresses) for all elected and appointed officials on their websites.  The bill would preempt home-rule authority.

It's not clear how this particular piece of legislation has anything to do with the Local Records Act, which deals with the retention of government records, not the creation of new government records for communication purposes.  We will continue to monitor this bill and report back after the Illinois House takes action.

Post Authored by Julie Tappendorf, Ancel Glink

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Ca Court Says Texts Sent from Private Device Not Subject to Release

Ca Court Says Texts Sent from Private Device Not Subject to Release

  Wednesday, April 09, 2014    Julie Tappendorf

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A California court recently held that the state's public records law requiring release of public records does not apply to communications transmitted on privately owned devices.  City of San Jose v. Superior Court (Cal. Ct. App. Mar. 27, 2014), 

In this case, a requester filed a public records request with the City asking for "voicemails, emails or text messages sent or received on private electronic devices" used by the Mayor and City Council members.  The City denied the request, and the requester filed a lawsuit. The trial court ordered the Mayor and City Council members to turn over the electronic communications.  

On appeal to the California Court of Appeals, the City argued that the electronic communications were not "public records" under the definition of California's public record law because the messages and devices are not "prepared, owned, used, or retained" by the City.  The appellate court agreed, finding that because the City cannot access or control messages on private devices, the messages are not public records under the law.  The court acknowledged that its ruling could result in public officials using private devices to conduct public business, but left the issue to the legislature to address.  The court also acknowledged the privacy concerns, as well as practicality, of requiring the disclosure of communications sent and received on privately owned devices.

You may recall that we reported on an Illinois case on this very same issue last year - in fact, the California court cites this case in its opinion.  In City of Champaign v. Madigan, the Second District Illinois appellate court ordered the City of Champaign to turn over text messages sent and received during a City Council meeting by City Council members on their private devices.  However, the court's ruling was limited to messages sent and received during the City Council meeting, when the council members were acting as a "public body."  The court did not extend this interpretation and analysis to all messages on private devices, however, stating that messages “pertaining to the transaction of public business received at home by an individual city council member on his personal electronic device would not be subject to FOIA."

Both the California and Illinois court rulings distinguish between the "public body" that is subject to public records disclosure laws and an individual member of that public body, holding that individual council members are not subject to these laws.  However, when an individual member is communicating as part of the public body (i.e., attending a meeting, communicating with the requisite number of public body members to constitute a meeting), then the individual member's communications could be subject to disclosure as a public record.  

Post Authored by Julie Tappendorf, Ancel Glink

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Court Approves PSEBA Administrative Process But Not Denial of Benefits

Court Approves PSEBA Administrative Process But Not Denial of Benefits

  Tuesday, April 08, 2014    Julie Tappendorf

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Under the Public Safety Employee Benefits Act (PSEBA), a police officer or firefighter can be entitled to health benefits for the officer and his or her family if he or she suffers a catastrophic injury in responding to an emergency situation.   A firefighter who had been awarded a line-of-duty pension for hearing damage applied for PSEBA benefits from the Village of Hoffman Estates.  The Village had enacted a local administrative process for hearing and deciding applications for PSEBA benefits, which required a hearing before the village manager.  At the conclusion of the hearing, the manager denied PSEBA benefits, and the firefighter appealed.  The trial court ruled in favor of the Village.

On appeal, the firefighter argued that the Village's administrative hearing procedure was illegal and unauthorized under Section 20 of PSEBA which expressly limits home rule authority.  The Village argued that this limitation related to the award of benefits, not the procedures for deciding applications.  The appellate court agreed, finding that a home rule municipality has authority to establish an administrative procedure for determining PSEBA claims.  However, the court found that the Village's denial of PSEBA benefits in this case was clearly erroneous because there was sufficient evidence that the hearing damage was caused by circumstances where the firefighter reasonably believed he was responding to an emergency.  Pederson v. Village of Hoffman Estates (Mar. 31, 2014).

For home rule municipalities, this is a good decision because it restricts the home rule preemption language in PSEBA and allows home rule municipalities to adopt local procedures for administering and determining PSEBA claims.

Post Authored by Julie Tappendorf, Ancel Glink

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Food Truck Loses Equal Protection Lawsuit

Food Truck Loses Equal Protection Lawsuit

  Monday, April 07, 2014    Julie Tappendorf

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The City of Monroe, Michigan had enacted an ordinance in 2009 that required street vendors, including food trucks, to obtain permission from the City Council to operate within certain areas, including downtown Monroe.  The ordinance also restricted vendors from operating in any one place for more than 10 minutes.  The Dog Pound, a hot dog vendor, applied for and was denied a license and sued the City, claiming that the ordinance violated its constitutional due process and equal protection rights. Specifically, the Dog Pound argued that the ordinance treated food truck merchants different from traditional restaurants. 

While the lawsuit was proceeding, the City amended its ordinance to eliminate the 10 minute restriction.  The district court ruled in favor of the City, and the Sixth Circuit Court of Appeals affirmed.  First, the court held that the Dog Pound failed to show that food trucks and restaurants were "similarly situated" to meet the equal protection test.  The court also rejected the Dog Pound's due process claim, finding it had waived that argument. The Dog Pound LLC v. City of Monroe, No 12-2692 (6th Cir. Mar. 10, 2014). 

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Hatch Act Change Benefits City Workers Running for Office

Hatch Act Change Benefits City Workers Running for Office

  Friday, April 04, 2014    Julie Tappendorf

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Since its enactment more than 70 years ago, the Hatch Act prohibited municipal employees from running for elective office in the city in which the employee works if the employment was funded in whole or in part with federal funds.  That law has prevented many local employees from running for elected office, because the broad language of the Act covered a significant number of employment positions, including police officers (where federal grant funding is common). 

Last year, the law was amended to narrow its scope - now, the ban applies only to employees whose salaries are paid "completely, directly or indirectly, by loans or grants made by the United States or a Federal Agency."   That change has not gotten a lot of press, but it is a significant one for municipal employees who are interested in running for office in the municipality where they work.  Before ordering all those campaign signs, however, employees should sure that there isn't a state or local law that might prohibit that activity (i.e., conflict of interest law).

Post Authored by Julie Tappendorf, Ancel Glink

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Minimum Manning Bill Passes Illinois House

Minimum Manning Bill Passes Illinois House

  Thursday, April 03, 2014    Julie Tappendorf

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Update 6/2/14:  This bill has passed both houses, and now heads to the Governor.

Under current law, decisions on how to manage and staff local fire departments are made by local government officials who appropriate the money necessary to fund the fire departments. The issue of minimum manning has generally been a permissive, not mandatory, subject of collective bargaining. However, House Bill 5485 would change that by amending the Illinois Public Labor Relations Act to provide that minimum manning requirements become a mandatory subject of bargaining that could ultimately be decided by an arbitrator.  This afternoon, the Illinois House took the first step by passing HB 5485 by a vote of 63-44. 

The IML has taken a strong position against this bill, and has written a position paper on how this bill would adversely affect local governments.  There is still time for municipalities to express their opinions on this legislation, as no vote has yet been taken in the Senate.

Post Authored by Julie Tappendorf, Ancel Glink

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Bill Would Give Municipalities More Flexibility Over Video Gaming

Bill Would Give Municipalities More Flexibility Over Video Gaming

  Thursday, April 03, 2014    Julie Tappendorf

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The Illinois General Assembly legalized video gaming almost five years ago, although it took some time for the Gaming Board to adopt rules and start processing license applications.  Since the Video Gaming Act was enacted, some municipalities have banned video gaming altogether, and others have no ban or other regulations in place, allowing bars, taverns, and other licensed establishments to establish a gaming presence without municipal regulation.  In the middle lie all of those municipalities that would like to lift their gambling ban, but may not want to open up gaming in all establishments that hold a liquor license.  

While there certainly seems to be adequate authority for a municipality to control the number of video gaming licenses through its liquor license authority, the Video Gaming Act is not clear at all as to whether municipalities have that type of flexibility.  Enter SB 3419, a bill recently introduced to give some flexibility to municipalities beyond (1) establishing a complete gaming ban or (2) opening the door to video gaming in all licensed establishments.  

SB 3419 would amend the Video Gaming Act to allow a municipality to adopt an ordinance to determine the number of video gaming licenses allowed in the municipality.  A municipality cannot, however, take away a gaming license from an establishment that has already been issued one as of the date of the statutory amendment.

The amendment adds the underlined language to Section 27 of the Act:  

Sec. 27. Prohibition of video gaming by political subdivision.

A municipality may pass an ordinance prohibiting video gaming within the corporate limits of the municipality.  A county board may, for the unincorporated area of the county, pass an ordinance prohibiting video gaming within the unincorporated area of the county.  Any municipality and any county board, for the unincorporated area of the county, shall have the power by ordinance to determine the number of licenses to be issued to licensed establishments, licensed fraternal establishments, licensed veterans establishments, and licensed truck stop establishments located within the borders of the municipality or unincorporated area of the county; however, the number of licenses issued to licensed establishments, licensed veterans establishments, and licensed truck stop establishments shall not be lower than the number of liquor licenses issued or otherwise allowed by ordinance and the number of licensed truck stop establishments, licensed veterans establishments, and licensed truck stop establishments in the municipality or unincorporated area of the county on the date that an ordinance limiting the number of licenses is enacted.  The municipality or county board shall inform the Board of such an ordinance within 30 days after its enactment.

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City Council Members Immune from Religious Land Use Lawsuit

City Council Members Immune from Religious Land Use Lawsuit

  Wednesday, April 02, 2014    Julie Tappendorf

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Dwight Merriam and Evan Seeman, authors of the RLUIPA Defense blog, have posted a summary of a recent decision by the Northern District of Illinois granting a municipality's motion to dismiss individual City Council members from the lawsuit based on legislative immunity.  The American Islamic Center had filed suit against the City and five members of the City Council after their rezoning application was denied.  The AIC argued that the City Council members’ actions were administrative or executive in nature and not entitled to immunity, as opposed to legislative acts taken in their legislative capacity which are entitled to immunity.  In concluding that the City Council members were acting legislatively, thus entitling the members to absolute legislative immunity, the District Court observed:

There is no question that the denial of the proposed zoning amendment had its most direct and immediate impact on AIC.  But the impact of the denial was not limited to AIC.  It also affected the property’s owner, who lost the opportunity to sell the property to AIC.  In addition, the property that AIC wished to buy will remain zoned for manufacturing activity regardless of who comes to own it, unless and until the city council’s actions are properly characterized as legislative, not executive or administrative.  When the council denied the zoning amendment and passed the later resolution rejecting the amendment, it was engaging in legislative acts.

You can read the entire summary of the case on the RLUIPA Defense blog here:  

Full Disclosure - Ancel Glink is defending the City and City Council members in this lawsuit.

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Court Upholds Public Employee Residency Requirement

Court Upholds Public Employee Residency Requirement

  Tuesday, April 01, 2014    Julie Tappendorf

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The City of Chicago requires all of its teachers to become City residents within 6 months of being hired.  If a teacher is found in violation of the policy, the City will first give them a warning and 60 days to come into compliance.  If they fail to comply, they can be terminated.  During an audit of employee records, the City discovered that two teachers lived outside the city.  At an administrative hearing on their proposed termination, the teachers admitted that they did not live in the City.  The teachers' defense to the termination was that because the City had waited so long to enforce the policy against them, the case against them was "stale."  However, they were both terminated and appealed to the courts.

On appeal, the appellate court upheld the City's termination of the teachers.  First, the teachers were clearly in violation of the City's residency policy.  Second, the fact that the City failed to enforce the policy for years did not excuse the employees engaging "in a high risk strategy of living outside Chicago." They had been put on notice that they were in violation and chose to ignore it until they were terminated.  Finally, the court rejected their argument that living outside Chicago is not a sufficient cause for termination, finding they waived that argument.  However, the court did note that public employee residency requirements have been long upheld as constitutional.  Crowley v. Board of Education of Chicago (Mar. 31, 2014) 

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