Repository: UIHistories Project: Board of Trustees Minutes - 1944 [PAGE 1006]

EXTRACTED TEXT FROM PAGE:

1944]

UNIVERSITY OF ILLINOIS

I003

T h e local authorities have also assessed the furnishings in all these buildings. T h e total assessment for 1042 and 1943 amounted to $2,337.31. T h e 1944 assessment would be at least as large as that of 1942, and the assessors have indicated their intention to assess this property again. T h e attempt to tax the furnishings will necessarily fall with the attempt to tax the real property.

Judge Johnson presented this report.

People ex rel. Willard G. Goodman, County Treasurer and ex officio County Collector vs. University of Illinois Foundation, a Corporation Not for Profit, and the Board of Trustees of the University of Illinois, a Public Corporation T h e assessors in the Champaign-Urbana community assessed the Union Building, the Men's Residence Halls and the Student Center and Arcade Properties for the year 1942 and taxes were extended against these properties accordingly. T h e total amount of the tax payable in 1943 was $26,379.33. On September 27, 1943, the Board of Trustees of the University and the University of Illinois Foundation filed joint objections against the application of the County Treasurer for leave to sell these properties at public sale on account of delinquent taxes. The University and the Foundation introduced evidence giving the story of the construction and acquisition of these properties and their use by the Board in the operation of the University. The construction and acquisition of these properties was financed without legislative appropriations, in part by a grant from the Federal Government for the construction of the Union Building and part by loans from an insurance company. Since the Board had no power to borrow money, it conveyed the legal title to the Foundation, which borrowed the money and executed the necessary mortgages securing the loans. The University then operated the properties under a lease from the Foundation, pursuant to certain enabling statutes enacted upon the initiative of the University. When the plan for the construction and acquisition of these properties was prepared, it was kept in mind constantly that the community might seek to tax them, thereby burdening the students and the people of the State from whom such tax payments would necessarily come. T h e plan, therefore, and the documents necessarily prepared and executed in connection with it were all conceived upon the theory, expressly stated therein, that the properties were to be used exclusively for public educational purposes and not with a view to profit. It was also expressly agreed between the Foundation and the Board of Trustees that the Foundation would convey the legal title to the Board either upon demand or when the debts had been paid, which were secured by mortgages of record. Council for the University and the Foundation presented the case to the County Court upon the following theory: 1. That all the properties belong to the State within the statute exempting property belonging to the State from local taxation, inasmuch as the entire equitable interest is in the University and therefore in the State of Illinois; 2. That if it be held that because the Foundation held the naked legal title in trust for the University the properties must be regarded as belonging to the Foundation, the properties were nevertheless exempt because they were used for public educational purposes and without a view to profit within the terms of the statutes exempting properties so used from taxation; 3. That if it be held that since a part of the Arcade Properties was leased for a rental, therefore the properties are in part subject to taxation, the assessment and taxation in this instance were illegal and void because the entire property, including the valuable equity of the University, was assessed without any attempt to segregate the leasehold interest from the property interests of the University, that is, the State of Illinois. _ County Judge Charles M. Webber in his opinion accepted these contentions and held that the objections to the assessment and to the application of the County Treasurer for the sale of the properties should be sustained. The

On motion of Mr. Davis, Judge Johnson was authorized to notify the local authorities that the University would not consent to a compromise in this matter.