Tax woes for Harvest Bible Chapel properties
Exemptions at two properties called into question
Two properties that house Harvest Bible Chapel congregations are under scrutiny after their tax exemptions were called into question.
The owners of the Highland Park building that is home to the church's Deerfield Road campus are already on the hook for more than $500,000 in property taxes after Lake County assessment officials learned the property had erroneously received a tax exemption for the past five years. The tax bill includes three years of back taxes and the amount owed this year, county officials said.
Meanwhile, West Aurora Unit District 129 officials said they are seeking to have the state revoke the tax-exempt status for Harvest Bible Chapel's Aurora church after learning the owner of the property is a for-profit limited liability corporation that rents the campus to the church.
"When we rented space ... a few years ago, we had to pay property taxes on that even though we're normally tax-exempt," said Angie Smith, assistant superintendent for operations at District 129. "We feel it's our job that property owners getting out of paying taxes justifiably are, and I'm instructing our attorney, on behalf of all taxpayers, to make sure all property owners are paying their fair share and we will do what we can to file an objection."
These new financial issues are just another chapter in the saga of the suburban megachurch that once boasted 12,000 worshippers among its seven church sites. In the last year, membership in the churches has dwindled and almost the entire senior leadership team was ousted, including co-founder and lead pastor James MacDonald, after internal investigations into spending by MacDonald and accusations of lax oversight by the church board.
Multiple attempts to reach church officials regarding the new property tax issues were unsuccessful. The identities of the different LLC owners for the Highland Park and Aurora properties are unknown.
Former church member Jessica Hockett brought the property tax issues to light, notifying Lake County Supervisor of Assessments Bob Glueckert that a property tax exemption had been applied to the Highland Park church campus even though the owners had never applied for such an exemption and the Illinois Department of Revenue had never granted one.
"We were members for 12 years but left the church in 2017 because of financial improprieties and the church's failures to address those problems," Hockett said.
The Highland Park church property was bought by a for-profit LLC in 2015 for $4.85 million, according to property records. The exemption awarded to the former Lutheran congregation was never lifted.
"They were not getting billed because we thought they were exempt," said Moraine Township Assessor Mark Lindsay, who said his predecessor neglected to remove the exemption when the property changed hands.
Glueckert said the county began assessing taxes this year on the property and has the authority to demand up to three years in past due taxes as well. The property owners missed a deadline to seek a property tax exemption, so a bill for four years' worth of taxes will be issued to the LLC this year, he said.
With the property's current tax rate of roughly 7.9%, that amounts to almost $400,000 in back taxes and another $150,000 in property taxes for this year.
"They could file for an exemption for 2020, and if granted there is probably some legal avenue they could pursue for the historical assessments, but it would be an uphill battle," Glueckert said. "The simple fact is they don't have an exemption."
But the Aurora campus does have a property tax exemption. The state's revenue department granted it to the property's LLC owner based on state law that allows exemptions for "property used exclusively for religious purposes."
In its petition for the exemption, the LLC originally claimed to be a nonprofit entity but then revised the petition to argue that since the property was being rented to a church, the property owners "should be afforded the same tax exempt status that Harvest Bible Chapel would be entitled."
However, legal experts and assessment officials said the relationship between the for-profit LLC and the church could nullify the exemption since the underlying use of the property is actually commercial rental property. The church pays the LLC more than $21,000 a month in rent, according to state tax records.
"If there's anything with a view to a profit, it's not going to be eligible for an exemption most of the time," said Ares Dalianis, a Chicago-based real estate tax attorney.
Hockett said she complained about the exemption to Kane County and state officials late last year and has not heard of any movement.
"I want them to pursue and remedy this situation in a way that is lawful and just," she said.
Mark Armstrong, Kane County's supervisor of assessments, said his hands are tied because the state has granted the exemption.
"I have not had any contact from IDOR noting they were reviewing or revoking the property's exemption," he said.
Department of revenue officials said they have yet to receive a formal complaint about the tax status and so have taken no action.
The LLC purchased the nearly 17-acre Aurora campus in 2016 for $4.15 million. If taxed, the property's bill would be roughly $130,000 annually, according to figures provided by the Sugar Grove Township Assessor's office.
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