Oswald v. Hamer, 115 N.E.3d 181

Background

Section 15-86 of the Illinois Property Tax Code (added in 2012) creates a new, quantifiable charitable exemption category for not‑for‑profit hospitals and affiliates, tying exemption to the value of specified services equaling or exceeding a hospital’s estimated property tax liability.
Constance Oswald sued the Illinois Department of Revenue, seeking a facial declaration that section 15-86 is unconstitutional because it does not expressly require the constitutional ‘‘exclusive charitable use’’ mandated by article IX, section 6 of the Illinois Constitution.
The circuit court granted summary judgment to defendants (including intervenor Illinois Hospital Association), concluding the statute need not be read to automatically override the constitutional exclusive‑use requirement and that plaintiff had not shown the statute is invalid in all applications.
The appellate court affirmed, holding the word "shall" in section 15-86(c) is directory/permissive and that the statute can be construed consistently with constitutional limits.
The Supreme Court of Illinois granted review and, applying principles of statutory construction and a presumption of constitutionality, affirmed the appellate court: section 15-86 is not facially unconstitutional because it can be read to require compliance with the constitution’s exclusive‑charitable‑use requirement.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether §15‑86(c) mandates issuance of exemption regardless of constitutional exclusive‑use requirement	§15‑86(c)’s use of “shall” makes the exemption mandatory once statutory criteria are met, so it ignores the constitutional exclusive‑charitable‑use requirement	"Shall" is directory/permissive; statute should be read to require both the statutory quantitative test and the constitutional exclusive‑use test	Court construed “shall” as permissive; hospitals must meet both §15‑86 criteria and constitutional exclusive‑use requirement
Whether §15‑86 is facially unconstitutional under the "no set of circumstances" test	Statute is facially invalid because it lacks express reference to exclusive charitable use and appears to automatically grant exemptions	Statute can be construed to comply with the constitution and thus is not facially invalid	Facial challenge fails—plaintiff cannot show no set of circumstances where the statute is valid
Proper approach to statutory construction when statute omits explicit constitutional cross‑reference	Omission means legislature intended to displace constitutional requirement	Courts should presume legislature intended to comply with constitution and may construe statute to avoid constitutional doubt	Court presumes legislative intent to comply with constitution and construes §15‑86 in harmony with art. IX, §6
Burden and scope of future challenges to §15‑86 applications	Broad facial invalidation is appropriate to prevent unconstitutional grants	Individual applications may be challenged where concrete violations occur	Court declines facial relief; future as‑applied challenges remain available

Key Cases Cited

Provena Covenant Medical Center v. Department of Revenue, 236 Ill. 2d 368 (2010) (plurality establishing that charitable exemption requires showing public benefit that relieves governmental burden)
Eden Retirement Center, Inc. v. Department of Revenue, 213 Ill. 2d 273 (2004) (discussing charitable‑use requirement and limits on legislative exemptions)
Methodist Old Peoples Home v. Korzen, 39 Ill. 2d 149 (1968) (defining ‘‘charity’’ and ‘‘exclusively used’’ standard)
North Shore Post No. 21 of the American Legion v. Korzen, 38 Ill. 2d 231 (1967) (confirming legislature may place conditions on exemptions but cannot expand constitutional categories)
Chicago Bar Association v. Department of Revenue, 163 Ill. 2d 290 (1994) (application of constitutional exclusive‑use limitation to statutory exemption)
Napleton v. Village of Hinsdale, 229 Ill. 2d 296 (2008) (facial‑challenge standard and presumption of constitutionality)