Last Wednesday was a typical day at the Lincoln Turners gym, with hundreds of giggling boys and girls taking classes in dance, swimming, aikido, and gymnastics. But on March 27 the classes will end, because the state intends to close the 75-year-old not-for-profit facility.
Well, it’s a little more complicated than that. The state has decided that Turners, which is near the intersection of Sheffield and Diversey, is not a school, even though the only reason it exists is to offer children classes in physical education. If Turners is not a school, the state continues, it is not exempt from property taxes. And if it doesn’t pay $91,000 in back taxes by March 27, its building will be seized. And Turners students? Tough luck.
“It’s as though the state wants to drive us out of business, and for the life of me I don’t know why,” says Phillip Sliwiak, general manager of Lincoln Turners. “No one in state government will explain why they’re doing this to us. They don’t return our calls, they don’t respond to our letters. We’re fighting a ghost who has a real sword. We can’t touch him, but he can slice us up.”
Most state officials seem blissfully ignorant of the gym’s fate. Governor Edgar’s press handlers say they’ve never even heard of Turners. And Doug Whitley, executive director of the state’s revenue department, would not return phone calls. He left it to his press secretary, Kevin Johnson, to confess that there’s only one employee in the entire state government (some lawyer in revenue) capable of saying anything remotely comprehensible about the matter. Alas, that lawyer won’t talk. “I’ve been told that it’s department policy not to release any information concerning a pending case,” says Johnson. “So the department will not be able to respond to any questions regarding the specifics of this case.”
Should Turners qualify for the kind of property-tax exemption that schools and other not-for-profits routinely receive? At first glance, it seems eminently qualified, since it offers physical-education courses to youngsters of all ages. “Our philosophy about education is based on the work of a 19th-century German educator named Friedrich Jahn,” says Sliwiak. “Jahn believed in rigorous exercise in an attempt to develop strength, endurance, balance, flexibility, and muscle discipline.”
Turners has no religious affiliation. “The name Turner simply means gymnast, and gymnastics was the sport that Jahn emphasized,” says Sandy Marshall, program coordinator at Turners. “We don’t teach team sports. We have classes for children as young as three. We want to teach them to get better control of their muscles and have more discipline and coordination.”
There are about 60 Turners societies throughout the country. The Chicago branch was chartered in 1885 and now has a full-time staff of nine, an annual budget of $500,000, and roughly 1,000 students. “We were originally located on Lincoln Avenue, which is why we’re called Lincoln Turners,” says Sliwiak. “We moved to Diversey in the 1920s.”
Which was around the time the state first started raising questions about the gym’s tax-exempt status. Property taxes are levied and collected by local taxing bodies, yet exemptions are approved by the state revenue department. The state never believed Turners deserved an exemption. On two occasions it took the gym to court. Each time Turners lost.
After the state supreme court ruled against it in 1968, Turners faced a $200,000 property-tax bill. Unable to pay, it lost half of its property at a county auction of tax-delinquent property.
“We were never a very sophisticated group,” says Sliwiak. “Most of our leaders are volunteers. After 1968 they kind of turned inward and didn’t trust anyone anymore.”
That’s Sliwiak’s euphemistic attempt to explain why Turners did something very foolish: it voluntarily signed away its federal designation as a tax-exempt charitable organization. “The Internal Revenue Service has several different taxing designations for not-for-profits,” he explains. “The choice one is what they call 501(c)(3). Being a (c)(3) doesn’t automatically make you eligible for a property-tax exemption. But you can’t get an exemption without being a (c)(3).
“We had the (c)(3) status for years, but in 1972 we signed it away. I don’t know why they did it. I wasn’t here then. It was probably done out of ignorance. They didn’t know what they were signing. The IRS came in, talked fast, wrapped them in red tape, and the next thing you know they had lost their (c)(3) status.”
The IRS change hardened the state’s opposition to a property-tax exemption for Turners. Throughout the 1970s and most of the early 80s, Turners paid its property taxes.
In 1988, however, the boom in north-side real estate caught up to it, and its annual assessment tripled to about $23,000, a figure it could not afford. “To pay that tax bill we would have had to cut programs and raise fees,” says Sliwiak. “What would be the point of that? Suddenly we would be existing to pay a property-tax bill, not to provide affordable classes.”
So they asked the IRS to restore their 501(c)(3) status, and they applied for a property-tax exemption. But while their IRS request was slowly winding its way through the federal bureaucracy, the state turned them down. That was in 1990, and by then they had not paid their property taxes in more than a year. On March 27, 1990, the rights to their building were sold at a county-sponsored auction of tax-delinquent properties.
“The way a tax-delinquent auction works is that the delinquent owner has two years after his building is auctioned to repay his back taxes,” says Sliwiak. “For us that meant we had until March 27, 1992, to pay back our taxes or get the state to give us a retroactive exemption that would waive the bill.”
Turners thought it had a strong case for exemption. Its 501(c)(3) status had been restored in March 1991. Just as important, the state had amended its tax code in 1987 to offer exemptions for “all property of not-for-profit organizations providing services or facilities related to the goals of educational, social, and physical development.”
“As I understand it, that amendment was intended to help the YMCA, but it also applies to us,” says Sliwiak. “I mean, all we do is provide services related to the goals of educational and physical development.”
Throughout 1991 Sliwiak and other Turners officials called the state revenue department, asking that their case be heard. “But we couldn’t even get a phone call returned, let alone an exemption,” says Sliwiak. “We didn’t know what they intended to do about us, and all the while March 27 was drawing closer.”
Finally in November Turners received a form letter from the department stating that a hearing was being scheduled. “After we got that letter we had our lawyer call their lawyer and asked for a specific date,” says Sliwiak. “But the state’s lawyer said that they had a backlog of 5,000 cases and that we would have to wait for at least 24 months. And that was the last we heard from the state. Since then their lawyers have stopped returning our calls.”
Of course any hearing in 1994 would be meaningless if Turners loses its building in March. So Turners will go to court, seeking a temporary extension of the time it has to pay its taxes. But even if it wins the extension, it still faces a mounting property-tax debt. “Our property tax is supposed to rise next year to about $41,000,” says Sliwiak. “By the time we get our hearing with the state we could owe as much as $300,000 in back taxes. We’re a small not-for-profit. Where in the world are we supposed to come up with that kind of money?”
Since state officials won’t respond to questions about the hearing, Sliwiak can only speculate as to their motives. “Maybe there’s some bureaucrat in revenue who hates that 1987 amendment and wants to use us as a means to challenge it in court,” he says. “Or maybe there is such a huge backlog of cases that we have been lost in the shuffle. If that’s the case, I hope they listen to our pleas and grant us an immediate hearing.”
For the moment Turners supporters have remained loyal. But their well-intended offers to raise money through tag sales fall far short of the group’s debt. “The revenue department may think they’re bringing $23,000 in property taxes back to the tax coffers,” says Sliwiak, “but they’re really costing the taxpayers the $500,000 or so we provide every year in physical-education classes. If they shut us down, who’s going to educate our children? The state? Great, show me any state agency that can do what we do on $500,000. If they shut us down, they’ll be spending $500,000 to save $23,000–or they’ll be denying 1,000 children a decent education.
“I keep wondering, why are they putting us through this? Why is the state trying to ruin our lives? Governor Edgar has the authority to issue an administrative order telling revenue to back off. Well, where is the governor? Where is government when you really need it?”
Art accompanying story in printed newspaper (not available in this archive): photo.Steven D. Arazmus.