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"Wheeling
Case Defines TIF Standards"
By Barry A. Springer
Illinois Municipal Review, January 1992
Village of Wheeling v. Exchange National Bank of Chicago,
213 Ill.App.3d 325 (1st Dist. 1991) was a condemnation
proceeding to acquire real property for the Wheeling tax
increment financing (TIF) redevelopment plan and project.
The trial court had granted the traverses and motions to
dismiss of several defendants interested in the properties
sought to be acquired, thereby dismissing the condemnation
suit.
The issue on appeal was the correctness of the trial court's
finding that the defendants overcame their burden of
establishing, that legislative findings made by the Village
in ordinances adopting the redevelopment plan and project,
which included findings that the redevelopment project area
constituted a blighted or conservation area under the TIF
statute (Ill.Rev.Stat., ch. 24, § 11-74.4-1 et seq.l, were
arbitrary, capricious and an abuse of discretion.
The trial court had found that the Village was acquiring the
property for a valid public purpose, and that ordinances
designating the redevelopment project area, adopting tax
increment financing, adopting the redevelopment plan and
project and authorizing acquisition of the property,
established a prima facie case establishing authority
for the condemnation. However, the trial court held that the
defendants met their burden of overcoming the Village's
prima facie case, by the cross-examination of the
Village's expert witness and by the introduction of several
documents into evidence in defendants' case in chief.
Significantly, the defendants did not present the testimony
of a single witness in their case in chief.
In May 1985, after the Village's study of the proposed
redevelopment project area and public hearings held pursuant
to the TIF statue, the Village adopted its TIF ordinances.
Thereafter, the Village collected TIF funds, sold bonds and
acquired several properties pursuant to the plan. In
February 1987, the Village adopted an ordinance authorizing
acquisition of the property (which was part of the greater
project area), located in the northwest quadrant of Dundee
Road and Milwaukee Avenue. In April 1987, the Village filed
suit to acquire the property, in which suit the various
defendants filed their traverses and motions to dismiss.
The trial court held two hearings: one on legal issues, and one on
factual issues. The hearing on legal issues proceeded first,
after which the trial court ruled for the village, finding
that the TIF statue did not violate the due process or equal
protection clauses of the federal and state constitutions,
that the village adopted a redevelopment plan and project
prior to designating the redevelopment project area and that
the redevelopment project satisfied the requirements of the
TIF statue. No appeal was taken from those rulings (the TIF
statute had previously been found constitutional, see
People ex rel. City of Canton v. Crouch, 79 Ill2d 356
(1980).
The evidentiary fact hearing then proceeded, at which the issue was
whether the project area qualified as a blighted area or a
conservation area under the TIF statute and whether
condemnation of the property was necessary. As was its
burden, the Village proceeded first, and introduced into
evidence its TIF ordinances and its ordinance authorizing
acquisition of the property. Those ordinances found that the
project area qualified for redevelopment as a blighted area
or conservation area or a combination of both, as defined in
the TIF statute and that the condemnation of the property
was necessary to achieve the objectives of the plan and
project. These ordinances established a prima
facie case, as a matter of law, that authorized the
condemnation of the property, and the trial court recognized
this. The plan and project also included the opinions of an
urban planner that supported the Village's findings.
As part of its case, the Village also called an expert witness, who
testified to a vast array of experience in community
planning and urban revitalization programs, a well as
teaching and lecturing experience and authorship of several
articles in those areas. The witness also testified to his
15 years of experience in TIF projects, and his involvement
in the drafting of the TIF statute. His testimony further
demonstrated that, after a thorough multi-date inspection of
the project area and pursuant to the definition under the
TIF statute, no less than 10 blight factors were present and
evenly distributed throughout the area. Via the exhibition
of hundreds of photographs in evidence, the testimony
concluded that the Village's findings were warranted. The
testimony also established that over 50% of the buildings in
the project area were at least 35 years of age and that, in
excess of the three factors necessary for a "conservation
area" under the TIF statute, were present in the project
are. The testimony additionally supported the Village's
findings, that the project area had not been subject to
growth and development by private enterprise before the
adoption of the plan and project, that the project area
would not reasonably be anticipated to be developed without
the adoption of the plan and project and that the plan and
project conformed to the Village's comprehensive plan for
development of the Village as a whole and included only
contiguous parcels and improvements that would be
substantially benefited by the proposed project
improvements. All of those findings were required under the
TIF statute. The testimony also demonstrated that the
acquisition of all the property was necessary for the
implementation of the plan and project.
At the conclusion of the Village's expert testimony, the defendants
moved to admit several documents into evidence (which were
ultimately admitted). The defendants then cross-examined the
Village's expert witness, revealing that the factors
contained in the TIF statute, relative to "blight" and
"conservation," applied to the area as a whole, and not to
individual parcels of property. This testimony comported
with the law as announced in Berman v. Parker, 348
U.S. 26 (1954) and a legion of cases decided by the Illinois
Supreme Court over the past 30 years. The cross-examiner
further elicited percentages of the statutory factors,
present in the project area, and confirmed their even
distribution throughout.
The Village then rested its case and the defendants called no
witnesses.
Thereafter, the trial court issued its memorandum decision and
judgment, granting the traverses and motions to dismiss,
from which the Village appealed.
The basic point made by the Village's brief, was that the trial
court erred in ruling that the defendants met their burden
of rebutting the village's prima facie case that the project
area qualified as a blighted area or conservation area. The
points of law made from the Village's perspective were: (1)
clearance of a blighted or conservation area is a public
purpose, sufficient to authorize acquisition of private
property through condemnation, regardless of the
municipality's position that the public purpose is the
prevention, rather than the elimination of blight which had
not begun or which, though begun, had not yet reached its
apex; (2) the Village's ordinances and findings established
a prima facia case for the acquisition of the
property. Upon introduction of those ordinances, the burden
shifted to the defendants to show, by clear and convincing
evidence, that the Village's designation of the project area
was arbitrary, capricious and an abuse of discretion,
allowing the trial court to interfere (because, where the
right of condemnation is granted, the necessity for its
exercise within constitutional restriction, is not a
judicial question, unless to prevent a clear abuse of
power); (3) the trial court could not substitute its
judgment for that of the Village's, in identifying the
elements which must be present to justify the conclusion
that the project area was blighted, or to fix percentage
standards or formulae therefore; (4) only if the evidence
was clear and satisfactory, that the Village's actions were
taken without reasonable grounds and were oppressive, could
the trial court interfere to declare the Village's
ordinances unreasonable; and (5) where there was factual
justification for the Village's ordinances, and it was not
shown that there was room for a legitimate difference of
opinion concerning the conditions which prompted the
ordinances, the trial court should not have investigated the
facts to determine whether the finding that the project area
qualified, was warranted by the facts.
The First District Appellate Court reversed the trial court,
agreeing with virtually every point made by the Village.
Significant points made in the opinion were: (1) the
defendants failed to present any additional substantive
evidence to overcome the Village's prima facie case;
(2) defendants' cross-examination of the Village's expert
witness did not effectively dilute or overcome the Village's
prima facie case or the legitimacy of the Village's
right to eminent domain under the facts; (3) the proposed
acquisition was for a public purpose, regardless of an
ultimate reselling of a portion of the property for
development, after acquisition; (4) that defendants'
buildings may be unoffending, taken individually, is no
defense to the condemnation, because the whole area is to be
considered, not the individual structures on a
building-by-building basis; (5) there were sufficient
factors for the subject property to qualify as a "blighted
area"; (6) once the statutory requirements have been met for
the area to be classified as a "blighted area," it does not
matter whether or not the area could also be qualified as a
"conservation area" under the TIF statute; and (7) the
defendants failed to overcome the presumption of the
validity of the ordinances through clear and convincing
evidence, or that the ordinances as applied were arbitrary,
unreasonable or capricious. Accordingly, the trial court
should not have interfered with the Village's legislative
action.
What Does a Municipality Generally Have to Show in a TIF
Condemnation Proceeding?
Condemnation is a statutory proceeding. As such, its
pleadings and procedure are governed by the Illinois Eminent
Domain Act (Ill.Rev.Stat., ch. 100, § 7-101 et seq.).
Generally, the only issue for resolution in a condemnation
proceeding is just compensation for the taking of the
property, and for any damages to remaining property caused
by the taking.
Occasionally, a defendant in such a case denies the allegations of
the complaint and attacks the complaint by filing a pleading
entitled "Traverse and Motion to Dismiss." Common issues
raised thereby, include the authority to take the property,
whether the taking is for a public purpose, whether the
taking is necessary, whether the property is subject to
condemnation, whether or not a bona fide attempt to agree on
compensation has been made and whether the taking is
excessive.
In a condemnation case pursuant to the TIF statute, several other
issues may be raised in a traverse and motion to dismiss,
such as: (1) whether or not the municipality made the
necessary findings mandated by the TIF statute and whether
or not those findings are supported by fact; (2) whether the
proposed plan and project conform to the municipal
comprehensive plan for development of a municipality as a
whole; (3) whether contiguous parcels of real property and
improvements thereon will be substantially benefited by the
proposed project improvements; (4) whether proper notice and
hearings were given and held pursuant to the TIF statute;
and (5) whether or not the project area qualifies under the
TIF statutes definitions of "blighted area" or "conservation
area."
When a traverse and motion to dismiss is filed, the burden is on
the condemning body to prove the positive, of the negatives
raised thereby. In the usual case, the introduction of the
ordinance or resolution authorizing the condemnation and
making the necessary findings of necessity, etc., is usually
made by the condemnor, to make out a prima facie case
for the authority to condemn.
In a condemnation case pursuant to the TIF statute, the ordinances
adopting the plan and project, designating the project area
and adopting tax increment financing should also be
introduced as part of the municipal prima facie case.
Assuming that the defendant raised the issues of the area
qualifying as "blighted" or "conservation" or that the
municipal findings are not supported by fact, the
municipality should have an expert witness prepared for
testimony, relative to the project area qualifying and
meeting the appropriate definitions under the TIF statue, as
well as for support relative to the findings made in the
municipal ordinances, pursuant to the TIF statute. Assuming
the condemning body meets its burden of proof, the burden
shifts to the defendant to disprove the condemning body's
case on the issues in the traverse and motion to dismiss, by
clear and convincing evidence, keeping in mind that
municipal ordinances are presumed valid and constitutional.
The Wheeling case appears to have made clear all of the
foregoing.
On June 27, 1991, the Circuit Court of Cook County dismissed a
condemnation suit, whereby the Village of Skokie attempted
to acquire property at the southwest corner of Dempster
Street and McCormick Boulevard for redevelopment purposes.
The Court ruled that the evidence demonstrated that the
Village's finding of necessity to take the property by
eminent domain power was arbitrary, capricious, unreasonable
and an abuse of discretion. Although the case was not based
on the TIF Act, the Court derived portions of its
precedential authority on general standards for
redevelopment and eminent domain power from the Wheeling
case. (Village of Skokie v. Gianoulis, No. 89 L
50625). |
