2014 IL App (3d) 130364
Opinion filed April 17, 2014 ______________________________________________________________________________
IN THE
APPELLATE COURT OF ILLINOIS
THIRD DISTRICT
A.D., 2014 ____________________________________________________________________________
) THE BOARD OF EDUCATION OF ) Appeal from the Circuit Court GARDNER-SOUTH WILMINGTON ) of the 13th Judicial Circuit, HIGH SCHOOL DISTRICT 73, ) Grundy County, Illinois, ) Plaintiff-Appellee, ) ) Appeal No. 3-13-0364 v. ) Circuit No. 12-L-46 ) THE VILLAGE OF GARDNER, ) ) The Honorable Robert C. Marsaglia Defendant-Appellant. ) Judge, Presiding. ) ______________________________________________________________________________
JUSTICE McDADE delivered the judgment of the court, with opinion. Justices Carter and Wright concurred in the judgment and opinion. ______________________________________________________________________________
OPINION
¶1 In 1986, the Village of Gardner (Village) entered into an agreement with the Board of
Education of Gardner-South Wilmington High School District 73 (District). The agreement
granted the Village a license to use the District's outdoor recreational facilities within the
designated redevelopment area. In 2012, the District sued the Village, alleging that the Village
failed to make the payments called for by the agreement. The trial court agreed and granted
summary judgment in favor of the District. The Village appeals and argues that it was not required to make payments to the District because the District sought to spend the funds in
violation of the Tax Increment Allocation Redevelopment Act (TIF Act) (65 ILCS 5/11-74.4-1 et
seq. (West 2012)).
¶2 Because neither the contract itself nor the TIF Act limits how the District may spend the
funds it is paid by the Village under the license agreement, we affirm.
¶3 BACKGROUND
¶4 On December 29, 1986, pursuant to the TIF Act, the Village adopted a redevelopment
plan and established the Gardner Redevelopment Project Area (TIF district). In aggregate, the
TIF district encompassed an area of approximately 1½ acres within the Village. The
redevelopment plan and project were subsequently amended four times, most recently in 2007.
¶5 The District owned some recreational property within the TIF district, which consisted of
tennis courts and a baseball field. On December 29, 1986, the District and the Village entered
into an agreement pursuant to the TIF Act, the Intergovernmental Cooperation Act (5 ILCS
220/1 et seq. (West 2012)), and the Illinois Constitution (Ill. Const. 1970, art. VII, § 10). In the
agreement, the parties found that it would substantially benefit the property within the TIF
district to provide public recreational facilities within the redevelopment area. The agreement
granted the Village a nontransferable "license" to use the District's outdoor recreational facilities
within the TIF district. The license would last until the area was no longer designated as a
redevelopment project area and the TIF district was dissolved by the Village.
¶6 In exchange for the license, the Village agreed to pay the District yearly "a percentage of
the total annual amount due." The agreement defined "total annual amount due" as follows:
"The total annual amount due shall be the positive
difference between the CURRENT EQUALIZED ASSESSED
2 VALUE of all taxable property in the redevelopment area
multiplied by School District's RATE PERCENT OF TAX, less
the TOTAL INITIAL EQUALIZED ASSESSED VALUE of all
taxable real property in the redevelopment area multiplied by the
School District's RATE PERCENT OF TAX."
The percentage of the total amount due that the Village would pay to the District would be
determined by the ratio of taxes the Village actually received from the TIF district compared the
total amount of taxes it was entitled to receive.
¶7 The agreement contained no express restriction on what the District could do with the
payments it received from the Village. The agreement also contained an integration clause,
stating that it was "the complete and final understanding of the parties with respect to the subject
matter."
¶8 Since 1986, the Village has paid the District over $4.5 million pursuant to the agreement.
However, in 2012, the Village withheld payment. 1 On October 4, 2012, the District filed a
complaint against the Village in the circuit court of Grundy County. The District alleged that it
had made the facilities available to the Village as called for by the contract and that the Village
had breached the contract by failing to pay. The District alleged it was due $400,000 under the
terms of the agreement. The Village answered, admitting it withheld payment but denying
liability. The Village also set forth two affirmative defenses. First, it alleged that the District
failed to satisfy a condition precedent of the contract because the District sought to spend funds
on employee salaries or benefits, which did not comply with the TIF Act. According to the
Village, the District could only spend the funds it received on capital costs. Second, it alleged
that the District's expenditures frustrated the Village's reporting obligations under the TIF Act. 1 It does not appear that any subsequent payments were withheld. 3 ¶9 The District moved for partial summary judgment on the issue of liability, and on
December 31, 2012, the court granted summary judgment in favor of the District. The court
stated that the Village had paid the District "for 26 years, pursuant to the agreement, and without
restriction." The court rejected the Village's affirmative defenses, finding that the agreement was
a license agreement executed pursuant to section 11-74.4-4(c) of the TIF Act (65 ILCS 5/11-
74.4-4(c) (West 2012)), and ruled that this section of the statute did not restrict how the District
could use the funds it received.
¶ 10 The District then moved for summary judgment on the issue of damages, while the
Village filed a motion to reconsider the court's prior order. In its motion, the Village argued that
the trial court had erred in interpreting the TIF Act. In addition, the Village argued that the
agreement was ambiguous and that the court had erroneously made a finding of fact. Among the
affidavits the Village attached to its motion, it included affidavits from the current mayor and
former mayor of Gardner. They stated that the agreement was administered "with the
understanding" that the District would use the funds it received from the Village to pay for
capital costs. Finally, the Village argued that the agreement was unconscionable because the
value granted to the Village from the use of the District's recreational facilities was grossly
inadequate compared to the amount of money the Village was required to pay.
¶ 11 On May 8, 2013, the court entered two orders. First, it denied the Village's motion to
reconsider. The court admitted that it had erred in its original order when it stated that the
payments had not had any restriction; whether the funds had been paid to the District without any
restriction on their use was a disputed factual matter which could not be resolved at summary
judgment. However, the court reiterated its conclusion that, as a matter of law, the TIF Act did
not impose any restriction on how the District could use the funds it received under the license
4 agreement. It also rejected the Village's unconscionability argument, finding that the agreement
was negotiated at arm's length, with full knowledge by the parties. In its second order, the court
entered summary judgment as to damages, awarding the District $419,111.71.
¶ 12 The Village filed a timely notice of appeal.
¶ 13 ANALYSIS
¶ 14 On appeal, the Village argues that it was not obligated to pay the District because the
District sought to spend the license income on employee benefits and salaries. According to the
Village, the District was required to spend the funds it received under the agreement on capital
costs and improvements. Although the agreement itself contains no such requirement, the
Village argues that this restriction is imposed by the TIF Act. In the alternative, the Village
argues that the agreement is ambiguous and that the matter should be remanded for trial to
determine whether the parties intended that the District use the license fees it received solely on
capital costs. In response, the District contends that the trial court correctly determined that the
TIF Act does not restrict how the District may spend funds received pursuant to the license
agreement.
¶ 15 When interpreting a contract, our primary goal is to give effect to the intent of the parties.
International Supply Co. v. Campbell, 391 Ill. App. 3d 439, 452 (2009). The best indication of
the intent of the parties is the contract's plain language, and when a contract is plain and
unambiguous, it must be enforced as written. TH Davidson & Co. v. Eidola Concrete, LLC,
2012 IL App (3d) 110641, ¶ 10.
¶ 16 The arguments of the parties also require us to interpret relevant provisions of the TIF
Act. When interpreting a statute, this court's primary objective is to ascertain and give effect to
the intent of the legislature. Ramos v. City of Peru, 333 Ill. App. 3d 75, 77 (2002). The best way
5 to determine legislative intent is from the plain language of the statute, which, if unambiguous,
should be enforced as written. Board of Trustees of the Teachers' Retirement System of Illinois
v. West, 395 Ill. App. 3d 1028, 1032 (2009). "When the language of the statute is clear and
unambiguous, the court should not add exceptions, limitations, or conditions that the legislature
did not express." Fandel v. Allen, 398 Ill. App. 3d 177, 179 (2010). We construe a statute as a
whole: each word, clause, and sentence is given a reasonable meaning and not rendered
superfluous, and we avoid an interpretation that would render any portion of the statute
meaningless. Lohr v. Havens, 377 Ill. App. 3d 233, 237 (2007).
¶ 17 Both the construction of a contract and the interpretation of a statute are questions of law
which we review de novo. MD Electrical Contractors, Inc. v. Abrams, 228 Ill. 2d 281, 286
(2008); Gallagher v. Lenart, 226 Ill. 2d 208, 219 (2007).
¶ 18 We begin our analysis with some background on the TIF Act. The TIF Act provides a
means for a municipality to develop or redevelop blighted areas. Board of Education,
Pleasantdale School District No. 107 v. Village of Burr Ridge, 341 Ill. App. 3d 1004, 1010
(2003). When a blighted area is designated as a redevelopment area and a TIF district is
established, the assessment of all taxable real property within the district at that point is
designated the total initial equalized assessed value. See 65 ILCS 5/11-74.4-8(a) (West 2012);
People ex rel. City of Canton v. Crouch, 79 Ill. 2d 356, 361 (1980). This is the TIF district's base
value. Every taxing district within the redevelopment area assesses property taxes on this base
value. 65 ILCS 5/11-74.4-8(a) (West 2012); Crouch, 79 Ill. 2d at 362. Each year, the value of
all real property within the TIF district is reassessed to determine the current equalized assessed
value; the portion of taxes that is attributable to the current equalized assessed value over and
above the base value is known as tax increment revenue. See Crouch, 79 Ill. 2d at 362. This tax
6 increment revenue, which is in theory attributable to increases in property value within the TIF
district resulting from redevelopment projects, is deposited into a special fund to pay for those
redevelopment project costs and obligations incurred thereof. See 65 ILCS 5/11-74.4-8(b) (West
2012); Crouch, 79 Ill. 2d at 362. In essence, "[t]he TIF Act enables a municipality to eliminate
blighted conditions by collecting real property tax increment revenues from local taxing districts
within the TIF [d]istrict and diverting the revenues to fund TIF [d]istrict development projects."
Malec v. City of Belleville, 407 Ill. App. 3d 610, 631 (2011).
¶ 19 The TIF Act grants municipalities a number of different tools to help encourage
redevelopment and eliminate blighted conditions. Of relevance to this case, section 11-74.4-4 of
the TIF Act outlines a municipality’s powers and duties. 65 ILCS 5/11-74.4-4 (West 2012). In
particular, section 11-74.4-4(b) provides that a municipality may "[m]ake and enter into all
contracts with property owners, developers, tenants, overlapping taxing bodies, and others
necessary or incidental to the implementation and furtherance of its redevelopment plan and
project." 65 ILCS 5/11-74.4-4(b) (West 2012). Section 11-74.4-4(c) specifically grants a
municipality the power to acquire or grant real property interests within the redevelopment area,
providing that a municipality may:
"Within a redevelopment project area, acquire by purchase,
donation, lease or eminent domain; own, convey, lease, mortgage
or dispose of land and other property, real or personal, or rights or
interests therein, and grant or acquire licenses, easements and
options with respect thereto, all in the manner and at such price the
municipality determines is reasonably necessary to achieve the
7 objectives of the redevelopment plan and project." 65 ILCS 5/11-
74.4-4(c) (West 2012).
¶ 20 In the agreement at issue in this case, the Village and the District found that it would
substantially benefit the property within the TIF district to provide public recreational facilities
within the redevelopment area. Accordingly, the District granted the Village a license to use the
District’s outdoor recreational facilities. In exchange, the Village agreed to pay the District a
percentage of the "total annual amount due," which was a percentage of the tax increment
revenues. We conclude that this was a license agreement executed pursuant to section 11-74.4-
4(c) of the TIF Act. The plain language of section 11-74.4-4(c) does not restrict how a licensor
of real property may spend the revenues it receives from a municipality when they enter into a
license agreement under the TIF Act. Nor does section 11-74.4-4(b) limit what a party entering
into a contract with a municipality may do with the funds it receives under that contract. We thus
reject the Village’s argument that the TIF Act limits how the District could spend these funds.
¶ 21 We are not persuaded by the Village’s argument that other provisions of the TIF Act
require that payments to taxing districts under a license agreement be spent exclusively on
capital costs. The Village’s argument, as we interpret it, proceeds in three steps. First, the
argument is premised on the idea that TIF revenues may only be spent on redevelopment project
costs. See 65 ILCS 5/11-74.4-8(b) (West 2012) (providing that tax increment revenues shall be
deposited into a "special tax allocation fund of the municipality for the purpose of paying
redevelopment project costs and obligations incurred in the payment thereof"). Second, the
Village cites section 11-74.4-4(j) of the TIF Act, which provides that a municipality may incur
"project redevelopment costs" if those costs are consistent with the objectives of the
redevelopment plan. See 65 ILCS 5/11-74.4-4(j) (West 2012). Third, the Village cites section
8 11-74.4-3(q)(7)—which is part of the definition of "redevelopment project costs"—and argues
that this definition requires that TIF funds transferred from a municipality to another taxing
district may only be spent on that taxing district’s capital costs. 65 ILCS 5/11-74.4-3(q)(7)
(West 2012).
¶ 22 The plain language of the statute does not support the Village’s interpretation. The
definition of "redevelopment project costs" in the TIF Act is broad and contains no such
restriction. The definition provides:
" 'Redevelopment project costs', except for redevelopment project
areas created pursuant to subsection (p-1), means and includes the
sum total of all reasonable or necessary costs incurred or estimated
to be incurred, and any such costs incidental to a redevelopment
plan and a redevelopment project. Such costs include, without
limitation, the following:***." 65 ILCS 5/11-74.4-3(q) (West
2012).
The definition then lists a number of redevelopment project costs. Some of the listed
redevelopment project costs include: costs of studies, surveys, and the costs of the
implementation and administration of the redevelopment plans, which includes certain
professional services (section 11-74.4-3(q)(1)); costs relating to marketing the redevelopment
area to businesses, developers, and investors (section 11-74.4-3(q)(1.6)); property assembly
costs, which include the acquisition of land and other interests in real or personal property, and
site development costs (section 11-74.4-3(q)(2)); costs of rehabilitation, reconstruction, and
repair of existing structures (section 11-74.4- 3(q)(3)); job training and retraining costs (section
11-74.4-3(q)(5)); financing costs (section 11-74.4-3(q)(6)); and qualifying interest costs incurred
9 by developers (section11-74.4- 3(q)(11)). The provision on which the Village relies, section 11-
74.4-3(q)(7), provides:
"To the extent the municipality by written agreement accepts and
approves the same, all or a portion of a taxing district's capital
costs resulting from the redevelopment project necessarily incurred
or to be incurred within a taxing district in furtherance of the
objectives of the redevelopment plan and project." 65 ILCS 5/11-
74.4-3(q)(7) (West 2012).
¶ 23 The significance of section 11-74.4-3(q)(7) is that it allows a municipality, by agreement,
to use TIF funds to pay another taxing district for capital costs that the taxing district incurred in
furtherance of the redevelopment plan. Had the District and the Village executed an agreement
pursuant to section 11-74.4-3(q)(7), we might agree that the District was obligated to spend the
funds on capital costs. But the agreement at issue is a license agreement under section 11-74.4-
4(c), so we find section 11-74.4-3(q)(7) irrelevant. The TIF Act simply does not require that TIF
funds paid to another taxing district under a license agreement be used for that taxing district's
capital costs. 2
2 To the extent that section 11-74.4-8(b) requires that the license agreement needs to
qualify as a redevelopment project cost to authorize the Village's payment of tax increment funds
to the District, the license agreement clearly qualifies. The parties found that the license for
outdoor recreational facilities within the TIF district would substantially benefit the
redevelopment, making it a reasonable or necessary expense. See 65 ILCS 5/11-74.4-3(q) (West
2012) (defining redevelopment project costs as all reasonable or necessary expenses incurred and
incidental expenses to the redevelopment plan and project).
10 ¶ 24 We also reject the Village’s three arguments that the agreement is ambiguous. First, the
Village relies on the affidavits from the current and former mayors stating that the agreement
was to be administered with the “understanding” that the District would use the funds received
for capital improvements. The unambiguous language of the agreement, however, contains no
limitations on what the District could do with the license fees it received. Its integration clause
forecloses reliance on any "understanding" not specified in the in the contract. We presume that
had the parties intended such a restriction, they would have included it in the plain language of
the agreement. See Wright v. Chicago Title Insurance Co., 196 Ill. App. 3d 920, 925 (1990)
("There is a strong presumption against provisions that easily could have been included in the
contract but were not."). In addition, where the language of an agreement is clear and
unambiguous, the intent of the parties should be determined from the agreement itself and
extrinsic evidence may not be considered. See Richard W. McCarthy Trust v. Illinois Casualty
Co., 408 Ill. App. 3d 526, 535 (2011). Therefore, despite the Village's attempts to demonstrate
an ambiguity through extrinsic evidence, we conclude the agreement itself demonstrates no
intent to restrict the District's use of the funds.
¶ 25 Next, the Village argues the TIF plan it adopted in 1986 limits the District to spending
the funds at issue on capital costs. According to the Village's brief, "paragraph 15 [of the TIF
plan] specifically limits the use of TIF funds transferred to 'other taxing authorities' for use in
'their respective capital development funds.' " The manner in which the Village presented this
provision of the TIF plan to this court is blatantly misleading. The paragraph referenced by the
Village actually states: "The Villages recognizes [sic] the importance of the services provided by
other taxing authorities with [sic] the Redevelopment District. It may from time to time consider
grants for their respective capital funds." This language plainly does not limit the use of TIF
11 funds received by taxing authorities to capital development costs, other than through such grants.
Also, even if the TIF plan actually said what the Village contends, the TIF plan was never
expressly incorporated into the agreement of the parties and therefore does not govern the
agreement. See Peterson v. Residential Alternatives of Illinois, Inc., 402 Ill. App. 3d 240, 245
(2010) (stating that another document is not incorporated into a contract without an express
reference demonstrating an intent to do so).
¶ 26 Finally, the Village argues that the agreement is ambiguous because the trial court
referred to the agreement as a "license/lease agreement" in its order of May 8, 2013. This
argument is completely without merit. The agreement clearly grants the Village a mere license,
and there is no genuine contention that the District actually granted the Village a lease to its
recreational facilities. The trial court's mistaken use of a term in its order does not render the
underlying agreement ambiguous.
¶ 27 In sum, we conclude that the Village and the District entered into a valid license
agreement pursuant to section 11-74.4-4(c) of the TIF Act. Nothing in section 11-74.4-4(c) or in
the TIF Act's definition of redevelopment project costs imposes a limitation on the District's use
of funds. Moreover, the plain language of that agreement does not limit how the District could
spend the license fees it received. We therefore affirm the grant of summary judgment on
liability and damages in favor of the District.
¶ 28 CONCLUSION
¶ 29 For the reasons stated, the judgment of the circuit court of Grundy County is affirmed.
¶ 30 Affirmed.