Habdab, LLC v. County of Lake

2023 IL App (2d) 230006, 238 N.E.3d 1182

• Court: Appellate Court of Illinois
• Decided: November 21, 2023
• Docket: 2-23-0006
• Status: Published

Opinion

2023 IL App (2d) 230006 No. 2-23-0006 Opinion filed November 21, 2023 ______________________________________________________________________________

IN THE

APPELLATE COURT OF ILLINOIS

SECOND DISTRICT ______________________________________________________________________________

HABDAB, LLC, ) Appeal from the Circuit Court ) of Lake County. Plaintiff-Appellant, ) ) v. ) No. 20-MR-514 ) THE COUNTY OF LAKE and THE ) VILLAGE OF MUNDELEIN, ) Honorable ) Jacquelyn D. Melius, Defendants-Appellees. ) Judge, Presiding. ______________________________________________________________________________

JUSTICE JORGENSEN delivered the judgment of the court, with opinion. Justices Birkett and Mullen concurred in the judgment and opinion.

OPINION

¶1 Plaintiff, Habdab, LLC, filed a two-count declaratory judgment action against defendants,

the County of Lake (county) and the Village of Mundelein (village). In count I, directed against

the county and the only count at issue in this appeal, plaintiff sought to invalidate an

intergovernmental agreement between the county, the village, and several other municipalities.

The agreement established construction funding for future highway improvements in the county’s

central area and provided that a portion of the construction costs would be reimbursed to the county

from impact fees collected from developers, including plaintiff, in the central area. Plaintiff alleged

that the agreement violated the Road Improvement Impact Fee Law (Impact Fee Law) (605 ILCS

5/5-901 et seq. (West 2022)) and that it had an interest in avoiding payment of unconstitutional 2023 IL App (2d) 230006

fees. The county and plaintiff filed cross-motions for summary judgment, and the trial court

granted the county’s motion, denied plaintiff’s motion, and entered judgment in the county’s favor

and against plaintiff on count I. The court subsequently made findings pursuant to Illinois Supreme

Court Rule 304(a) (eff. Mar. 8, 2016). Plaintiff appeals, arguing that (1) the Impact Fee Law

applies to the agreement’s fees because they meet the statutory definition of impact fees, (2) the

agreement’s fees do not comply with the Impact Fee Law because they are assessed on a per-acre

basis and, thus, are not specifically and uniquely attributable to the developed property’s actual

impact on the roadway system, (3) the doctrine of unconstitutional conditions bars the fees because

they constitute an unconstitutional taking, and (4) plaintiff never agreed to pay the unconstitutional

impact fees. We affirm.

¶2 I. BACKGROUND

¶3 A. Central Lake County Area Transportation Improvement Intergovernmental Agreement

¶4 In 2009, the county and three municipalities (the villages of Mundelein, Grayslake, and

Libertyville) entered into an intergovernmental agreement, the Central Lake County Area

Transportation Improvement Intergovernmental Agreement (IGA). Its purpose was to establish

construction funding for future highway improvements in the central Lake County area. The

improvements were intended to address existing and future traffic demands. Under the IGA, the

county agreed to design and construct road improvements in exchange for a portion of the

construction costs being reimbursed from fees collected from developers within the area, upon the

occurrence of certain triggers. The parties to the IGA agreed that developers of future

developments would be collectively assessed 50% of the construction costs of the road

improvements and the remaining 50% of the costs would be borne by the county as a “public

benefit.”

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¶5 Specifically, as relevant here, the IGA provides that the villages, “as a condition of

annexation of any unincorporated territory located within the Central Lake County Area and within

a Highway Improvement Area,” would “require the execution of an annexation agreement, which

annexation agreement shall include among its terms the payment of FEES in accordance with this

Agreement.” The IGA establishes six “Highway Improvement Areas” within the central Lake

County area, and the parties (to the IGA) created a schedule of fees for each subarea. The fees for

each subarea would be divided by the number of developable areas within each subarea and

assessed against future developments, based on the number of acres contained within each

development.

¶6 The fees would be collected “prior to granting Final Development Approval.” The term

“Final Development Approval” was defined as “the latter of the grant of Zoning Relief, annexation

approval, or final plat approval.” If none of these conditions apply, the fees are collected upon “the

issuance of the earlier of a grading permit, a site development permit, a building permit, or a

certificate of occupancy.”

¶7 B. Annexation Agreements Between Plaintiff and the Village

¶8 Plaintiff and the village, a home rule municipality, entered into three successive annexation

agreements. Parcel 1, consisting of 6.6 acres, was annexed via an annexation agreement, dated

September 11, 2018, for a “clean fill” commercial development project. 1 Parcel 2, consisting of

10.03 acres, was annexed via an amendment to the annexation agreement, dated July 22, 2019.

Parcel 3 was annexed through a second amendment, dated April 26, 2021, about eight months after

the complaint was filed in this case. Neither the annexation agreement nor the first amendment

included any provision in which plaintiff agreed to pay the IGA fees.

1 Third parties pay a fee to plaintiff to truck in fill to be deposited on the parcels.

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¶9 The second amendment provided for the annexation of parcel 3, consisting of 35 acres, into

the village. It addressed the payment of fees arising from the IGA as a result of any “Final

Development Approval.” The amendment stated that the parties agreed that any fees, as defined

in the IGA and as a result of any final development “or otherwise, relative to any or all of the

Combined Parcel,” were the owner’s responsibility to pay to the county. However, the village and

plaintiff agreed that plaintiff would not be required to pay any fees while the lawsuit challenging

the county’s ability to charge and collect the fees remained pending. The second amendment also

provided that plaintiff agreed to indemnify and hold harmless the village from 50% of attorney

fees and costs, up to $50,000, the village incurred in connection with the litigation; this included

such amounts associated with any claims made by any IGA party, any settlement, any claim, and

any judgment against the village by the county, plaintiff, or any other IGA party, relating to the

IGA and/or the annexation agreements/amendments and the village’s actions or omissions. It also

stated that the expected completion date of plaintiff’s improvements on the three parcels was

December 31, 2035.

¶ 10 The three parcels were zoned agricultural prior to annexation; afterward, they were

reclassified into the R-1 “Single Family Residential Zoning District.” Plaintiff submitted to the

village various plans and plats of annexation. 2

¶ 11 On September 19, 2019, the county informed the village that plaintiff owed $191,581.90

in fees for parcels 1 and 2 pursuant to the IGA. It asserted that the fees must be paid before the

county would issue a construction access permit for the properties.

2 The parcels are located south of Petersen Road, north on Winchester Road, and east of

Illinois Route 83.

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¶ 12 C. Plaintiff’s Complaint and Other Filings

¶ 13 On August 25, 2020, plaintiff filed a declaratory judgment complaint against the county

(count I) and the village (count II), seeking a declaration that it was not obligated to pay the fees

under the IGA on the basis that the county had not complied with the Impact Fee Law. Also at this

time, plaintiff was seeking to annex parcel 3 into the village. Specifically, as to count I, which is

at issue in this appeal, plaintiff asserted that the IGA fees did not meet the requirements of the

Impact Fee Law and, thus, the county lacked the authority to impose them and could not condition

the issuance of a permit or other discretionary benefit upon plaintiff’s agreement to pay the fees.

It also alleged that it had a tangible interest in avoiding the payment of unconstitutional “road

improvement impact fees.” 605 ILCS 5/5-903 (West 2022).

¶ 14 On October 5, 2022, the village filed an answer, affirmative defenses, and a counterclaim

against plaintiff, seeking a declaration that plaintiff must pay any IGA fees related to all three

parcels. It also filed on that date a third-party complaint against the county, seeking a declaration

that the IGA fees were not yet due because final development approval had not been granted by

the village for parcels 1 or 2. On July 6, 2021, the village voluntarily dismissed its counterclaim

against plaintiff, based on the agreement contained in the second amendment to the annexation

agreement, which provided that the village shall voluntarily dismiss its counterclaim within 10

days of the parties’ execution of the second amendment.

¶ 15 On May 24, 2021, the county filed a third-party counterclaim against the village, asserting

breach of contract and unjust enrichment and seeking recovery of unpaid IGA fees. It asserted that

the village breached the IGA by not including a provision in the annexation agreement or the first

amendment that required plaintiff to pay the IGA fees. It sought $191,581.90 in unpaid fees.

¶ 16 D. Summary Judgment Motions

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¶ 17 On June 29, 2022, the county moved for summary judgment as to count I of plaintiff’s

declaratory judgment complaint. It argued that the IGA fees, as they related to plaintiff and its

three parcels, were not subject to the Impact Fee Law because they “flow” from an annexation

agreement entered between the village and plaintiff and are, therefore, enforceable. 3 The county

also asserted that the fees under the IGA are not “road improvement impact fees” under the Impact

Fee Law because they are not conditioned on the issuance of a building permit or a certificate of

occupancy. Id.

¶ 18 Plaintiff, on August 23, 2022, filed a cross-motion for summary judgment on count I of its

complaint, arguing that the IGA fees are unenforceable against it because they are unconstitutional

and violate the Impact Fee Law. Specifically, plaintiff asserted that the county had violated the

federal and Illinois constitutions and that the IGA fees are “road improvement impact fees.” The

IGA parties coerced landowners, it alleged, to “agree” to pay the fees, as a condition of receiving

any of several forms of land use relief from the applicable government unit. In this way, the county

presumed to escape the Impact Fee Law because parties may agree to contract away their

constitutional rights. Plaintiff also asserted that the fees constituted “road improvement impact

fees” and that the IGA is an illegal attempt to avoid the Impact Fee Law’s requirements, because

the roadway improvement impact fees assessed would not be specifically and uniquely attributable

to the traffic demands generated by a particular development but, instead, would be assessed on a

per-acre basis.

3 The county asserted that the clean fill operation was proceeding on all three parcels, with

an average of 100 truckloads of fill being brought to them daily. No village approvals remained

pending.

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¶ 19 On November 1, 2022, the trial court granted the county’s summary judgment motion and

denied plaintiff’s summary judgment motion. It found that the IGA fees were not subject to the

Impact Fee Law and could be collected via an annexation agreement. Plaintiff appeals.

¶ 20 II. ANALYSIS

¶ 21 Plaintiff argues that the trial court erred in denying its summary judgment motion and

granting the county’s motion. It contends that the Impact Fee Law applies to this case because the

fees the county seeks to assess on developers to compensate for impacts of their developments on

the public roadway system are unquestionably “road improvement impact fees” under the statute.

Plaintiff further argues that, because the IGA fees are assessed on a per-acre basis and are not

specifically and uniquely attributable to its property’s actual impact on the roadway system, the

fees do not comply with the Impact Fee Law and, therefore, violate its constitutional rights under

the takings clauses of the fifth amendment to the United States Constitution and section 2 of article

1 of the Illinois Constitution. U.S. Const., amend. V; Ill. Const. 1970, art. I, § 2. It further contends

that neither the county nor the village may condition plaintiff’s receipt of a discretionary benefit,

such as annexation or the issuance of an access permit, on plaintiff’s agreement to give up its

constitutional rights. Finally, plaintiff argues that it never agreed to pay the unconstitutional impact

fees. For the following reasons, we affirm the trial court’s ruling.

¶ 22 Summary judgment is appropriate where the pleadings, depositions, admissions, and

affidavits on file, viewed in the light most favorable to the nonmoving party, reveal that there is

no genuine issue of material fact and that the moving party is entitled to judgment as a matter of

law. 735 ILCS 5/2-1005(c) (West 2022); First of America Bank v. Netsch, 166 Ill. 2d 165, 176

(1995). When parties file cross-motions for summary judgment, “they agree that only a question

of law is involved and invite the court to decide the issues based on the record.” Pielet v. Pielet,

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2012 IL 112064, ¶ 28. “However, the mere filing of cross-motions for summary judgment does

not establish that there is no issue of material fact, nor does it obligate a court to render summary

judgment.” Id. We review de novo a trial court’s ruling on a motion for summary judgment.

Standard Mutual Insurance Co. v. Lay, 2013 IL 114617, ¶ 15.

¶ 23 This case involves a question of statutory interpretation. The fundamental rule of statutory

interpretation is to ascertain and give effect to the intent of the legislature. Benzakry v. Patel, 2017

IL App (3d) 160162, ¶ 74. The most reliable indicator of that intent is the language of the statute

itself. Id. In determining the plain meaning of statutory language, a court will consider the statute

in its entirety, the subject the statute addresses, and the apparent intent of the legislature in enacting

the statute. Id. If the statutory language is clear and unambiguous, it must be applied as written,

without resorting to further aids of statutory interpretation. Id. We review de novo issues of

statutory interpretation. Id. ¶ 73.

¶ 24 A. Relevant Statutes

¶ 25 We begin with the relevant statutes. The Illinois Municipal Code allows municipalities to

enter into annexation agreements with owners of land in unincorporated territories. 65 ILCS 5/11-

15.1-1 (West 2022). Furthermore, such agreements may provide for contributions of either land or

monies or both to any municipality or other units of local government. Id. § 11-15.1-2(d).

¶ 26 The Impact Fee Law authorizes certain units of local government 4 to implement “road

improvement fee” ordinances and resolutions to supplement other funding sources so that the

burden of paying for such improvements is allocated fairly and equitably. 605 ILCS 5/5-902 (West

4 “Units of local government” means “counties with a population over 400,000 and all home

rule municipalities.” 605 ILCS 5/5-903 (West 2022).

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2022). In so doing, the statute promotes economic growth and preserves local elected officials’

adoption of ordinances and resolutions that adhere to minimum standards and procedures. Id.

¶ 27 Section 5-904 of the Impact Fee Law provides, in relevant part:

“No impact fee shall be imposed by a unit of local government within a service area

or areas upon a developer for the purposes of improving, expanding, enlarging or

constructing roads, streets or highways directly affected by the traffic demands generated

from the new development unless imposed pursuant to the provisions of this Division. An

impact fee payable by a developer shall not exceed a proportionate share of costs incurred

by a unit of local government which are specifically and uniquely attributable to the new

development paying the fee in providing road improvements, but may be used to cover

costs associated with the surveying of the service area, with the acquisition of land and

rights-of-way, with engineering and planning costs, and with all other costs which are

directly related to the improvement, expansion, enlargement or construction of roads,

streets or highways within the service area or areas as designated in the comprehensive

road improvement plan.” (Emphasis added.) Id. § 5-904.

¶ 28 Section 5-911 addresses the timing of the assessment of impact fees and provides:

“Impact fees shall be assessed by units of local government at the time of final plat

approval or when the building permit is issued when no plat approval is necessary. No

impact fee shall be assessed by a unit of local government for roads, streets or highways

within the service area or areas of the unit of local government if and to the extent that

another unit of local government has imposed an impact fee for the same roads, streets or

highways.” (Emphasis added.) Id. § 5-911.

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¶ 29 The statute prescribes the timing of the payment of impact fees. Impact fees imposed on a

residential development, consisting of one single-family residence, are “payable as a condition to

the issuance of the building permit.” Id. § 5-912. As to all other types of new development, the

fees are “payable as a condition to the issuance of the certificate of occupancy, provided that the

developer and the unit of local government enter into an agreement designating that the developer

notify the unit of local government that the building permit or the certificate of occupancy has

been issued.” Id. If agreed to by the unit of local government and the person paying the fees, they

may be paid at the time the building permit is issued or at an earlier stage of the development. Id.

¶ 30 The statute defines a “road improvement impact fee” as

“any charge or fee levied or imposed by a unit of local government as a condition to the

issuance of a building permit or a certificate of occupancy in connection with a new

development, when any portion of the revenues collected is intended to be used to fund

any portion of the costs of road improvements.” (Emphasis added.) Id. § 5-903.

¶ 31 The Impact Fee Law preempts home rule powers and functions. Id. § 5-919.

¶ 32 B. Application of Impact Fee Law to IGA Fees

¶ 33 Plaintiff argues first that the IGA fees are “road improvement impact fees” under the

Impact Fee Law. It disputes the county’s assertion, based on the definition of that term included

in the statute’s definition section, that the Impact Fee Law applies only to “road improvement

impact fees” that are collected at the time a “building permit or certificate of occupancy” is issued.

Id. § 5-903. It contends that the county’s assertion is based on an arbitrary distinction between a

“road improvement impact fee” as defined in the Impact Fee Law and the fees the county seeks to

collect under the IGA. Plaintiff argues that the definition must be read more broadly and in

conjunction with the phrase, “in connection with a new development.” Id. Plaintiff also asserts that

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the county’s interpretation leads to an absurd result, in that a municipality could avoid the statute

by making fees payable upon an event other than the issuance of a building permit or a certificate

of occupancy. It posits that there would be no need to adopt a comprehensive road plan, for

example, under this scenario. Instead, a municipality could merely require a developer to pay

impact fees at the time it submits its application for a building permit rather than when the permit

is issued.

¶ 34 Plaintiff also contends that the remainder of the statute guides the definition it proposes.

Plaintiff points to the statutory provision addressing the timing of the assessment of impact fees,

which requires that they be assessed at the time of final plat approval or, if no approval is necessary,

when a building permit is issued. Id. § 5-911. Plaintiff argues that this provision ensures that the

fees are assessed when the development is far enough along that the plan is final or building

permits are issued, thus assuring that the fees will be related to the actual development. Conversely,

here, it contends, the fees the county attempts to impose on plaintiff’s property were assessed in

2009, long before plaintiff sought to annex its property into the village, let alone develop its

property.

¶ 35 Further, plaintiff asserts that the statutory provision addressing the payment of impact fees,

which requires that the fees shall be payable as a condition to the issuance of a building permit or

a certificate of occupancy, shows that the language in the definitions section of the Impact Fee

Law was not intended to be limiting. Id. § 5-912. In plaintiff’s view, the legislature did not intend

the statute to apply only to “road improvement impact fees” that a unit of local government has

independently decided to impose on its developers at the stage of development when the issuance

of a building permit or a certificate of occupancy is imminent, as opposed to any other stage.

Rather, plaintiff contends, that language is in the definitions section because that stage is when

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units of government are required to collect “road improvement impact fees.” Plaintiff also points

to language in the same provision that allows parties to agree to payment of impact fees before the

building permit is issued. Id. Thus, it reasons, the Impact Fee Law clearly applies to “road

improvement impact fees” that are imposed pursuant to an agreement, including an annexation

agreement. Plaintiff argues that the IGA fees are not removed from the statute’s purview just

because the county imposes the fees when a property is annexed through a voluntary annexation

agreement instead of when a building permit or a certificate of occupancy is issued.

¶ 36 Plaintiff points to section 5-904, which addresses the purpose of the statutory fees. It

contends that the IGA fees’ purpose is the same as that of “road improvement impact fees” under

the Impact Fee Law. The purpose of IGA fees is to fund roadway improvement projects that will

be required so county highways can meet the demands of increased traffic generated from future

development. The purpose of “road improvement impact fees” is to improve, expand, enlarge, or

construct roads, streets, or highways directly affected by the traffic demands generated from the

new development. Id. § 5-904.

¶ 37 The county responds that the term “road improvement impact fee” in the statute means the

fee imposed as a condition to the issuance of a building permit or a certificate of occupancy. Here,

however, the fees that the village would be required to collect from plaintiff under the IGA do not

involve the exchange of a fee for the issuance of a building permit or a certificate of occupancy.

Rather, the county contends, the fees involve the voluntary annexation of the plaintiff’s properties

into the village as authorized by the Illinois Municipal Code. Thus, it reasons, the IGA fees, as

they relate to plaintiff’s properties, are not “road improvement impact fees” and do not fall within

the purview of the Impact Fee Law.

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¶ 38 The trial court found persuasive Shore Development Co. v. City of Joliet, 2011 IL App (3d)

100911-U, an unpublished order upon which the county had relied. 5 The trial court determined, as

had the court in Shore, that the Impact Fee Law did not apply, because the fees at issue did not

constitute “road improvement impact fees” under the Impact Fee Law since they were not levied

upon the issuance of a building permit or certificate of occupancy. See id. ¶ 29 (noting that the

case before it did not involve the charge of a fee in exchange for the issuance of a building permit

or a certificate of occupancy but, rather, the initial annexation of the subject property and the

approval of a final plat). The trial court here further found that the annexation agreement or the

IGA controlled for determining fees.

¶ 39 We likewise agree that the IGA fees do not constitute “road improvement impact fees”

under the Impact Fee Law. The IGA provides that payment of the highway improvement fees

thereunder is a condition of annexation into one of the villages. It also provides that the party

having jurisdiction over a development is responsible for collecting the fees before granting “Final

Development Approval” (defined as the latter of the grant of zoning relief, annexation approval,

or final plat approval; if none of the foregoing apply, then the issuance of the earlier of a grading

permit, a site development permit, a building permit, or a certificate of occupancy).

5 Illinois Supreme Court Rule 23(e) (eff. Feb. 1, 2023) prohibits parties from citing as

persuasive authority nonprecedential orders entered before January 1, 2021. Thus, the county

should not have cited Shore, which was filed in 2011, for any purpose. See Katz v. Hartz, 2021 IL

App (1st) 200331, ¶ 41. Regardless, courts may adopt the reasoning of unpublished orders. See

Byrne v. Hayes Beer Distributing Co., 2018 IL App (1st) 172612, ¶ 22. Our analysis, thus, is

unaffected by the county’s reliance on Shore.

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¶ 40 The Impact Fee Law, again, defines “road improvement impact fees” as

“any charge or fee levied or imposed by a unit of local government as a condition to the

issuance of a building permit or a certificate of occupancy in connection with a new

development, when any portion of the revenues collected is intended to be used to fund

any portion of the costs of road improvements.” (Emphasis added.) 605 ILCS 5/5-903

(West 2022).

¶ 41 There is no ambiguity in the statutory definition. The phrase “in connection with a new

development” does not broaden the definition, as plaintiff suggests. We also find unavailing

plaintiff’s assertion that the county’s position is based on an arbitrary distinction between a “road

improvement impact fee,” as defined in the Impact Fee Law, and the fees the county seeks to

collect under the IGA. We believe that, if the legislature intended to encompass into the Impact

Fee Law every conceivable exaction for highway improvements, it would not have limited the

definition of “road improvement impact fees.” That the statute encompasses only fees levied as

conditions to the issuance of either a building permit or a certificate of occupancy reflects that the

legislature selected a point in time distinct from and later than, as relevant here, annexation.

¶ 42 Nor can we conclude that the remainder of the statute contains language supporting

plaintiff’s position. Section 5-911, which addresses the timing of the fee assessment and provides

that “road improvement impact fees” shall be assessed “at the time of final plat approval or when

the building permit is issued when no plat approval is necessary” (id. § 5-911), does not act to

broaden the definition of “road improvement impact fees,” which, again, are limited to fees “levied

or imposed *** as a condition to the issuance of a building permit or a certificate of occupancy in

connection with a new development.” Id. § 5-903. The two conditions in the definition must still

be met.

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¶ 43 Section 5-912 also does not impact the definition of “road improvement impact fees.” That

section addresses the timing of payment of “road improvement impact fees” and sets forth methods

of payment that are intended to minimize the effect of impact fees on the persons making the

payments. Id. § 5-912. For residential developments, it provides that fees “shall be payable as a

condition to the issuance of the building permit.” Id. For all other types of developments, fees

“shall be payable as a condition to the issuance of the certificate of occupancy.” Id. Finally, the

section provides that the parties may agree to the payment of the fees “at the time when the building

permit is issued or at an earlier stage of development.” (Emphasis added.) Id. We believe that this

language does not reflect that the legislature intended to broaden the definition of “road

improvement impact fees.” The fact that parties may agree that the statutory fees may be paid

earlier than the default times under the provision does not in any way show that the definition

includes fees other than those that are “levied or imposed *** as a condition to the issuance of a

building permit or a certificate of occupancy in connection with a new development.” Id. § 5-903.

¶ 44 Even if, as plaintiff asserts, the county and the villages entered into the IGA to avoid the

Impact Fee Law’s requirements, we cannot ignore a statutory definition with very specific

language. Because we conclude that the IGA fees do not constitute “road improvement impact

fees,” the Impact Fee Law has no relevance to our decision. Accordingly, we need not address

plaintiff’s arguments concerning compliance with that statute.

¶ 45 C. Doctrine of Unconstitutional Conditions

¶ 46 Next, plaintiff argues that the doctrine of unconstitutional conditions bars the county’s

attempt to circumvent the Impact Fee Law by agreeing that the village will require plaintiff to

“agree” to pay the IGA fees. Specifically, plaintiff contends that, despite the IGA, the county and

the village cannot agree between themselves to do away with plaintiff’s constitutional right (i.e.,

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to be required to pay only impact fees that are specifically and uniquely attributable to its

development, pursuant to the takings clauses of the federal and Illinois Constitutions) in exchange

for a discretionary governmental benefit (i.e., annexation). Further, plaintiff contends that, if the

fees are not specifically and uniquely attributable to the development activity, it amounts to

confiscation of private property, rather than reasonable regulation under the police power. Plaintiff

maintains that, here, it was faced with a Hobson’s choice (i.e., an apparent free choice when there

is no real alternative) of either (1) accepting the IGA’s per-acre fee without any input on its behalf

nor any consideration as to what its actual use of the property will be or (2) foregoing the

discretionary benefit of annexing its property into the village. For the following reasons, we find

plaintiff’s argument unavailing.

¶ 47 Preliminarily, we note that plaintiff agreed at oral argument that municipal/county

enactments are presumptively constitutional. See, e.g., Jackson v. City of Chicago, 2012 IL App

(1st) 111044, ¶ 20 (further noting the challenging party has the burden to establish a constitutional

violation). Also, courts construe enactments to uphold their validity and constitutionality, where

that can reasonably be done. See, e.g., In re Commitment of Walker, 2014 IL App (2d) 130372,

¶ 20.

¶ 48 “ ‘[T]he unconstitutional conditions doctrine *** vindicates the Constitution’s enumerated

rights by preventing the government from coercing people into giving them up.’ ” Willie Pearl

Burrell Trust v. City of Kankakee, 2016 IL App (3d) 150655, ¶ 36 (quoting Koontz v. St. Johns

River Water Management District, 570 U.S. 595, 604 (2013)).

“Under the doctrine of ‘unconstitutional conditions,’ the ‘government may not require a

person to give up a constitutional right *** in exchange for a discretionary benefit

conferred by the government where the benefit sought has little or no relationship’ to the

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right. Dolan v. City of Tigard, 512 U.S. 374, 385 (1994). The Seventh Circuit has explained

that the meaning of the doctrine is simply that ‘conditions can lawfully be imposed on the

receipt of a benefit—conditions that may include the surrender of a constitutional right,

such as the right to be free from unreasonable searches and seizures—provided the

conditions are reasonable.’ Burgess v. Lowery, 201 F.3d 942, 947 (7th Cir. 2000). The

Supreme Court has adopted a two-part test for evaluating unconstitutional conditions

questions: first, is there an essential nexus between the condition burdening rights and a

legitimate state interest and second, is there a ‘rough proportionality’ between the burden

on the individual and the harm the government seeks to remedy through the condition.

Dolan, 512 U.S. at 386-91.” McElwain v. Office of the Illinois Secretary of State, 2015 IL

117170, ¶ 29.

¶ 49 Here, plaintiff notes that no developer was a party to the IGA and that the IGA establishes

fees and leaves no opportunity for a developer to change the amount of such fees. Thus, it

maintains, the fees are not the result of any bargain between the developer and the municipality

into which it seeks to annex. Instead, they are, according to plaintiff, a condition imposed on the

developer by the municipality, on behalf of the county, and the developer has no ability to negotiate

the fees. Accordingly, the practice, it asserts, is unconstitutional.

¶ 50 Plaintiff further asserts that, in essence, the county is attempting to use the IGA to

circumvent the Impact Fee Law by using the village as the enforcer of the county’s unconstitutional

impact fees. The IGA, it notes, provides that, if plaintiff seeks to obtain a discretionary benefit

from the village, the village must “require” plaintiff to “agree” to pay the county’s unconstitutional

impact fees. However, it asserts, the unconstitutional conditions doctrine prohibits the village from

requiring plaintiff to give up its right to be free from unconstitutional takings in exchange for a

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discretionary benefit. Plaintiff maintains that it has no obligation to pay the county any “road

improvement impact fees” other than those the county may assess in compliance with the Impact

Fee Law, i.e., “road improvement impact fees” with an actual nexus to the impact on public

roadways attributable to plaintiff’s development. 605 ILCS 5/5-904 (West 2022). Thus, it reasons,

the county’s argument that the IGA does not have to honor plaintiff’s constitutional rights because

parties may agree to contract away their constitutional rights does not weigh in favor of the IGA’s

validity.

¶ 51 Plaintiff further asserts that it has a right to be required to pay only those impact fees that

are specifically and uniquely attributable to its development, pursuant to the takings clauses of the

federal and Illinois constitutions. This is the constitutional right, it contends, the IGA is designed

to force landowners to “agree” to contract away. Plaintiff also again raises the Impact Fee Law,

arguing that it provides the procedure for satisfying the “rough proportionality” requirement. Its

purpose, plaintiff contends, is to provide a procedure for ensuring that roadway improvement

impact fees are specifically and uniquely attributable to the development, which is the “rough

proportionality” required in Illinois. The county, plaintiff argues, does not get to ignore the Impact

Fee Law and deem that its own procedure is enough of a “rough proportionality,” such that the

statute does not need to be followed.

¶ 52 The county responds that plaintiff does not have a right to annex property into a

municipality, which involves a voluntary, arm’s length bargained-for contractual arrangement

between a municipality and a property owner. Plaintiff, it contends, was not required to annex into

the village, and the village was not obligated to enter into an annexation agreement with plaintiff.

In choosing to annex the three parcels into the village to conduct its commercial clean fill

development, the county asserts, plaintiff freely agreed in the second amendment to pay the IGA

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fees for the parcels upon termination of the litigation in favor of the county. The county argues

that, because this matter involves fees provided pursuant to a voluntary annexation agreement, as

authorized by section 11-15.1-2(d) of the Illinois Municipal Code, the doctrine of unconstitutional

conditions has no application.

¶ 53 We agree with plaintiff that it has referenced a constitutional right, specifically, “the right

to receive just compensation when property is taken for a public use.” Dolan v. City of Tigard, 512

U.S. 374, 385 (1994). However, we disagree with plaintiff that the unconstitutional conditions

doctrine applies.

¶ 54 Turning to the first requirement under the doctrine, we conclude that there is an essential

nexus between the condition burdening rights and a legitimate state interest. As to the latter, “the

need to minimize or reduce traffic congestion is a legitimate State interest.” Northern Illinois Home

Builders Ass’n, Inc. v. County of Du Page, 165 Ill. 2d 25, 32 (1995). Further, “a nexus exists

between preventing further traffic congestion and providing for road improvements to ease that

congestion.” Id. The IGA provides that, as property develops in the central Lake County area,

residents will benefit from highway improvements that ensure traffic is efficiently transported

through the area, and it provides for construction funding for such improvements.

¶ 55 Second, we conclude that there is a rough proportionality between the burden on plaintiff

and the harm the county (via the village) seeks to remedy through the condition. Plaintiff misstates

the proper standard, asserting that the IGA fees must be specifically and uniquely attributable to

its development. Our supreme court has noted that rough proportionality is the proper standard

under the unconstitutional conditions doctrine (which is a federal doctrine). McElwain, 2015 IL

117170, ¶ 29 (citing Dolan, 512 U.S. at 386-91). This standard requires a lesser degree of

connection between the exaction and the projected impact of the new development than the

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specifically-and-uniquely-attributable standard, which applies in takings challenges under the

Illinois Constitution. Northern Illinois Home Builders Ass’n, 165 Ill. 2d at 33. No precise

mathematical calculation is required, but the municipality must make some sort of individualized

determination that the required dedication is related in both nature and extent to the impact of the

proposed development. Dolan, 512 U.S. at 391.

¶ 56 We believe that there is a rough proportionality between the IGA fees assessed against

plaintiff’s parcels and the road improvements. The IGA’s purpose is to establish construction

funding for future highway improvements in the central Lake County area. The improvements are

intended to address existing and future traffic demands. Under the IGA, the county agreed to

design and construct road improvements in exchange for a portion of the construction costs being

reimbursed from fees collected from developers within the area, upon the occurrence of certain

triggers. It established six “Highway Improvement Areas” within the central Lake County area,

and the parties created a schedule of fees for each subarea. The fees for each subarea are divided

by the number of developable areas within each subarea and are assessed against future

developments, based on the number of acres contained within each development. The three parcels

were zoned agricultural prior to annexation; afterward, they were reclassified into the R-1 “Single

Family Residential Zoning District.” Plaintiff’s clean fill operation, which operates on all three

parcels, involves about 100 truckloads of fill per day (as of March 2022) being transported to the

parcels.

¶ 57 In summary, because both of its requirements are met, the unconstitutional conditions

doctrine does not apply here to render the fees a taking without just compensation.

¶ 58 D. Annexation Agreement

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¶ 59 Finally, plaintiff argues that it has not agreed, via the annexation agreements, to give up its

constitutional right to pay only impact fees genuinely attributable to the impact its property has on

the roadways. It notes that the first annexation agreement between it and the village does not

mention the county’s impact fees and contains no promise by plaintiff to pay them. Similarly, it

notes, the first amendment to the annexation agreement does not mention the IGA fees and contains

no promise by plaintiff to pay them. The second amendment to the annexation agreement contains

references to the IGA fees, plaintiff notes, but it also has language providing that, if its challenge

to the fees fails, it agrees to pay the fees to the village. 6 Plaintiff argues that the foregoing is not a

knowing and voluntary agreement to waive a constitutional right. Rather, it is an express

preservation of a judicial challenge seeking to enforce that right. It also contends that the trial

court’s judgment in the county’s favor cannot stand, if the judgment turned on the court’s finding

that plaintiff “agreed” to pay the fees in the annexation agreement, where, in plaintiff’s view, such

a finding is erroneous.

¶ 60 In this appeal, plaintiff challenges the trial court’s summary judgment rulings by raising

arguments based on the Impact Fee Law and the unconstitutional conditions doctrine. We have

rejected those arguments. (Neither our discussion of the Impact Fee Law nor the unconstitutional

conditions doctrine rely on any “agreement” to pay the IGA fees.) As plaintiff acknowledges, if

its challenge to the county’s impact fees fails and the fees are upheld, as has occurred here, then

6 Similarly, in its reply brief, plaintiff argues that the second amendment cannot be read to

reflect its agreement to the fees but is, rather, an acknowledgement “that, if plaintiff loses this

lawsuit, and the County’s fees are deemed constitutional, then the fees would have to be paid, and

plaintiff would have to pay them.”

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plaintiff must pay the fees to the village. Thus, we reject plaintiff’s argument that it never agreed

to pay the IGA fees.

¶ 61 III. CONCLUSION

¶ 62 For the reasons stated, we affirm the judgment of the circuit court of Lake County.

¶ 63 Affirmed.

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Habdab, LLC v. County of Lake, 2023 IL App (2d) 230006

Decision Under Review: Appeal from the Circuit Court of Lake County, No. 20-MR-514; the Hon. Jacquelyn D. Melius, Judge, presiding.

Attorneys Robert T. O’Donnell and Hayleigh K. Herchenbach, of for O’Donnell Callaghan LLC, of Libertyville, for appellant. Appellant:

Attorneys Eric F. Rinehart, State’s Attorney, of Waukegan (John P. for Christensen and Gunnar B. Gunnarsson, Assistant State’s Appellee: Attorneys, of counsel), for the People.

No brief filed for other appellee.

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