The Illinois Second District Appellate Court recently delivered an opinion clarifying the terms “electors” and “owners of record” for purposes of establishing a Special Service Area (SSA).

On June 5, 2007, the Village of Johnsburg approved an Ordinance proposing the establishment of an SSA.  Residents of the proposed SSA subsequently filed a petition objecting to the proposed SSA.  Illinois SSA law provides that a petition opposing the establishment of an SSA must be signed by at least 51% of the “electors” and 51% of the “owners of record” of the land to be included within the boundaries of the SSA and the objectors claimed that they had met these standards.

The Village claimed that the petition failed to meet both the 51% of electors standard and the 51% of owners of record standard.  Residents of the Village filed suit and the trial court found for the petitioners.  The Village appealed.

Based on its review of the law, the Appellate Court found the following:

• The term “elector” means a person who is registered to vote at the address shown opposite his or her signature on a petition.  The petitioners claimed that certain electors who were included in the Village Clerk’s tally no longer resided within the boundaries of the proposed SSA and therefore should not have been counted.  The Appellate Court found that electors are determined by the names listed on the County Clerk’s list of registered voters.  Therefore, even if certain property within the boundaries of a proposed SSA is vacant, if the previous residents are still listed on the County Clerk’s list of registered voters for that property, they are considered electors for the purpose of the objection petition.

• Although the SSA Law provides that a property owned by a land trust, corporation, estate or partnership is considered to only have one owner of record, it does not state that land owned by more than one land trust, corporation, estate or partnership must be treated as having only one owner of record.  Therefore, since two living trusts owned some of the property in question, the property is considered to have two owners of record, requiring a larger number of owners to meet the 51% test.

The Appellate Court reversed the trial court’s decision and decided the case in favor of the Village, finding that the petitioners failed to provide enough signatures to meet the 51% requirement under both standards in the SSA Law.

The term of the Illinois Industrial Jobs Recovery Law (IJRL) (65 ILCS 5/11-74.6) sunset on March 14, 2010, however, the life of the law could be extended through January 1, 2012 if Governor Quinn approves SB 3619 which has already been adopted by the House and the Senate.

The IJRL provides an alternative to the traditional TIF Statute for municipalities to establish redevelopment project areas and to provide assistance to redevelopment projects in the form of tax increment.  Under the IJRL, municipalities can establish redevelopment project areas in industrial park conservation areas, vacant industrial building conservation areas or environmentally contaminated areas based on certain factors, including:  

• Status as a labor surplus municipality or substantial labor surplus municipality;
• Adequate public and road transportation;
• Existing industrial uses;
• Term of vacancy;
• Number of employees previously employed;
• Reduction in equalized assessed value; and
• Threat of environmental contamination

City of Chicago Alderman Walter Burnett (27^th Ward) has proposed an ordinance that would require the City to set aside an amount equal to at least 20% of the aggregate tax increment revenue collected from all TIF districts in the City in a fiscal year for affordable housing projects.  The Ordinance would require that at least 40% of the housing units constructed or preserved with the funds obligated by the City be affordable to households at or below 30% of the Chicago area median income, or approximately $22,600 for a family of four.

A joint City Council Committee on Housing and Finance debated the proposed ordinance earlier this month, however no vote was taken.  During the joint committee testimony, Aldermen debated the enforcement mechanism for such a requirement, whether there are sufficient developers in the City to build the amount of affordable housing that would be funded with a 20% set aside and whether neighborhoods without TIF districts would be eligible to receive a portion of the affordable housing funding.

In many States, TIF statutes provide local governments with the authority to use tax increment to pay for environmental remediation costs.  In Wisconsin, however, to finance redevelopment projects for parcels requiring environmental cleanup, local governments can rely on either the traditional TIF Statute (66.1105) or the Environmental Remediation TIF (ERTIF) Statute (66.1106). 

TIF districts established under the ERTIF Statute differ from other TIF districts in Wisconsin in several ways, including:

• ERTIF districts can only be established on environmentally contaminated parcels while traditional TIF districts can include more generally blighted areas;
• An ERTIF district can be established without a public hearing, however, a traditional TIF district requires a public hearing at least 14 days before the resolution establishing  the TIF district is adopted;
• Once an ERTIF district is established, the district boundaries can not be amended, however, the boundaries of a traditional TIF district can be amended up to 4 times; and
• Project expenditures in an ERTIF district can be made no later than 15 years after the base is certified while expenditures in a traditional TIF district can only be made for up to 5 years.

In November 2009, the Wisconsin ERTIF Statute was amended by the State legislature, allowing local governments to allocate environmental remediation tax increment from one ERTIF district to another ERTIF district provided that both ERTIF districts are within the same municipality or county and the donor ERTIF district first repays all eligible costs within the donor’s district.

By amending the ERTIF Statute, the Wisconsin legislature strengthened a municipality’s ability to remediate or cause the remediation of environmentally contaminated land.  Local governments have already started to implement this amended legislation.  For example, the City of Cudahy created a new ERTIF district in April 2010 and approved plans to reallocate tax increment from a separate ERTIF district in the City in which all environmental remediation costs had been repaid.  This amended legislation enabled the City to more easily provide remediation funds to a private developer who subsequently acquired this contaminated land and intends to develop a retail project on the property.