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.), 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.

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In May, 1985, after the Village's study of the proposed redevelopment project area and public hearings held pursuant to the TIF statute, 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 statute 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 statute. 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 Ill.2d 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, as 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.

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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 area. 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 benefitted by the proposed project improvements. All of those findings were required under the TIF statute. The testimony also demonstrated that the acquisition of all of 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-examination further

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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 facie 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 therefor; (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

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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. 110, §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 statute, 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

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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). •

Mr. Springer is a Chicago attorney concentrating in condemnation and TIF trial and appellate practice. He was trial attorney for the Village of Wheeling, as well as for the property owners in the Skokie case.

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