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A Window Of Opportunity To Correct Defects By KURT P. FROEHLICH, Evans & Froehlich, Champaign, Illinois The General Assembly has opened a 90-day window of opportunity for municipalities to take corrective action concerning the published and mailed notices related to certain tax increment finance (TIF) areas. This legislation may also allow all municipalities with TIF areas established prior to 1987 increase the probability that their notices related to those areas would survive a "scorched earth" review and challenge. By an ordinance adopted during the 90-day period commencing with the December 16, 1991 effective date of P.A. 87-813, municipalities can make the findings required by this amendatory Act concerning pre-1987 TIF areas and correct defects related to the published and mailed notices required by the Tax Increment Allocation Redevelopment Act (including its predecessor, the Real Property Tax Increment Area Redevelopment Act, the "TIF Act") preliminary to the formation of a TIF area. The 90-day window ends on Sunday, March 15, 1992. (We recommend not relying on Section 1.11 of the Statute or Statutes, which suggests that Monday, March 16, is the actual deadline, and treat the prior Friday as the actual deadline.) P.A. 87-813 adds a new subsection (d) to Section 11-74.4-6 of the TIF Act. The new subsection (d) is fairly brief and provides: "In the event that any municipality has by ordinance adopted tax increment financing prior to 1987, and has complied with the notice requirements of this Section, except that the notice has not included the requirements of subsection (b), paragraphs (2), (3) and (4), and within 90 days of the effective date of this amendatory Act of 1991, that municipality passes an ordinance which contains findings that: (1) all taxing districts prior to the time of the hearing required by Section 11-74.4-5 were furnished with copies of a map incorporated into the redevelopment plan and project substantially showing the legal boundaries of the redevelopment project area; (2) the redevelopment plan and project, or a draft thereof, contained a map substantially showing the legal boundaries of the redevelopment project area and was available to the public at the time of the hearing; and (3) since the adoption of any form of tax increment financing authorized by this Act, and prior to June 1, 1991, no objection or challenge has been made in writing to the municipality to respect to the notices required by this Section, then the municipality shall be deemed to have met the notice requirements of this Act and all actions of the municipality taken in connection with such notices as were given are hereby validated and hereby declared to be legally sufficient for all purposes of this Act." [The referenced paragraphs (2), (3) and (4) in the amendatory Act are: "(2) The boundaries of the proposed redevelopment project area by legal description and by street locations where possible; (3) A notification that all interested persons will be given an opportunity to be heard at the public hearing; (4) A description of the redevelopment plan or redevelopment project for the proposed redevelopment project area if a plan or project is the subject matter of the hearing."] Any municipality with a pre-1987 TIF area that upon review can make the findings numbered (1) - (3) in the amendatory Act would be able to take advantage of the corrective features, or additional protections, of the amendment. Among the potentially many problems that could arise, and have arisen, in the review of a municipality's initial TIF process are: (i) certain mailed or published notices were not given; (ii) defects were in the legal descriptions (or common descriptions) or plan or project descriptions; (iii) mailing lists or postal service forms never existed, have been lost or cannot be found; (iv) planners have changed; (v) planning offices have moved; (vi) there have been fires, floods or other reasons for loss of records; and (vii) changes in administration which result in inability (or unwillingness) to show, or later certify, who did what or when. In any event the defects become apparent years later, often discovered in the process of issuing TIF bonds or entering into certain redevelopment agreements, when the TIF process is then "audited" for TIF Act compliance. Prior to P.A. 87-813 there was no effective way to correct such defects. For example, years later a defectively noticed TIF process cannot be simply "done over February 1992 / Illinois Municipal Review / Page 21 again" for the reasons that: (1) the private development may be complete, resulting in no effective later increment because of the now enhanced property, sales or utility tax base; or (2) after 1986, sales tax TIFs utilizing the Net State Sales Tax Increment are not possible to form. To "audit" this process years later is extremely difficult, time consuming, expensive and in some cases almost not possible. Less than perfect assurances may have been accepted on the basis that the burden of proving non-compliance is on the challenger, and some certification of compliance was provided. Even if Bonds have been issued, and the TIF process "audited" in that connection, there was almost certainly some reliance on a clerk's, planner's or finance officer's certificate and the municipal attorney's opinion. Also, home rule TIFs do not necessarily require the validity of the TIF process in order that general obligation bonds be binding with respect to the tax levy, with TIF reimbursement to the municipality still at risk. This remedial legislation offers a rare opportunity for an additional layer of after the fact protection. The above TIF amendment is patterned after the retroactively remedial legislation approved by the Illinois Supreme Court in Bates v. Board of Education, Allendale CCSD No. 17,136 Ill.2d 260 (1990), the interest rate litigation concerning fire prevention and life safety bonds that also froze the issuance of almost all non-home rule bond issues. That remedial legislation, for comparison, is P.A. 86-4 (including specifically Ill. Rev. Stats. 1989, ch. 1, para. 1107(d)). Although judicially untested, as also is the form of a suggested ordinance that follows, there is a reasonable basis for confidence in the intended result of the new TIF corrective amendment on the basis of the Bates decision and that the corrective amendment follows closely the form of the remedial legislation in Bates. In view of the need for relatively quick municipal action to use the corrective legislation, a suggested form of ordinance follows this article. We suggest consultation with the municipal attorney for necessary revisions related to the use of this ordinance. The ordinance is phrased in such a manner that there is no "admission" of any defects in the prior TIF notice process (see the last recital in the form ordinance). There appears to be much to gain and nothing to lose by adopting a corrective ordinance. Relatively quick action is urged. [Complete blanks and conform bracketed materials as applicable.] ORDINANCE NO.__________ WHEREAS, pursuant to the provisions of the [Real Property] Tax Increment Allocation Redevelopment Act (the "TIF Act") and a series of ordinances adopted ______ , 198__ (as supplemented and amended Page 22 / Illinois Municipal Review / February 1992 collectively, the "TIF Ordinances") the [City/Village] of _____________________ , Illinois (the "Municipality") adopted tax increment finance (TIF), approved a redevelopment plan (the "Redevelopment Plan") a redevelopment project (the "Redevelopment Project") and established a redevelopment project area [commonly known as the "_______________ ",] (the "Redevelopment Project Area"); and WHEREAS, Section 11-74.4-6 of the TIF Act was amended by Public Act 87-813, effective December 16, 1991, by adding a subsection (d), as follows: "(d) In the event that any municipality has by ordinance adopted tax increment financing prior to 1987, and has complied with the notice requirements of this Section, except that the notice has not included the requirements of subsection (b), paragraphs (2), (3) and (4), and within 90 days of the effective date of this amendatory Act of 1991, that municipality passes an ordinance which contains findings that: (1) all taxing districts prior to the time of the hearing required by Section 11-74.4-5 were furnished with copies of a map incorporated into the redevelopment plan and project substantially showing the legal boundaries of the redevelopment project area; (2) the redevelopment plan and project, or a draft thereof, contained a map substantially showing the legal boundaries of the redevelopment project area and was available to the public at the time of the hearing; and (3) since the adoption of any form of tax increment financing authorized by this Act, and prior to June 1, 1991, no objection or challenge has been made in writing to the municipality to respect to the notices required by this Section, then the municipality shall be deemed to have met the notice requirements of this Act and all actions of the municipality taken in connection with such notices as were given are hereby validated and hereby declared to be legally sufficient for all purposes of this Act" (the "Amendment"); and WHEREAS, without representing that any of its prior actions were other than in compliance with the TIF Act in effect at the time or would fail to be upheld upon judicial review thereof, this Municipality desires to further take advantage of and avail itself of the additional protections provided by the Amendment. NOW THEREFORE, BE IT ORDAINED BY THE [CITY COUNCIL/PRESIDENT AND BOARD OF TRUSTEES] OF THE [CITY/VILLAGE] OF __________________ , ILLINOIS, as follows: Section 1. Findings. Pursuant to the Amendment, the Corporate Authorities of the Municipality hereby find as follows: (1) in connection with the adoption of TIF, the designation of the Redevelopment Project Area and the related approval of a Redevelopment Plan and a Redevelopment Project, all taxing districts prior to the time of the hearing required by Section 11-74.4-5 of the TIF Act were furnished with copies of a map incorporated into the Redevelopment Plan and Project substantially showing the legal boundaries of the Redevelopment Project Area; (2) the Redevelopment Plan and Project, or a draft thereof, contained a map substantially showing the legal boundaries of the Redevelopment Project Area and was available to the public at February 1992 / Illinois Municipal Review / Page 23 the time of the hearing; (3) since the adoption of any form of tax increment financing authorized by the TIF Act, and prior to June 1, 1991, no objection or challenge has been made in writing to the Municipality in respect to the notices required by Section 11-74.4-6 of the TIF Act prior to such June 1, 1991 date. Section 2. Compliance. With respect to the above findings in Section 1, the Corporate Authorities hereby determine that pursuant to Section 11-74.4-6 (d) of the present TIF Act that the Municipality is deemed to have met the notice requirements of the TIF Act and all actions of the Municipality taken in connection with such notices as were given are, to the fullest extent lawful, hereby validated and hereby, declared to be legally sufficient for all purposes of the TIF Act. Section 3. Effective. This ordinance shall be effective immediately upon its adoption and approval. Adopted upon motion by ________, seconded by _________ , by roll call vote, this __ day of ________, 1992, as follows:
Page 24 / Illinois Municipal Review / February 1992 |
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