No. 2-09-1136 Filed: 11-1-10
IN THE
APPELLATE COURT OF ILLINOIS
SECOND DISTRICT
MICHAEL A. RAJTEROWSKI, ROBERT ) Appeal from the Circuit Court
SKELTON, LYNN SKELTON, MICHELLE) of De Kalb County.
ELIASON, JEFFREY ELIASON, PAUL )
BRIAN HUDON, and ANDREA LEE )
HUDON, )
)
Plaintiffs-Appellants, )
)
v. ) No. 08--CH--271
)
THE CITY OF SYCAMORE and )
SYCAMORE COMMUNITY UNIT SCHOOL )
DISTRICT No. 427, ) Honorable
) Kurt P. Klein,
Defendants-Appellees. ) Judge, Presiding.
JUSTICE JORGENSEN delivered the opinion of the court:
In an amended five-count complaint, plaintiffs, Michael A. Rajterowski, Robert and Lynn
Skelton, Michelle and Jeffrey Eliason, and Paul Brian and Andrea Lee Hudon, sued defendants, the
City of Sycamore (City) and Sycamore Community Unit School District No. 427 (School District),
arguing that the City's real estate transfer tax, from which buyers of homestead real estate who had
resided in the City for at least one year were exempt, violated the federal and state constitutions and
that, in entering into an intergovernmental agreement under which the City forwarded transfer tax
revenues to the School District, the City and the School District exceeded their constitutional and
statutory authority. Defendants moved to dismiss plaintiffs' complaint, asserting that it failed to state
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a cause of action. 735 ILCS 5/2--615 (West 2008). The trial court granted defendants' motion as
to all counts and dismissed plaintiffs' complaint with prejudice. Plaintiffs appeal. We affirm.
I. BACKGROUND
On March 21, 2006, a referendum was passed, authorizing the City, a home rule municipality,
to impose a municipal transfer tax on real property transferred within its boundaries (Transfer Tax).
On April 17, 2006, the City adopted Ordinance No. 2005.93 (Ordinance), which established the
Transfer Tax. The Ordinance became effective on June 1, 2006, and imposed on the transfer of title
to real estate located in the City a tax at a rate of $5 for each $1,000 of value or fraction thereof.
The Ordinance was intended by the City to create a new source of funds that it would give
to the School District, a public school district, to supplement the School District's operating revenue.
The mechanism by which the City provides the funds to the School District is an intergovernmental
agreement (Intergovernmental Agreement) executed pursuant to the Illinois Intergovernmental
Cooperation Act (5 ILCS 220/1 et seq. (West 2008)). The agreement provided that certain start-up
and ongoing operating expenses the City incurred that were related to the Transfer Tax would be
withheld from the revenues generated by the tax. There would also be a cooperatively established
method to account for the monies received from the Transfer Tax and distributed to the School
District.
The Ordinance contains an exemption, which is at issue in this appeal, for buyers of
homestead real estate within the City who have been residents of the City for at least one year:
"1. The following deeds shall be exempt from the tax levied by this Article:
***
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(n) A deed or trust document where the grantee or buyer is purchasing homestead real
estate within the [C]ity and has maintained resident status (whether as a tenant or as an
owner-occupier of real property) within the corporate limits of the City *** for a period of
at least one year immediately prior to the date of application for exemption from the transfer
tax to be imposed." Sycamore Municipal Code §3--20--6 (2006).
Rajterowski formerly lived one-quarter mile outside the City's limits and purchased a home
in the City in July 2006. Robert and Lynn Skelton formerly lived in Edwardsville and purchased a
home in the City in October 2006. Michelle and Jeffrey Eliason formerly resided in Texas and
purchased a home in the City in June 2006. Paul and Andrea Hudon formerly resided in Florida and
purchased a home in the City in August 2006. Because plaintiffs had not been residents of the City
for one year immediately prior to purchasing homestead property in the City, they did not qualify for
the Transfer Tax exemption. Plaintiffs paid the Transfer Tax.1
On July 10, 2008, plaintiffs sued the City and the School District. In a five-count complaint,
plaintiffs alleged that the Transfer Tax violates the United States and Illinois Constitutions and that,
in entering into the Intergovernmental Agreement, the City and the School District exceeded their
authority. Specifically, plaintiffs alleged that: (1) the Ordinance violates the privileges and
immunities clause of article IV, section 2, of the United States Constitution (U.S. Const., art. IV, §2)
(count I); (2) the Ordinance violates the equal protection clause of the United States Constitution
(U.S. Const, amend. XIV) (count II); (3) the Ordinance violates the uniformity clause of the Illinois
Constitution (Ill. Const. 1970, art. IX, §2) (count III); (4) in enacting the Ordinance and entering into
1
Rajterowski paid $1,915; the Skeltons paid $2,395; the Eliasons paid $2,425; and the
Hudons paid $2,020.
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the Intergovernmental Agreement, the City exceeded its authority under the Illinois Constitution
(count IV); and (5) in entering into the Intergovernmental Agreement, the School District exceeded
its authority under the Illinois Constitution (count V).
On September 2, 2008, defendants moved to dismiss plaintiffs' complaint (735 ILCS 5/2--615
(West 2008)), alleging that it failed to state any cause of action. On November 25, 2008, the court
held a hearing on the motion. On January 13, 2009, the court granted the motion, finding that
plaintiffs' complaint failed to state a cause of action as to all counts. The court granted plaintiffs
leave to file an amended complaint.
On February 10, 2009, plaintiffs filed an amended 26-page, 5-count complaint. Thereafter,
on March 12, 2009, defendants moved to strike and dismiss the amended complaint. On April 17,
2009, defendants moved for sanctions (155 Ill. 2d R. 137), arguing that plaintiffs' amended
complaint contained no substantive changes from the initial complaint and, therefore, was an
improper attempt to relitigate claims already decided by the trial court. A hearing on the motion to
dismiss was held on August 20, 2009. On October 15, 2009, the trial court granted defendants'
motion and dismissed plaintiffs' complaint with prejudice. Also, the court denied defendants' motion
for sanctions, finding that sanctions were "not appropriate in this matter." Plaintiffs appeal.
II. STANDARD OF REVIEW
A motion to dismiss pursuant to section 2--615 of the Code of Civil Procedure (735 ILCS
5/2--615 (West 2008)) challenges only the complaint's legal sufficiency. Napleton v. Village of
Hinsdale, 229 Ill. 2d 296, 305 (2008); DeWoskin v. Loew's Chicago Cinema, Inc., 306 Ill. App. 3d
504, 513 (1999) (legal sufficiency of complaint alleging constitutional violations may be raised by
section 2--615 motion). The motion does not raise affirmative factual defenses. DeWoskin, 306 Ill.
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App. 3d at 514. In ruling on a section 2--615 motion to dismiss, a court should inquire whether the
allegations of the complaint, when accepted as true and considered in the light most favorable to the
plaintiff, are sufficient to state a cause of action upon which relief may be granted. Turner v.
Memorial Medical Center, 233 Ill. 2d 494, 499 (2009). "Evidentiary material outside of the
complaint may not be considered." DeWoskin, 306 Ill. App. 3d at 514. Since Illinois is a
fact-pleading jurisdiction, "a plaintiff must allege facts sufficient to bring his or her claim within the
scope of the cause of action asserted." Turner, 233 Ill. 2d at 499. A plaintiff need not prove his or
her case at the pleading stage; however, he or she must allege specific facts supporting each element
of the cause of action, and "the court will not admit conclusions of law and conclusory allegations
not supported by specific facts." Visvardis v. Eric P. Ferleger, P.C., 375 Ill. App. 3d 719, 724
(2007). A complaint should not be dismissed under section 2--615 unless no set of facts can be
proved that would entitle the plaintiff to recover. Napleton, 229 Ill. 2d at 305. We review de novo
the trial court's dismissal of a complaint under section 2--615. Kelley v. Carbone, 361 Ill. App. 3d
477, 480 (2005).
III. ANALYSIS
Home rule municipalities, such as the City, have the right to levy taxes. Ill. Const. 1970, art.
VII, §6(a). They may exercise their taxation powers, unless restricted by the constitution or
appropriate legislation. Mulligan v. Dunne, 61 Ill. 2d 544, 550 (1975). A transfer tax in and of itself
does not "offend any constitutional provisions." Stahl v. Village of Hoffman Estates, 296 Ill. App.
3d 550, 554 (1998); see also 65 ILCS 5/8--3--19 (West 2006) (authorizing home rule municipalities
to impose, upon prior approval by referendum, real estate transfer taxes). Indeed, the central issue
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in this case is whether plaintiffs' complaint stated a cause of action that the exemption violates
certain constitutional or statutory provisions.
A. Count I--Privileges and Immunities Clause of Article IV of the Federal Constitution
The privileges and immunities clause provides that: "The Citizens of each State shall be
entitled to all Privileges and Immunities of Citizens in the several States." U.S. Const., art. IV, §2,
cl. 1. It "was designed 'to place the citizens of each State upon the same footing with citizens of
other States, so far as the advantages resulting from citizenship in those States are concerned.' "
United Building & Construction Trades Council v. Mayor & Council of the City of Camden, 465
U.S. 208, 215-16, 79 L. Ed. 2d 249, 257, 104 S. Ct. 1020, 1026 (1984), quoting Paul v. Virginia, 75
U.S. (8 Wall.) 168, 180, 19 L. Ed. 357, 360 (1868); see also Broeckl v. Chicago Park District, 131
Ill. 2d 79, 88 (1989) ("clause prohibits one State from discriminating against citizens of another
State" and "does not apply where a city or municipal ordinance discriminates against intrastate
residents" (emphasis added). Although the clause is written in terms of state citizenship guarantees,
it also applies to residency or citizenship restrictions established by municipalities. United Building
& Construction Trades Council, 465 U.S. at 215, 79 L. Ed. 2d at 256, 104 S. Ct. at 1026. Further,
merely because an ordinance disadvantages some in-state residents does not immunize the ordinance
from constitutional review. United Building & Construction Trades Council, 465 U.S. at 215, 79
L. Ed. 2d at 256, 104 S. Ct. at 1026.
In count I of their amended complaint, the Eliasons and the Hudons (the plaintiffs who
moved to the City from out of state) sought declaratory, injunctive, and other relief. They alleged
that they were wrongly denied the privileges and immunities guaranteed under the federal
constitution because, as to application of the exemption, there was no rational basis or substantial
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reason for the differential treatment between City residents and nonresidents. The Eliasons and the
Hudons noted that, in passing the Ordinance, the City sought to increase funding for the School
District. They alleged that lack of adequate school funding, to the extent it exists, is not caused by
resident citizens of foreign states moving into the City and purchasing real estate; thus, there is no
substantial reason or rational basis for the discrimination between resident citizens of a foreign state
and resident citizens of the City. They further alleged that buyers who are residents of foreign states
can never qualify or be eligible for the Transfer Tax exemption. For the following reasons, we
conclude that the trial court did not err in dismissing count I.
To assess whether plaintiffs pleaded a cause of action based upon a violation of the privileges
and immunities clause, we briefly review the requirements for showing such a violation. When a
law establishes a citizenship or residency classification, a court applies a two-part test in assessing
whether the law violates the privileges and immunities clause. First, the court determines whether
the benefit or activity constitutes one of the "privileges and immunities" protected by the clause.
United Building & Construction Trades Council, 465 U.S. at 218, 79 L. Ed. 2d at 258, 104 S. Ct. at
1027. Second, the court determines if there is a substantial state interest in the difference in
treatment of nonresidents. United Building & Construction Trades Council, 465 U.S. at 222, 79 L.
Ed. 2d at 261, 104 S. Ct. at 1029.
As to the first part of the test, the Supreme Court has noted that states must treat residents
and nonresidents "without unnecessary distinctions" when the nonresident seeks to "engage in an
essential activity or exercise a basic right." Baldwin v. Fish & Game Comm'n, 436 U.S. 371, 387,
56 L. Ed. 2d 354, 367, 98 S. Ct. 1852, 1862 (1978). However, if the nonresident engages in conduct
that is not "fundamental" because it does not "bea[r] upon the vitality of the Nation as a single
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entity," the privileges and immunities clause affords no protection. Baldwin, 436 U.S. at 383, 56 L.
Ed. 2d at 365, 98 S. Ct. at 1860. The determination:
"whether a right is sufficiently fundamental to be protected by the [privileges and
immunities] clause should not be confused with a determination of whether an activity
constitutes a fundamental right so as to require strict judicial scrutiny under the due process
and equal protection clauses when the activity is regulated by the government. For example,
the regulation of conditions of employment is not considered a limitation of a fundamental
right for due process and equal protection analysis, but the ability to engage in private sector
activity or employment is a fundamental right protected by the privileges and immunities
clause." (Emphases added.) 2 R. Rotunda & J. Nowak, Constitutional Law §12.7(d)(ii), at
335-36 (4th ed. 2007).
Along with private-sector employment, access to the courts and the disposition of privately
held property have been held to be fundamental rights for privileges and immunities clause analysis
(see Baldwin, 436 U.S. at 383, 56 L. Ed. 2d at 365, 98 S. Ct. at 1860), as has the right to procure
medical services (Doe v. Bolton, 410 U.S. 179, 200, 35 L. Ed. 2d 201, 217, 93 S. Ct. 739, 751
(1973)). However, recreational activities, such as recreational hunting or fishing, are not considered
privileges or immunities. Baldwin, 436 U.S. at 388, 56 L. Ed. 2d at 368, 98 S. Ct. at 1863; Toomer
v. Witsell, 334 U.S. 385, 403, 92 L. Ed. 1460, 1475, 68 S. Ct. 1156, 1165 (1948). Likewise, suffrage
and qualification for elective office may be tied to an individual's identification with a specific state
and are, therefore, not protected by the privileges and immunities clause. See Baldwin, 436 U.S. at
383, 56 L. Ed. 2d at 365, 98 S. Ct. at 1860.
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On appeal, plaintiffs argue that their complaint sufficiently pleaded that the rights to travel
and purchase property are fundamental rights protected by the privileges and immunities clause.
Preliminarily, we note that there is some support for the proposition that the rights to travel and
purchase property are considered privileges and immunities. See Saenz v. Roe, 526 U.S. 489, 500-
01, 143 L. Ed. 2d 689, 702, 119 S. Ct. 1518, 1525 (1999) (discussing the three aspects of the right
to travel and noting that the privileges and immunities clause of article IV protects citizens of one
state who travel to another state, intending to return home at the end of their journey);2 Ward v.
Maryland, 79 U.S. (12 Wall.) 418, 430, 20 L. Ed. 449, 452 (1871) (the clause "plainly and
unmistakably secures and protects the right of a citizen of one State to pass into any other State of
2
A second aspect of the right to travel is a newly arrived citizen's right to the same privileges
and immunities enjoyed by other citizens of the same state. This right is identified in the privileges
and immunities clause of the fourteenth amendment. Saenz, 526 U.S. at 502-03, 143 L. Ed. 2d at
703-04, 119 S. Ct. at 1526. A third aspect of the right to travel, which has no specific textual source
in the constitution, protects the right of a citizen of one state to enter and leave another state. Saenz,
526 U.S. at 500-01, 143 L. Ed. 2d at 702, 119 S. Ct. at 1525. The right to travel is not explicitly
mentioned in the federal constitution, and Saenz is the only Supreme Court case to enunciate three
aspects of the right to travel. Further, the right to travel has, in various cases, been held to be
grounded upon the privileges and immunities clause of article IV, the privileges and immunities
clause of the fourteenth amendment, or the commerce clause, or it has been generally considered as
a basic right under the federal constitution. Shapiro v. Thompson, 394 U.S. 618, 630 n.8, 22 L. Ed.
2d 600, 612 n.8, 89 S. Ct. 1322, 1329 n.8 (1969) (citing cases), overruled on other grounds by
Edelman v. Jordan, 415 U.S. 651, 39 L. Ed. 2d 662, 94 S. Ct. 1347 (1974).
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the Union for the purpose of engaging in lawful commerce, trade, or business, without molestation;
to acquire personal property; to take and hold real estate; to maintain actions in the courts of the
State; and to be exempt from any higher taxes or excises than are imposed by the State upon its own
citizens" (emphasis added)); see also Borden v. Selden, 259 Iowa 808, 819, 146 N.W.2d 306, 314
(1966) (statute denying nonresident Iowa landowners a land tax credit that was granted to resident
owners held unconstitutional as violating the privileges and immunities clause); Opinion of the
Judges, 81 S.D. 629, 632, 140 N.W.2d 34, 35 (1966) (advisory opinion holding that property tax
relief act that granted to South Dakota residents a real estate tax refund not allowed to nonresidents
was unconstitutional as violating privileges and immunities clause). Assuming that the foregoing
rights are fundamental for purposes of the privileges and immunities clause, we conclude that
plaintiffs' complaint has failed to sufficiently plead a violation of the clause.
In count I, plaintiffs alleged that, along with laws passed by states, the privileges and
immunities clause applies to an ordinance that discriminates on the basis of municipal residency.
Nowhere in count I of the complaint did plaintiffs specifically mention the rights to travel and
purchase property. Nevertheless, we infer these rights from the allegations referencing
"discrimination [in application of the Transfer Tax exemption] between resident citizens of a foreign
state and resident citizens of" the City.
Having determined that plaintiffs, via their references to the differential treatment of residents
and nonresidents, adequately pleaded that the rights to travel and purchase property are privileges
and immunities, we conclude that their complaint failed to plead sufficient facts as to the second part
of our inquiry. This analysis, i.e., whether there is a substantial state interest in the difference in
treatment of nonresidents, consists of two aspects: (1) there must be a substantial reason for the
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discrimination beyond the fact that they are citizens of other states; that is, there must be something
to indicate that noncitizens constitute a "peculiar source of evil" at which the statute or ordinance
is directed; and (2) the court must find a substantial or reasonable relationship between the evil and
the discrimination practiced against noncitizens. Hicklin v. Orbeck, 437 U.S. 518, 525-27, 57 L. Ed.
2d 397, 404-05, 98 S. Ct. 2482, 2487-88 (1978); People ex rel. Bernardi v. Leary Construction Co.,
102 Ill. 2d 295, 299 (1984).
Plaintiffs argue that the "evil" at which the Ordinance is directed is inadequate school
funding. Indeed, in their amended complaint, plaintiffs alleged that the Ordinance was intended "to
create a new source of funds that [the City] will give to the School District to supplement the School
District's operating revenues," and plaintiffs attached thereto a copy of the Intergovernmental
Agreement. The question, plaintiffs assert, is whether nonresidents are the source of the evil. In
their complaint, they alleged that there "is no substantial reason, nor rational basis for discriminating
between citizens of a foreign state and citizens of [the City], when establishing a transfer tax to
increase school funding." The complaint continued, "Lack of adequate school funding, if indeed
there is a lack of funding, is not caused by resident citizens of a foreign state moving into [the City]
and purchasing real estate, thus, there is no 'substantial reason' nor 'rational basis' for the
discrimination between resident citizens of a foreign state and resident citizens of" the City.
The foregoing allegations are clearly conclusory. To survive a section 2--615 motion to
dismiss, a plaintiff must allege specific facts supporting each element of the cause of action, and we
will "not admit conclusions of law and conclusory allegations not supported by specific facts."
Visvardis, 375 Ill. App. 3d at 724. The foregoing allegations mirror the "elements" of the second
aspect of our analysis, i.e., substantial reason and substantial relationship, but do not constitute
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specific factual allegations. Nowhere in count I of their amended complaint did plaintiffs provide
any factual allegations supporting their conclusion that residents of a foreign state, such as the
Eliasons and the Hudons, who move to the City and purchase real estate do not cause inadequate
school funding. In their appellate brief, plaintiffs state that the City "is discriminating against
nonresidents who may only be a small part of the cause/source of increased costs in the School
District." (Emphasis added.) They continue, the "facts could show that the majority of the increased
School District costs result from an increase of the school population coming mainly from children
born to established residents, from costs of salary increases to existing teachers, or from increased
administration or energy costs that are unrelated to an overwhelming mass (if there is one) of new
students coming from parents who moved" to the City from outside it. (Emphasis added.) We agree
with plaintiffs that the facts could show any of the foregoing sources of the underfunding, but this
does not absolve them of their obligation to plead specific facts to state a claim for relief. Because
count I of the amended complaint contained, as to the elements of a privileges and immunities clause
claim, merely conclusory allegations unsupported by specific facts, we conclude that, as to count I,
the trial court did not err in granting defendants' motion to dismiss.
B. Count II--Equal Protection Clause of the Federal Constitution
In count II of their amended complaint, plaintiffs alleged that the Ordinance violates the equal
protection clause of the fourteenth amendment, which provides that the states may not " 'deny to any
person within [their] jurisdiction the equal protection of the laws,' " but does allow reasonable
classifications among such persons. Western & Southern Life Insurance Co. v. State Board of
Equalization of California, 451 U.S. 648, 656-57, 68 L. Ed. 2d 514, 523, 101 S. Ct. 2070, 2077
(1981), quoting U.S. Const., amend. XIV, §1. They asserted that the Ordinance, by treating plaintiffs
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disparately from City residents purchasing homestead property, denies them equal protection of the
laws.
In this count, unlike in count I, plaintiffs specifically alleged that the right to own property
is a fundamental right and that the exemption (i.e., the discrimination), based upon a buyer's
residence prior to purchasing real estate in the City, has neither a rational basis nor is narrowly
tailored to the reason the City adopted the Transfer Tax (i.e., to address school underfunding).
Plaintiffs noted that the City's and the School District's boundaries are not coterminous. The
Ordinance, they alleged, violates the equal protection clause by making unconstitutional distinctions
among several classifications of buyers: (1) resident and nonresident buyers of real estate; (2)
homestead and nonhomestead resident buyers of real estate; (3) persons living within the School
District but outside the City who buy homestead property within the City; and (4) persons living in
(or moving to) the City who buy homestead or nonhomestead real estate within the City but outside
the School District. Plaintiffs asserted that there is no real and substantial difference among the
classes of purchasers.
As to Ratjerowski, plaintiffs alleged that he was wrongly denied equal protection because,
prior to purchasing real estate in the City, he already lived in the School District. In plaintiffs' view,
after Ratjerowski moved into the City, he did not cause any additional burden to the School District.3
3
Plaintiffs also alleged (generally and not as to any specific plaintiff in this case) that parts
of the City do not lie within the School District; rather, they lie in a neighboring district. Plaintiffs
alleged that purchasers moving into portions of the City that are not within the School District must
pay the tax even though their children will attend school in another school district.
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As to the Skeltons, Eliasons, and Hudons (who lived outside the City and the School
District), plaintiffs alleged that there is no rational basis for the disparate treatment of residents and
nonresidents. These plaintiffs paid the Transfer Tax that a City resident of more than one year does
not have to pay and, therefore, were denied the equal protection of the laws.
Additionally, plaintiffs alleged that the exemption is unconstitutional as it applies to resident,
nonhomestead purchasers, including corporations, partnerships, or individuals purchasing
commercial property. In plaintiffs' view, a resident corporation or individual purchasing a building
for office space places no additional financial burden on the School District and is, therefore, no
different from a resident homestead buyer when one considers the City's only reason for the
Ordinance.
The first step in assessing an equal protection claim is to determine if the enactment at issue
disadvantages a suspect class or infringes upon a fundamental right. Fundamental rights include the
expression of ideas, participation in the political process, and intimate personal privacy interests.
People ex rel. Tucker v. Kotsos, 68 Ill. 2d 88, 97 (1977). Where the enactment creates a suspect
classification or infringes upon a fundamental right, then, under what is called strict-scrutiny review,
the enactment must promote a compelling or overriding state interest. Illinois Housing Development
Authority v. Van Meter, 82 Ill. 2d 116, 119-20 (1980). Further, the enactment must be narrowly
tailored thereto, i.e., the legislature must use the least restrictive means consistent with the attainment
of its goal. Schultz v. Lakewood Electric Corp., 362 Ill. App. 3d 716, 720 (2005). Intermediate
scrutiny applies to an ordinance that is based on a gender or illegitimacy classification or that causes
certain incidental burdens to speech. In re Detention of Samuelson, 189 Ill. 2d 548, 561-62 (2000);
Desnick v. Department of Professional Regulation, 171 Ill. 2d 510, 521 (1996). In all other
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circumstances, courts will review an ordinance under highly deferential rational-basis scrutiny.
Samuelson, 189 Ill. 2d at 562. Under the rational-basis test, the enactment must bear a rational
relationship to a legitimate governmental interest. Van Meter, 82 Ill. 2d at 120.
On appeal, plaintiffs argue that they stated an equal protection claim. They assert that the
rights to travel and own property are fundamental rights requiring strict-scrutiny analysis. In their
complaint, plaintiffs alleged that the equal protection clause prevents a municipality from
discriminating on the basis of residency, without a proper basis for that discrimination. They also
specifically alleged that the right to own property is a fundamental right. Alternatively, they argue
that, if the foregoing are not fundamental rights, the Ordinance does not survive rational-basis
review.
Turning first to property, we reject plaintiffs' assertion that the right to private housing, in and
of itself, is a fundamental right. See, e.g., Van Meter, 82 Ill. 2d at 121 (the Supreme Court "has
clearly ruled that a right to private housing is not a fundamental right" and, thus, applies rational-
basis review "to government actions that might burden a person's ability to find adequate housing"),
citing Village of Belle Terre v. Boraas, 416 U.S. 1, 7-9, 39 L. Ed. 2d 797, 803-04, 94 S. Ct. 1536,
1540-41 (1974) (upholding a village zoning ordinance that limited, with certain exceptions, the
occupancy of one-family dwellings to traditional families or to groups of not more than two
unrelated persons after determining that no fundamental right guaranteed by the federal constitution
was involved and, thus, applying rational-basis scrutiny), and Lindsey v. Normet, 405 U.S. 56, 74,
31 L. Ed. 2d 36, 51, 92 S. Ct. 862, 874 (1972) ("We are unable to perceive in [the federal
constitution] any constitutional guarantee of access to dwellings of a particular quality, or any
recognition of the right of a tenant to occupy the real property of his landlord beyond the term of his
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lease without the payment of rent or otherwise contrary to the terms of the relevant agreement"); see
also 4 R. Rotunda & J. Nowak, Constitutional Law §18.44, at 411 (4th ed. 2008) ("the Court has not
subjected governmental actions which might burden persons' abilities to find adequate private
housing to any standard of review above the rationality test of the due process and equal protection
guarantees. Of course, if these laws involve the use of suspect classifications or burden fundamental
rights they will be subjected to the strict scrutiny standard of review").
As to the right to travel, count II of plaintiffs' complaint did not explicitly mention the right.
Rather, they alleged that basing applicability of the exemption on a buyer's residency prior to
purchasing real estate in the City was unconstitutional because it impermissibly distinguished
between, inter alia, nonresident (including out-of-state) and resident buyers. We conclude that the
assertion that the discrimination against out-of-state residents implicates the right to travel can be
reasonably inferred from the complaint's allegations.
Having determined that plaintiffs adequately pleaded that the Ordinance affects the right to
travel, we next address the proper level of scrutiny. Plaintiffs urge that, as to the right to travel, strict
scrutiny applies, and defendants respond that rational-basis review is appropriate. Case law is not
directly on point.
For example, laws that establish durational residency requirements for certain governmental
benefits are subject to strict-scrutiny review. See, e.g., Shapiro v. Thompson, 394 U.S. 618, 634, 22
L. Ed. 2d 600, 615, 89 S. Ct. 1322, 1331 (1969) (applying strict-scrutiny review and holding invalid
as a restriction on the fundamental right to travel a one-year residency requirement for subsistence
welfare benefits), overruled on other grounds by Edelman v. Jordan, 415 U.S. 651, 39 L. Ed. 2d 662,
94 S. Ct. 1347 (1974); see also Memorial Hospital v. Maricopa County, 415 U.S. 250, 259, 39 L.
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Ed. 2d 306, 315, 94 S. Ct. 1076, 1082-83 (1974) (Court, applying strict-scrutiny review, struck down
Arizona statute that required one-year residency in a county as a condition of receiving
nonemergency hospitalization or medical care at county's expense; "medical care is as much 'a basic
necessity of life' to an indigent as welfare assistance. And, governmental privileges or benefits
necessary to basic sustenance have often been viewed as being of greater constitutional significance
than less essential forms of governmental entitlements"); Dunn v. Blumstein, 405 U.S. 330, 338, 31
L. Ed. 2d 274, 281-82, 92 S. Ct. 995, 1001 (1972) (applying strict-scrutiny analysis to invalidate, as
violative of rights to travel and vote, Tennessee durational residency law that required a voter to be
a resident of the state for one year and of the county for three months before the voter could vote).
In Attorney General v. Soto-Lopez, 476 U.S. 898, 911, 90 L. Ed. 2d 899, 911, 106 S. Ct.
2317, 2325 (1986), the Court, in a plurality opinion, invalidated a New York statute and
constitutional provision that provided a preference in civil service employment to veterans who lived
in the state when they entered military service, but denied a similar preference to resident veterans
who lived outside the state when they entered military service. Justice Brennan delivered the opinion
of the Court and noted that strict-scrutiny review should apply. Soto-Lopez, 476 U.S. at 906, 90 L.
Ed. 2d at 907, 106 S. Ct. at 2322.
In other factual scenarios, the Supreme Court has declined to define the appropriate standard,
although it has nevertheless struck down the enactments as unconstitutional under rational-basis
review. In Hooper v. Bernalillo County Assessor, 472 U.S. 612, 86 L. Ed. 2d 487, 105 S. Ct. 2862
(1985), for example, the Supreme Court considered whether a New Mexico statute that granted a
$2,000 property tax exemption to Vietnam veterans who resided in the state before May 8, 1976, but
not to those who resided in the state on or after that date, violated the equal protection clause of the
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fourteenth amendment. The Court did not address the proper standard of review to be applied in
right-to-travel cases, noting that if the statutory scheme does not pass even the rationality test, the
Court's inquiry ends. Hooper, 472 U.S. at 618, 86 L. Ed. 2d at 493, 105 S. Ct. at 2866. The Court
held that the discrimination the statute made between veterans who established residency before the
statutory date and those who arrived thereafter bore no rational relationship to one of the state's
objectives--encouraging veterans to move to New Mexico--because the state set the eligibility date
long after the triggering event, the date, had occurred. Hooper, 472 U.S. at 619, 86 L. Ed. 2d at 494,
105 S. Ct. at 2866-67. Next, the Court addressed the statute's second purpose--to reward veterans
who served before May 8, 1976. The Court noted that resident veterans may be offered preferential
treatment vis-a-vis nonveterans without offending the equal protection clause, but the statute at issue
was problematic because it conferred a benefit only on established resident veterans--those who
resided in the state before the statutory date. Hooper, 472 U.S. at 620-21, 86 L. Ed. 2d at 494-95,
105 S. Ct. at 2867-68. "The State may not favor established residents over new residents based on
the view that the State may take care of 'its own,' if such is defined by prior residence. Newcomers,
by establishing bona fide residence in the State, become the State's 'own' and may not be
discriminated against solely on the basis of their arrival in the State after May 8, 1976." Hooper, 472
U.S. at 623, 86 L. Ed. 2d at 496, 105 S. Ct. at 2868. Accordingly, the Court held that the equal
protection clause did not permit the State to establish a preference for established resident veterans
over newcomers in the retroactive apportionment of an economic benefit. Hooper, 472 U.S. at 623,
86 L. Ed. 2d at 497, 105 S. Ct. at 2869; see also Zobel v. Williams, 457 U.S. 55, 60-64, 72 L. Ed.
2d 672, 677-80, 102 S. Ct. 2309, 2313-15 (1982) (refusing to adopt a standard of review and
invalidating, as not withstanding even rational-basis scrutiny, Alaska's statutory scheme to distribute
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to its adult citizens income derived from its petroleum revenues in varying amounts based upon their
length of residency in the state; right to travel implicated because statute distinguished between
residents based upon when they arrived in the state).
In another right-to-travel case, the Court did not discuss the level of scrutiny, although,
arguably, in upholding a law, it applied rational-basis review. See Sosna v. Iowa, 419 U.S. 393, 406-
09, 42 L. Ed. 2d 532, 544-46, 95 S. Ct. 553, 561-62 (1975) (upholding one-year residency
requirement for maintaining divorce action on the basis that the state had a strong, traditional interest
in setting the terms of and procedures for marriage and divorce; right to migrate not violated as
appellant's access to desired state procedure was only temporarily delayed and because state may
reasonably desire to insulate divorce decrees from collateral attack).
We conclude that rational-basis review is appropriate in this case. The Soto-Lopez Court
held that the right to civil service employment, although not a necessity of life or the right to vote,
"is unquestionably substantial. The award of bonus points can mean the difference between winning
or losing civil service employment, with its attendant job security, decent pay, and good benefits."
Soto-Lopez, 476 U.S. at 908, 90 L. Ed. 2d at 909, 106 S. Ct. at 2324. Also, the Court noted that the
appellees had been permanently deprived of the veterans' credits they sought. Soto-Lopez, 476 U.S.
at 909, 90 L. Ed. 2d at 909, 106 S. Ct. at 2324. "Such a permanent deprivation of a significant
benefit, based only on the fact of nonresidence at a past point in time, clearly operates to penalize
appellees for exercising their rights to migrate." Soto-Lopez, 476 U.S. at 909, 90 L. Ed. 2d at 909,
106 S. Ct. at 2324.
We conclude that private housing (or a property tax exemption) does not constitute a
significant benefit or privilege like civil service employment (Soto-Lopez), subsistence welfare
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benefits (Shapiro), nonemergency hospitalization or medical care (Memorial Hospital), or voting
rights (Dunn). See also, e.g., Sylvester v. Commissioner of Revenue, 445 Mass. 304, 311, 837
N.E.2d 662, 667-68 (2005) (rational-basis review appropriate in assessing whether five-year
residency requirement for partial real estate tax exemption for disabled veterans violated right to
travel protected by equal protection clause; "residency requirement in the veterans' exemption does
not prevent new arrivals from purchasing property in Massachusetts or from establishing a domicile
here. It recognizes that the plaintiff, as a taxpayer, has no right to a particular rate of taxation, and
it is underpinned *** by the well-settled law" protecting states from undue federal interference in
the tax field); cf. Ball v. Village of Streamwood, 281 Ill. App. 3d 679, 683-85 (1996) (applying
rational-basis review to determine whether a real estate transfer tax imposed on sellers but exempting
those who purchased residences within the village violated the right to intrastate travel protected by
the equal protection clause; court concluded that no vital government benefit or privilege was
involved).
Thus, we now assess whether plaintiffs stated a claim that the Ordinance, under rational-basis
review, infringes on the rights to housing and travel in violation of equal protection. Plaintiffs argue
that they stated a claim that the Ordinance bears no rational relationship to a legitimate governmental
interest because there is no rational basis for creating a class of persons, such as Ratjerowski, who
live in the School District and pay taxes to fund the schools but live outside the corporate limits of
the City, and treating them differently from people who live in both the School District and the City.
Also, they contend that there is no rational basis for charging new residents a transfer tax when these
same persons will be paying property taxes, just like other City residents, to support the School
District. Finally, they urge that it was not appropriate to dismiss this case under section 2--615,
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because there is case law invalidating state laws under rational-basis review. See Hooper, 472 U.S.
at 623, 86 L. Ed. 2d at 497, 105 S. Ct. at 2869; Zobel, 457 U.S. at 60-64, 72 L. Ed. 2d at 677-80, 102
S. Ct. at 2313-15.
Defendants respond that the Ordinance, on its face, demonstrates, as does the
Intergovernmental Agreement, that its purpose is to increase school funding to help offset the costs
associated with new students moving into the City. Exempted from the tax are established residents
who will not add new burdens to the schools when they purchase new homes in the City. Residents
under this classification, according to defendants, do not create an additional burden to the district;
conversely, nonresident homestead purchasers do add to the economic burden by potentially
increasing the number of children entitled to attend the public schools. Requiring this class to pay
the Transfer Tax rationally and legitimately advances the City's purpose for passing the Ordinance.
Defendants urge that plaintiffs' allegations support the rational purpose and legitimate goal for the
Transfer Tax--supplemental school funding. Defendants also assert that it is beyond dispute that
providing adequate public schools is a legitimate governmental goal. Finally, they argue that the
Ordinance does not violate equal protection merely because the City and the School District
boundaries are not coterminous. Defendants contend that the fit need not be perfect; it need only
avoid being arbitrary. For example, the fact that Rajterowski was not exempt from the Transfer Tax
does not invalidate the Ordinance because it does not negate the Ordinance's legitimate purpose or
make it discriminatory.
We conclude that plaintiffs failed to state a claim that the Ordinance is not rationally related
to a legitimate governmental interest. "The rational basis test is particularly deferential in the context
of classification made by tax laws, and if a set of facts can be reasonably conceived that would
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sustain the classification, the tax must be upheld." Ball, 281 Ill. App. 3d at 683. Plaintiffs'
allegations that the Transfer Tax's purpose--to address school underfunding--targets only certain
classes of residents do not show that the law is arbitrary. The allegations, rather, reflect that the
Ordinance makes a reasonable distinction between those adding new burdens to the schools (who
are subject to the Transfer Tax) and those who do not add to the underfunding (who are exempt from
paying the tax). That the "fit" is not perfect, due to the lack of coterminous boundaries, does not
cause the law to fail for being arbitrary, under rational-basis review. City of New Orleans v. Dukes,
427 U.S. 297, 303, 49 L. Ed. 2d 511, 517, 96 S. Ct. 2513, 2517 (1976) ("States are accorded wide
latitude in the regulation of their local economies under their police powers, and rational distinctions
may be made with substantially less than mathematical exactitude. Legislatures may implement their
program step by step").
Hooper and Zobel, wherein the Court struck down the enactments at issue as not
withstanding even rational-basis review, do not compel a different conclusion. Although Hooper
involved a property tax exemption, the residency requirement in that case was a fixed-date
requirement: the New Mexico statute provided a property tax exemption for Vietnam veterans who
had established residency in the state before May 8, 1976. Hooper, 472 U.S. at 618, 86 L. Ed. 2d
at 493, 105 S. Ct. at 2862. The Court noted, quoting Zobel, that "the Constitution will not tolerate
a state benefit program that 'creates fixed, permanent distinctions...between...classes of concededly
bona fide residents, based on how long they have been in the State.' " Hooper, 472 U.S. at 623, 86
L. Ed. 2d at 496, 105 S. Ct. at 2869, quoting Zobel, 457 U.S. at 59, 72 L. Ed. 2d at 677, 102 S. Ct.
at 2312. Here, the exemption is not a fixed-date enactment.
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In sum, we conclude that the trial court did not err in dismissing count II of plaintiffs'
amended complaint.
C. Count III--Uniformity Clause of the Illinois Constitution
The uniformity clause of the Illinois Constitution provides that, "[i]n any law classifying the
subjects or objects of non-property taxes or fees, the classes shall be reasonable and the subjects and
objects within each class shall be taxed uniformly. Exemptions, deductions, credits, refunds and
other allowances shall be reasonable." Ill. Const. 1970, art. IX, §2.
In count III of their amended complaint, plaintiffs alleged that the Ordinance's exemption
violates the uniformity clause. They noted that the object of the Ordinance is to tax purchasers who
move into the City who bring new students into the School District from outside the City, because
they are the cause of the inadequate school funding. Plaintiffs alleged that the Ordinance created
several classes of taxpayers: resident buyers who purchase nonhomestead property; resident buyers
purchasing homestead property; and nonresident buyers purchasing homestead property. As to the
first class, plaintiffs alleged that there is no real and substantial difference between resident
homestead purchasers and resident nonhomestead purchasers and that the classification does not bear
some reasonable relationship to the object of the Ordinance, especially when "the only reason" the
City adopted the Ordinance was to address the School District's additional financial burden that
stems from new students moving into the district. In plaintiffs' view, the resident nonhomestead
purchasers are not adding to the School District's burden, yet they are not entitled to the same
exemption as resident homestead purchasers.
As to the second and third classifications, plaintiffs alleged that distinguishing between
resident and nonresident homestead buyers does not bear some reasonable relationship to the object
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of the Ordinance when the reason for the Ordinance is to address the School District's additional
financial burden that stems from new students moving into the district. They alleged that there is
no exemption for nonresident buyers who do not have children or whose children do not attend
public school in the School District (such as Rajterowksi); the Ordinance does not exempt buyers
who move to the City but already lived in the School District (but outside the City) and thus were
already paying property taxes and fees and are not bringing new students into the School District;
and the Ordinance does not tax buyers who move into the School District but outside the City and
who are bringing new children into the School District. Finally, they alleged that the Ordinance does
not exempt nonresident or resident nonhomestead buyers moving into areas of the City that are not
within the School District.
Plaintiffs further asserted that, if the School District is underfunded, the causes could be
declining property tax revenue, increases in the number of children of City residents who qualify for
the exemptions, increases in salary, changes in the amount of state and federal aid, increases in
insurance costs, and other expenses. The complaint cited to a study, the "2007 Sycamore Housing
Impact Analysis" prepared by Strategic Management Alliance in June 2007 (Study), which is not
contained in the record on appeal. Plaintiffs alleged that the Study did not quantify the number of
new students coming into the School District who were previously non-City residents. They alleged
that the City "has not and can not actually demonstrate and determine the number of children moving
into Sycamore from outside of Sycamore." Plaintiffs noted that the Study stated that 22.3% of new
home buyers were from the City; that 49% of new detached homes built since June 2004 had no
children living in them at the point of initial occupancy; and that 91% of townhouses and
condominiums built during that time had no children living in them at initial occupancy. Further,
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plaintiffs quoted from the Study with respect to sales of existing homes to non-City buyers: " 'The
average of 2.60 people per existing housing unit re-occupied in 2006 is slightly lower than the
Special Census findings from 2005 which showed 2.68 people lived in Sycamore's owner-occupied
homes on average. This difference does not prove that there are less children, but it does suggest
there are less people overall.' " Plaintiffs also quoted the following from the Study: " 'The findings
suggest that, of those who responded to the mail survey who were transfer taxpayers [i.e.,
nonresident purchasers], 18% said that they were not sending their children to Sycamore schools.'
" Plaintiffs alleged that the foregoing statements do not support the assertion that a large number
of new students are coming into the City from outside and causing an economic burden on the
School District. Thus, the difference among the classifications, in their view, is not real and
substantial and the exemptions as drawn are unreasonable because there is no reasonable relationship
between those taxed and those exempted. Finally, they assert that there is no reasonable relationship
to the object of the legislation when the tax applies to purchasers who end up residing in those
portions of the City that do not lie within the School District. For the following reasons, we
conclude that the trial court did not err in dismissing count III.
"To survive scrutiny under the uniformity clause, a nonproperty tax or fee classification must:
(1) be based on a real and substantial difference between the people taxed and those not taxed; and
(2) bear some reasonable relationship to the object of the legislation or to public policy." (Emphases
added.) Valstad v. Cipriano, 357 Ill. App. 3d 905, 914 (2005). "A plaintiff is not required to come
forward with any and all conceivable explanations for the tax and then prove each one unreasonable
***." Geja's Café v. Metropolitan Pier & Exposition Authority, 153 Ill. 2d 239, 248 (1992). Rather,
upon a good-faith uniformity challenge, the taxing body bears the "burden of producing a
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justification for the classification." Valstad, 357 Ill. App. 3d at 914; see also Geja's Café, 153 Ill.
2d at 248. Next, "plaintiff bears the burden of persuading the court that the justification is not
supported by facts or is insufficient as a matter of law." Valstad, 357 Ill. App. 3d at 914. Where the
plaintiff fails to meet his or her burden, judgment is proper as a matter of law. Geja's Café, 153 Ill.
2d at 249; see also Valstad, 357 Ill. App. 3d at 914.
This court's inquiry under a uniformity clause challenge is relatively narrow:
"[T]he court is not required to have proof of perfect rationality as to each and every taxpayer.
The uniformity clause was not designed as a straitjacket for the General Assembly. Rather,
the uniformity clause was designed to enforce minimum standards of reasonableness and
fairness as between groups of taxpayers." Geja's Café, 153 Ill. 2d at 252.
The uniformity clause "was not made to duplicate the limitation on the taxing power contained in
the equal protection clause." Searle Pharmaceuticals, Inc. v. Department of Revenue, 117 Ill. 2d 454,
467 (1987). Rather, the clause "imposes more stringent limitations than the equal protection clause
on the authority of a legislative body to classify the subjects and objects of taxation." DeWoskin,
306 Ill. App. 3d at 518. Nevertheless, a court's analysis is of limited scope because legislative
enactments carry the presumption of validity and because broad latitude is granted to legislative
classifications for taxing purposes. Allegro Services, Ltd. v. Metropolitan Pier & Exposition
Authority, 172 Ill. 2d 243, 250 (1996).
As to the first part of our inquiry, i.e., whether the exemption is based upon a real and
substantial difference between the people taxed and the people not taxed, this element is essentially
conceded in defendants' favor on appeal. In their amended complaint, plaintiffs alleged, in a
conclusory fashion, that there is no real and substantial difference between resident homestead
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purchasers and resident nonhomestead purchasers. They also alleged, again in a conclusory fashion,
that there is no real and substantial difference between resident and nonresident homestead
purchasers. On appeal, plaintiffs concede that there is a factual distinction between resident and
nonresident buyers of homestead real estate.
As to the second part of our inquiry, whether the tax classification bears some reasonable
relationship to the object of the enactment or to public policy, plaintiffs argue that the need for
funding for the School District is not reasonably related to the classification of resident buyers of
homestead real estate versus nonresident buyers of homestead real estate. They note that
nonresidents moving into the City who have no children do not add any economic strain to the
School District. According to plaintiffs, City residents who are also School District residents do
cause financial strain on the School District. Nonresidents moving into the City and the School
District "may" cause financial strain, "but not any more of a strain than the residents who are already
burdening the School District." Plaintiffs assert that the stated purpose of the Ordinance, to fund the
School District, cannot be met when it taxes those who may perhaps cause financial strain on the
School District in the future, while failing to tax the one group known to already cause financial
strain on the School District. Further, plaintiffs argue that the City cannot determine the number of
children moving into the City from outside the City. As they did in their complaint, plaintiffs note
that the City's Study did not quantify the new students entering the School District from outside the
City. Plaintiffs argue that the Study shows that nonresidents are not causing a school funding crisis.
Thus, the differential classification between residents and nonresidents is not reasonably related to
the school funding issue. Plaintiffs contend that, once a nonresident becomes a resident, he or she
begins paying property taxes to fund his or her use of the schools. An additional tax based upon the
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nonresident's failure to pay past property taxes for a benefit he or she was not receiving prior to
purchasing property within the City is not reasonable. Plaintiffs argue that this is especially true
given that the only group certain to use those benefits is the one group exempt from paying the tax.
Additionally, plaintiffs take issue with the fact that the Ordinance does not exempt purchasers
of nonhomestead real property, including residents who purchase nonhomestead real property. They
note that the exemption does not apply to any buyers of commercial property, even though these
buyers do not put any more strain on the School District than resident buyers of homestead real
estate, the only group excluded from paying the Transfer Tax. Finally, plaintiffs argue that a
uniformity clause analysis necessarily requires analysis of the facts and circumstances surrounding
the Ordinance's enactment and purpose and a determination of the least restrictive means of
achieving the legislative goal and, thus, precludes dismissal on the pleadings.
Defendants respond that the face of plaintiffs' amended complaint provides a reason for the
Ordinance that is clearly related to the classification of resident purchasers of homestead property
as exempt from paying the Transfer Tax. They point to plaintiffs' allegation that "[t]he object of the
legislation is to tax buyers who move into Sycamore who bring new students into the School District
from outside of Sycamore because the Defendant's [sic] assert that is what is causing what
Defendant[s] believe to be inadequate school funding." Defendants further note that plaintiffs
alleged that the "only reason" the City adopted the Ordinance "is to address the additional financial
burden to the School District that stems from new students moving into the School District."
Defendants argue that a reasonable basis for the classification exempting resident homestead
purchasers, who "by definition" will not be bringing new students into the School District, was
actually pleaded in the amended complaint.
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As to nonhomestead property, defendants argue that such purchasers include those who will
use the property as rental property, which could reasonably be expected to add families that would
add to the School District's financial burden. Nonhomestead property also includes commercial
property, which, defendants assert, adds to a community's growth, which necessarily increases the
burden upon the School District. Thus, defendants reason, when nonhomestead property is
purchased, the Transfer Tax imposed upon the purchase at the very least bears some reasonable
relation to the purchase. Next, as to the Study, defendants argue that: (1) plaintiffs' allegation that
the City cannot demonstrate the number of children moving into the City from outside it has no
factual basis in the complaint; (2) quantification of the children entering the City is not essential to
the inquiry because it is clear that homestead purchasers who already live in the City will not be
burdening the School District with additional students by virtue of their purchase of new homesteads
within the City, while nonresident homestead purchasers "have the clear potential to do so"; and (3)
the burden is not on defendants to prove any particular set of facts; so long as there is a set of facts
that can reasonably be conceived that would sustain the classification, as there is here, the
classification must be upheld.
We address first plaintiffs' argument that a uniformity clause challenge necessarily involves
a factual analysis and, therefore, precludes dismissal on the pleadings. We disagree. It has been
noted that, in the context of a uniformity clause challenge, a section 2--615 motion "is generally ***
inappropriate" because such claims involve a burden-shifting arrangement and summary judgment
"is more suited to the task." DeWoskin, 306 Ill. App. 3d at 523. However, "[w]hen the
reasonableness of a tax classification is determinable as a matter of law, a uniformity challenge may
be decided in the context of a section 2--615 motion." DeWoskin, 306 Ill. App. 3d at 523 (movie
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theater patron challenged county amusement tax; court held that as a matter of law, there was a
reasonable basis for exempting from county amusement tax patrons of organizations benefitting
community and not patrons of commercial organizations; exclusion of raffles and intertrack
wagering facilities from the definition of amusement was reasonable because participatory activities
and the operation of amusement devices are fundamentally different from passive entertainment, and
their exclusion was not arbitrary or unreasonable as a matter of law; however, whether the size of
an entertainment facility or the frequency with which an entity offered amusement activities justified
an exemption presented factual questions, as did the assessment of an exemption for amusements
sponsored by military and veterans organizations).
As to the Ordinance's differential treatment of residents and nonresidents, we conclude as a
matter of law that the exemption from the Transfer Tax for residents (but not for nonresidents) bears
a reasonable relationship to the school underfunding issue. It is certainly reasonable to impose upon
new residents the one-time burden, via the Transfer Tax, of contributing to the maintenance of a
School District. New residents are a reasonable class to target for the imposition of such a burden,
as they generally will add to the school population and costs. Plaintiffs' attempt to characterize the
Ordinance as imposing a tax burden on new residents for past school underfunding issues (for which
they necessarily are not responsible) is unavailing because it is not clear on this record that this is
the Ordinance's purpose. We cannot discern from this record that the Ordinance's purpose (sole or
otherwise) is to address an existing underfunding issue. It is equally plausible/reasonable to read the
Ordinance as a forward-looking enactment that seeks to have new users of the schools (i.e., primarily
new City residents) bear the cost at the commencement of their City residency for the impact they,
as a group, will have on the School District's finances. We will not second-guess the City's
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determination that property taxes alone are inadequate to address the added financial burden that new
students/residents impose on the schools.
Plaintiffs' reliance on the Study is misplaced, as the excerpts recited in the amended
complaint do not provide a sufficient factual basis for plaintiffs' allegation that new residents are not
causing school underfunding. Indeed, the excerpts themselves undercut plaintiffs' allegations: (1)
the "difference [i.e., the slight decrease from 2005 to 2006 in the average number of people in
existing homes purchased by non-City buyers] does not prove that there are less children, but it does
suggest that there are less people overall" (emphasis added); (2) "22.3% of new home buyers were
from Sycamore," which implies that the overwhelming majority (almost 80%) were nonresidents;
(3) "49% of new detached homes built since June of 2004 had no children at all living in them at the
point of initial occupancy," which implies that 51%, or a majority, did have children living in them;
and (4) "of those who responded to the mail survey who were transfer taxpayers [i.e., nonresident
purchasers], 18% said that they were not sending their children to Sycamore schools," which implies
that the overwhelming majority were doing so.
As to the Ordinance's treatment of homestead and nonhomestead purchasers, we conclude
as a matter of law that the exemption from the Transfer Tax for homestead purchasers (but not for
nonhomestead purchasers) bears a reasonable relationship to the issue of school funding. The
uniformity clause does not require that the class taxed be the sole or primary beneficiary of the tax.
Arangold Corp. v. Zehnder, 329 Ill. App. 3d 781, 798 (2002). "Rather, courts have held that
uniformity is satisfied even when those taxed benefit only indirectly [citation], or when others not
taxed benefit as well." Arangold, 329 Ill. App. 3d at 798. As defendants note, commercial property
encompasses rental property, and renters could reasonably be expected to add to the School District's
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student population. Further, nonresidential commercial property can reasonably be expected to add
to a community's growth through additional employment opportunities. These opportunities
certainly attract to the City families whose children would generally be expected to attend the public
schools.
For similar reasons, plaintiffs' allegations that certain other classifications should have been
exempted from the tax fail. They complain that there is no exemption for nonresident purchasers
who have no children or whose children do not attend public schools. Plaintiffs also protest that
there is no exemption for purchasers who formerly lived in the School District and moved to the City
and for purchasers who move to areas of the City that are not within the School District. Plaintiffs'
allegations fail to sufficiently state a uniformity clause claim because, as we noted above with respect
to nonhomestead purchasers, there exists an interrelationship wherein those classifications of
taxpayers indirectly benefit as a result of the Transfer Tax.
Ball v. Village of Streamwood, 281 Ill. App. 3d 679 (1996), is instructive. In Ball, taxpayers
challenged the constitutionality of an exemption to a village's real estate transfer tax that was
imposed, unlike in this case, upon sellers of real property. The exemption relieved sellers who
purchased new residences within the village from payment of the transfer tax. In assessing a
certified question4 asking whether the exemption violated the taxpayers' rights to uniformity, the
court first concluded that there was a difference between those taxed (those relocating outside the
village) and those not taxed (those remaining in the village). Ball, 281 Ill. App. 3d at 685. Next, the
court addressed whether the classification bore a reasonable relationship to the object of the
enactment. Referring to its earlier holding (in assessing, under rational-basis review, whether the
4
The question was certified under Supreme Court Rule 308 (134 Ill. 2d R. 308).
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exemption violated the taxpayers' rights to intrastate travel) that the village articulated "a rational
basis for structuring its tax in this manner" (Ball, 281 Ill. App. 3d at 685), specifically, that the
exemption encouraged community continuity and values, the court concluded that the tax and the
exemption did not violate the uniformity clause of the Illinois Constitution. Ball, 281 Ill. App. 3d
at 685;5 see also Stahl v. Village of Hoffman Estates, 296 Ill. App. 3d 550, 558-59 (1998) (finding
Ball controlling and affirming section 2--615 dismissal of action challenging constitutionality of
transfer tax exemption for sellers who lived on the property for one year if they purchased another
residence in the village within a certain period; the taxpayers who challenged the exemption moved
out of the village after transferring their property).
Arguably, school underfunding presents a more pressing issue than the preservation of
community continuity or values, as was the issue in Ball. In any event, the community-values-and
continuity rationale present in Ball is also a consideration here due to, as we noted above, the
interrelationship between various community groups and the quality/funding of the community's
public schools.
5
The Ball court relied on Nordlinger v. Hahn, 505 U.S. 1, 120 L. Ed. 2d 1, 112 S. Ct. 2326
(1992), wherein the Supreme Court addressed an equal protection challenge (without a right-to-travel
component) to a California law requiring property reassessment upon a change in ownership. The
law exempted from reassessment property transfers by persons over age 55 and transfers between
parents and their children. The Ball court noted that the Court upheld the exemptions, concluding
that a " '[s]tate has a legitimate interest in local neighborhood preservation, continuity, and
stability.' " Ball, 281 Ill. App. 3d at 684, quoting Nordlinger, 505 U.S. at 12, 120 L. Ed. 2d at 13,
112 S. Ct. at 2333.
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In sum, we conclude that the trial court did not err in dismissing count III of plaintiffs'
amended complaint.
D. Count IV--the City's Constitutional Authority
In count IV, plaintiffs alleged that, in enacting the Ordinance and entering into the
Intergovernmental Agreement, the City, a home rule unit, exceeded its constitutional (i.e., home rule)
authority in two respects: it (1) circumvented the School Code (105 ILCS 5/1--1 et seq. (West
2008)); and (2) exceeded its jurisdiction. For the following reasons, we conclude that the trial court
did not err in dismissing count IV.
Preliminarily, we note that the Illinois Constitution provides that "[h]ome rule units may
exercise and perform concurrently with the State any power or function of a home rule unit to the
extent that the General Assembly by law does not specifically limit the concurrent exercise or
specifically declare the State's exercise to be exclusive." (Emphases added.) Ill. Const. 1970, art.
VII, §6(I). Home rule units' powers are liberally construed. Ill. Const. 1970, art. VII, §6(m). As
previously noted, a transfer tax in and of itself does not "offend any constitutional provisions." Stahl,
296 Ill. App. 3d at 554; see also 65 ILCS 5/8--3--19 (West 2006) (authorizing home rule
municipalities to impose, upon prior approval by referendum, real estate transfer taxes).
The constitution permits intergovernmental cooperation. It provides:
"Units of local government and school districts may contract or otherwise associate
among themselves *** to obtain or share services and to exercise, combine, or transfer any
power or function, in any manner not prohibited by law or by ordinance. *** Participating
units of government may use their credit, revenues, and other resources to pay costs and to
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service debt related to intergovernmental activities." (Emphasis added.) Ill. Const. 1970, art.
VII, §10(a).
Similarly, the Intergovernmental Cooperation Act addresses intergovernmental cooperation:
"Any power or powers, privileges, functions, or authority exercised or which may be
exercised by a public agency6 of this State may be exercised, combined, transferred, and
enjoyed jointly with any other public agency of this State and jointly with any public agency
of any other state or of the United States to the extent that laws of such other state or of the
United States do not prohibit joint exercise or enjoyment and except where specifically and
expressly prohibited by law." (Emphasis added.) 5 ILCS 220/3 (West 2008).
The Intergovernmental Cooperation Act also permits intergovernmental contracts:
"Any one or more public agencies may contract with any one or more other public
agencies to perform any governmental service, activity or undertaking or to combine,
transfer, or exercise any powers, functions, privileges, or authority which any of the public
agencies entering into the contract is authorized by law to perform, provided that such
contract shall be approved by the governing bodies of each party to the contract and except
where specifically and expressly prohibited by law. Such contract shall set forth fully the
purposes, powers, rights, objectives and responsibilities of the contracting parties."
(Emphasis added.) 5 ILCS 220/5 (West 2008).
As to the first aspect of count IV, plaintiffs alleged that the Ordinance created a new source
of funds to supplement the School District's operating revenues and, as such, circumvented the
6
The term "public agency" includes units of local government and school districts. 5 ILCS
220/2 (West 2008).
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School Code's (105 ILCS 5/1--1 et seq. (West 2008)) procedures for raising tax revenues for schools.
Plaintiffs alleged that, in the School Code, the legislature established a mechanism for funding public
education. Plaintiffs alleged that increases in school funding must be the subject of proper school
board resolution and that the school board must submit to the School District's voters for referendum
a proposition to increase the annual tax rate for educational purposes. 105 ILCS 5/17--3 (West
2008). They further alleged that the Ordinance that adopted the Transfer Tax (that is to be used to
fund the School District) was not a referendum submitted to all School District voters and was not
treated as a tax levy for educational purposes, as required by the School Code. Conceding that some
statutes specifically authorize municipalities to give certain portions of their tax revenues to public
school districts,7 plaintiffs alleged that there is no statutory authority, including the School Code,
permitting a municipality to give Transfer Tax revenues to any public school district. Accordingly,
they alleged that the City, without legal authority, circumvented the School Code by raising tax
revenues for schools without following the procedures set forth in the statute.
7
As an example, plaintiffs specifically referred in their complaint to the Local Government
Distributive Fund established in the State Revenue Sharing Act (30 ILCS 115/0.1 et seq. (West
2008)), which requires the Treasurer to allocate to a special fund certain income tax revenues and
pay therefrom certain amounts to municipalities and counties. 30 ILCS 115/1 (West 2008).
Municipalities and counties must use such funds "solely for the general welfare of the people of the
State of Illinois, including financial assistance to school districts, any part of which lie within the
municipality or county, through unrestricted block grants for school purposes carried out within the
municipality or county making the grant" (30 ILCS 115/3 (West 2008)).
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"[T]he legislature has enacted a comprehensive scheme for the creation, management and
operation of Illinois schools. *** Thus the legislature, pursuant to the constitutional mandate,
exercises plenary power over the Illinois school system." Board of Education of School District No.
150 v. City of Peoria, 76 Ill. 2d 469, 476 (1979); see also Ill. Const. 1970, art. X, §1 ("The State has
the primary responsibility for financing the system of public education" (emphasis added)).
Section 17--3 of the School Code, upon which plaintiffs rely, addresses additional tax levies
and provides, in relevant part:
"The school board in any district having a population of less than 500,000 inhabitants
may, by proper resolution, cause a proposition to increase, for a limited period of not less
than 3 nor more than 10 years or for an unlimited period, the annual tax rate for educational
purposes to be submitted to the voters of such district at a regular scheduled election."
(Emphases added.) 105 ILCS 5/17--3 (West 2008).
Defendants respond that the City may share with the School District the revenue generated
by the Transfer Tax. They note that, as a home rule entity, the City can exercise any power
pertaining to its government and affairs (Ill. Const. 1970, art. VII, §6(a)). Further, defendants assert
that both the constitution and statutes permit intergovernmental cooperation. As to the School Code,
defendants argue that it does not prohibit a school district from receiving funds from sources other
than its own property tax levy and, in any event, the City, not the School District, passed the
Ordinance at issue. The City, according to defendants, is not subject to the School Code's
provisions. The statute establishes a mechanism by which a school district may submit a referendum
to its voters to increase the district's annual tax levy; in enacting the Ordinance, the City did not and
could not increase the School District's annual tax levy or circumvent the School Code. Defendants
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argue that School District funding pertains to the City's government and affairs because it promotes
the general prosperity and welfare of the community and that the expenditure of tax money need not
benefit all taxpayers equally to be constitutional.
We agree with defendants that plaintiffs' reliance on section 17--3 of the School Code is
misplaced because that provision addresses the obligations of school boards, not municipalities. We
also agree with defendants that, in their complaint, plaintiffs pointed to no provision in the School
Code that specifically restricts a municipality's powers to forward monies to school districts.
Further, the constitution provides that the State has primary responsibility for financing public
education. Ill. Const. 1970, art. X, §1. However, it does not confer on the State exclusive
responsibility for school funding. Because a home rule unit may exercise concurrently with the State
any power of a home rule unit, in the absence of any specific legislative limitation on home rule
units' powers, or the State's exclusive exercise of power, over schools, we cannot conclude that
plaintiffs stated a claim that the City exceeded its authority by circumventing the School Code.
We find City of Peoria instructive. In that case, a home rule municipality enacted ordinances
imposing taxes upon the witnessing of or participation in amusements and upon the privilege of
purchasing food or alcoholic beverages served at restaurants or taverns. The taxes were paid by
consumers, but the ordinances also imposed on establishment operators and owners the duties of
collecting the taxes and keeping records of tax receipts and imposed on them the obligation to file
tax returns reflecting such receipts. The school district and park district challenged the ordinances
as unenforceable against them. As to the school district, the supreme court held that the ordinances
imposed duties upon the board of education that were not authorized, such as the keeping of records,
examination of books, and collection of the taxes. City of Peoria, 76 Ill. 2d at 476-77. These duties
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were over and above those imposed upon the entity by the legislature. City of Peoria, 76 Ill. 2d at
476-77. Further, the court held that the ordinances conferred on the school district powers that it did
not have by statute, such as the power to collect taxes on behalf of the city and to hold them as
trustee. City of Peoria, 76 Ill. 2d at 477. Thus, the ordinances constituted the unauthorized
regulation of the school district, contrary to the constitution (Ill. Const. 1970, art. X, §1 ("The State
shall provide for an efficient system of high quality public educational institutions and services")).
City of Peoria, 76 Ill. 2d at 477.8
City of Peoria is distinguishable because, in that case, the municipality's ordinances burdened
the school district by requiring it to, among other things, collect the municipal tax and maintain
records. Here, the Transfer Tax merely confers benefits to the School District by forwarding to it
funds to enable the district to carry out its operations. This distinction is critical because the City,
via the Ordinance and by entering into the Intergovernmental Agreement, has neither infringed on
the State's power nor burdened the School District.
Plaintiffs next argue that the City has no obligation to solve a school revenue shortage and,
thus, any transfer of funds to the district constitutes a donation or gift. In plaintiffs' view, the City
cannot donate money to the School District because this does not pertain to the City's government
and affairs. See Ill. Const. 1970, art. VII, §6(a) ("a home rule unit may exercise any power and
perform any function pertaining to its government and affairs including, but not limited to, the power
*** to tax").
8
As to the park district, the court held that the ordinances did not constitute unauthorized
regulation, because municipalities had explicit statutory authority to establish and maintain parks.
City of Peoria, 76 Ill. 2d at 477.
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Plaintiffs rely on an Attorney General opinion that addressed a proposed agreement to share
sales tax revenue between the City of Belleville, a home rule unit, and St. Clair County. 1978 Ill.
Att'y Gen. Op. 165. The proposed agreement provided that, whenever the city received sales tax
revenue from businesses located in territory that had been newly annexed by the city, the city would
share a portion of the tax with the county, which was no longer receiving tax revenues from the
businesses. The county was not obligated to provide the city with any consideration for the proposed
agreement. The Attorney General opined that the city did not have authority to enter into the
proposed agreement and that the agreement was, therefore, invalid. 1978 Ill. Att'y Gen. Op. 165.
Although constitutional and statutory provisions addressing intergovernmental cooperation
authorized cities to contract with counties, they did not authorize cities to donate city funds to
counties, which was, in essence, what the city was proposing to do. 1978 Ill. Att'y Gen. Op. 165.
According to the Attorney General, a home rule municipality's powers are limited to strictly local
affairs and do not encompass those involving other municipalities, the county, or the State. 1978
Ill. Att'y Gen. Op. 165. Thus, the city was under no legal obligation to assist the county in
remedying the financial problems that were caused when businesses located in territory annexed by
the city were no longer subject to the county's service occupation tax. 1978 Ill. Att'y Gen. Op. 165.
Plaintiffs' reliance on the foregoing Attorney General opinion is misplaced. In our view the
critical distinction between the Transfer Tax and the City of Belleville's proposed arrangement with
St. Clair County is the nature of the benefit received by the party collecting the tax. In this case, the
City benefits from forwarding Transfer Tax revenues to the School District because better-financed
schools benefit the community (which includes the portions of the School District that are within the
City) as a whole. In the scheme proposed by the City of Belleville, as the Attorney General
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specifically noted, the county was not obligated under the agreement to pay any consideration
therefor. Indeed, for sharing sales tax revenue with the county, Belleville received no benefit in
return. Its transfer of tax revenue was purely gratuitous, which is not the case here (as we can
discern from the complaint's allegations).
For the same reason that we reject plaintiff's reliance on the Attorney General Belleville
opinion, we also reject the second aspect of plaintiffs' claim in count IV. Therein, plaintiffs alleged
that Transfer Tax revenues will be used to fund the School District, which includes areas outside the
City's corporate boundaries and jurisdiction (because the entities' boundaries are not coterminous).
They alleged that the City has no authority to pass or enforce an ordinance that has an extraterritorial
effect by disbursing tax monies to the School District. In our view, plaintiffs failed to state a claim
that the City exceeded its authority. Again, better-financed schools benefit the community as a
whole. See, e.g., Board of Library Directors v. City of Lake Forest, 17 Ill. 2d 277, 285 (1959)
(upholding statute requiring township to pay to cities the proceeds of township library tax collected
on property lying within cities; fact that libraries maintained by the cities were located outside the
boundaries of township did not invalidate the levy; "the true test is the enhancement of the general
welfare of the township levying the tax"). The allegation that there are portions of the School
District that are not within the City's boundaries does not form the basis of a claim for relief.
In summary, we conclude that the trial court did not err in dismissing plaintiffs' claim in
count IV that the City exceeded its constitutional authority.
E. Count V--the School District's Authority
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Finally, in count V, plaintiffs asserted that the School District exceeded its constitutional
authority by entering into an intergovernmental agreement for the City to collect taxes and give them
to the School District and for the School District to accept the tax revenues.
Specifically, plaintiffs alleged that, since the Transfer Tax will be used to fund the School
District, which includes areas outside the City's boundaries and jurisdiction, the Ordinance has an
extraterritorial effect. An intergovernmental agreement, plaintiffs alleged, cannot be used in this
manner.
They also alleged that the School Code and other statutes provide a complete and specific
method for financing public schools. For example, the School District, under the School Code, can
levy only ad valorem (i.e., according to value) taxes on real property (105 ILCS 5/17--2 (West 2008)
("The school board of any district having a population of less than 500,000 inhabitants may levy a
tax annually, at not to exceed the maximum rates and for the specified purposes, upon all the taxable
property of the district at the value, as equalized or assessed by the Department of Revenue as
follows")). Plaintiffs alleged that the School Code does not give the School District the authority
to impose the Transfer Tax either directly or indirectly through the City and does not give the School
District the authority to receive Transfer Tax revenues from the City.
Thus, in summary, plaintiffs alleged that the Intergovernmental Agreement is invalid because
it has an extraterritorial effect and because the School District does not have statutory authority to
impose (directly or indirectly) a transfer tax or to receive transfer tax revenues. On appeal, plaintiffs
address only the statutory authority and not the extraterritorial aspect of their claim. We limit our
analysis accordingly and, for the following reasons, conclude that the trial court did not err in
dismissing count V.
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We begin by reviewing the powers granted to non-home-rule entities such as the School
District and the authority they may exercise via intergovernmental agreements. The constitution
provides that school districts "shall have only powers granted by law." Ill. Const. 1970, art. VII, §8.
This provision preserves the concept of "Dillon's Rule." Under "Dillon's Rule," non-home-rule units
possess only those powers that are specifically conveyed by the constitution or by statute or that are
necessarily implicit from the express authority. Commonwealth Edison Co. v. City of Warrenville,
288 Ill. App. 3d 373, 380 (1997); Fischer v. Brombolich, 207 Ill. App. 3d 1053, 1059 (1991).
Because a non-home-rule entity derives its powers only from "an express grant from the legislature,
the statutes granting this power are strictly construed, and any doubt concerning an asserted power
is resolved against the [non-home-rule entity]." Fischer, 207 Ill. App. 3d at 1059.
As plaintiffs note, the Attorney General has, in various opinion letters, consistently opined
that non-home-rule entities may not, by entering into intergovermental agreements, circumvent
statutory requirements or limitations. See, e.g., 2005 Ill. Att'y Gen. Op. No. 05--010 ("the
Intergovernmental Cooperation section of the Constitution and its statutory counterpart, the
Intergovernmental Cooperation Act, are not grants of authority to undertake jointly functions that
the cooperating entities cannot undertake individually"); 2000 Ill. Att'y Gen. Op. No. 00--015
(constitutional and statutory intergovernmental cooperation provisions "are not *** independent
grant[s] of authority and cannot authorize an entity to do that which is not otherwise authorized or
permitted by law"); 1998 Ill. Att'y Gen. Op. No. 98--014 (same).
Certain opinion letter factual scenarios are instructive. In one letter, the Attorney General
opined that a public group self-insurance fund, whose members consisted of units of local
government and state agencies, could (as to certain of its members) expand its coverage to provide
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group health insurance benefits for its members' employees and their dependents. 1998 Ill. Att'y
Gen. Op. No. 98--014. Specifically, counties and home rule units could jointly self-insure the
benefits, but non-home-rule municipalities did not have that authority because they did not have the
independent authority to self-insure and the Intergovernmental Cooperation Act did not
independently grant them authority to do so. 1998 Ill. Att'y Gen. Op. No. 98--014.
In another opinion, the Attorney General addressed the authority of a township (which is a
non-home-rule unit) to contract with a private corporation to provide for the collection and disposal
of waste and recyclables from residences within the township's unincorporated areas, as well as
commercial waste generated by the township. The questions posed were whether referendum
approval was a prerequisite to the exercise of such authority and whether, in the absence of
referendum approval, the township could implement the plan through an intergovernmental
agreement between it and the county. The Attorney General opined that (pursuant to the relevant
statute) referendum approval was a prerequisite to the township's contemplated contract and that the
referendum requirement could not be circumvented through the use of an intergovernmental
agreement with the county. 2000 Ill. Att'y Gen. Op. No. 00--015. "An intergovernmental agreement
by which the county would facilitate waste collection in a single township, without relation to waste
management in surrounding areas, is not consistent with the apparent legislative intent of" a statute
permitting county-wide waste management plans. 2000 Ill. Att'y Gen. Op. No. 00--015. Further,
another statute that permitted counties to contract with various governmental entities for waste
disposal did not specifically mention townships. 2000 Ill. Att'y Gen. Op. No. 00--015.
Finally, in another letter, the Attorney General opined that an entity formed under an
intergovernmental cooperation agreement between home rule and non-home-rule municipalities was
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bound by statutory limitations governing its non-home-rule members. 2005 Ill. Att'y Gen. Op. No.
05--010. Specifically, home rule members were exempt from competitive bidding statutes when
seeking contractors to develop the proposed South Suburban Airport in Peotone. 2005 Ill. Att'y Gen.
Op. No. 05--010. Non-home-rule municipalities had more limited powers and were subject to the
State's procurement requirements. 2005 Ill. Att'y Gen. Op. No. 05--010.
We find the foregoing opinions well reasoned and persuasive. See Vine Street Clinic v.
HealthLink, Inc., 222 Ill. 2d 276, 283 (2006) (Attorney General's well-reasoned opinions
"interpreting or construing an Illinois statute are persuasive authority and are entitled to considerable
weight in resolving a question of first impression, although they do not have the force and effect of
law"). We reject defendants' assertion that the foregoing Attorney General opinion letters are
inapposite because the statutes at issue "expressly prohibited" the non-home-rule entities from
performing certain acts. To the contrary, the provisions at issue in the opinions did not expressly
prohibit certain acts. See 2005 Ill. Att'y Gen. Op. No. 05--010 (stating that section 11--103--10 of
the Municipal Code (65 ILCS 5/11--103--10 (West 2004)) allows municipalities to jointly exercise
their statutory powers to operate airports, but does not, expressly or impliedly, remove the limitations
imposed on them by other laws); 2000 Ill. Att'y Gen. Op. No. 00--015 (opining that article 210 of
the Township Code (60 ILCS 1/210--5 et seq. (West 1998)) expressly authorized townships, with
referendum approval, to contract for waste disposal and that referendum requirement could not be
circumvented through use of intergovernmental agreement with a county); 1998 Ill. Att'y Gen. Op.
No. 98--014 (noting that section 10--4--2 of the Illinois Municipal Code (65 ILCS 5/10--4--2 (West
1996)) does not grant non-home-rule municipalities the option to self-insure, but not noting that it
expressly prohibited the option).
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Thus, as we have noted: (1) non-home-rule units such as the School District may exercise
only those powers granted to them by the constitution or by statute, together with such implied
powers as are essential, not merely convenient, to carry out their express powers; and (2) the power
to cooperate intergovernmentally cannot authorize an agreement that contravenes statutory
prohibitions or limitations that apply to the participating entities. In count V, plaintiffs sufficiently
alleged the foregoing. They alleged that the School District, as a public school district, did not have
the authority to enter into an intergovernmental agreement to enact a Transfer Tax or receive
Transfer Tax revenues where the School Code does not authorize such acts.9
Next, we assess the School District's statutory authority to enact the Transfer Tax or receive
Transfer Tax revenues. School boards or districts do not have an inherent power to levy taxes. In
re Application of the Du Page County Collector, 294 Ill. App. 3d 868, 870 (1998). Rather, that
power is granted by the legislature and is strictly construed. Du Page County Collector, 294 Ill. App.
3d at 870.
Plaintiffs argue that they adequately pleaded that, although the City may have the authority
to enact a Transfer Tax, the School District does not have independent authority to enact (directly
or indirectly) such a tax to generate additional revenues. Plaintiffs assert that, like the township in
the opinion letter addressing waste collection, the School District cannot circumvent the School
9
Technically, although they did allege that the School District is a public school district that
exceeded its constitutional authority, plaintiffs did not specifically allege that the School District is
a non-home-rule entity. Elsewhere in their complaint, they alleged that the City is a home rule unit.
We do not find plaintiffs' failure to specifically allege that the School District is a non-home-rule
entity fatal to their claim.
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Code or other statutes by entering into an intergovernmental agreement to receive Transfer Tax
revenues when it does not have independent authority to do so. Plaintiffs argue that the School Code
authorizes the School District to impose property tax levies, but not transfer taxes. Thus, an
intergovernmental agreement cannot give the School District authority to receive tax revenues
generated by the City's Transfer Tax.
Defendants respond that the City and not the School District enacted the Transfer Tax
pursuant to its statutory and constitutional authority and assert that plaintiffs have not provided any
legal authority expressly prohibiting the distribution of Transfer Tax proceeds to the School District.
They urge that plaintiffs, therefore, have failed to state a claim that the School District exceeded its
authority or that the Intergovernmental Agreement is invalid. Defendants further note that section
10--20 of the School Code grants school districts wide powers as to school matters and shows that
school districts are not restricted to powers expressly enumerated in the School Code. Section 10--
20 of the School Code provides:
"The school board has the powers enumerated in the Sections of this Article
following this Section. This enumeration of powers is not exclusive, but the board may
exercise all other powers not inconsistent with this Act that may be requisite or proper for
the maintenance, operation, and development of any school or schools under the jurisdiction
of the board. This grant of powers does not release a school board from any duty imposed
upon it by this Act or any other law." (Emphasis added.) 105 ILCS 5/10--20 (West 2008).
Subsequent statutes address school boards' powers to, inter alia, "provide for the revenue necessary
to maintain schools in their districts" (105 ILCS 5/10--20.3 (West 2008)), visit and inspect schools
(105 ILCS 5/10--20.6 (West 2008)), appoint teachers and fix their salaries (105 ILCS 5/10--20.7
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(West 2008)), and develop and implement policies of hiring minority teachers (105 ILCS 5/10--20.7a
(West 2008)). Plaintiffs respond that section 10--20 grants school districts only incidental powers
and grants them only so long as those powers do not conflict with any other state law.
We conclude that plaintiffs failed to state a claim that the Intergovernmental Agreement is
invalid because the School District exceeded its authority in imposing (directly or indirectly) a
Transfer Tax and agreeing to receive Transfer Tax revenues. We disagree with plaintiffs that this
case is similar to the Attorney General opinion letter addressing waste collection. There, the
Attorney General opined that a township could not circumvent a statutory limitation (i.e., referendum
approval) through the use of an intergovernmental agreement. Here, in their amended complaint,
plaintiffs alleged that the enactment of a transfer tax and the receipt of revenues thereunder were not
consistent with, specifically, the School Code provision that specifically permits school boards to
impose ad valorem taxes on real property (105 ILCS 5/17--2 (West 2008)). Plaintiffs' complaint
alleged that school districts can levy only property taxes and not transfer taxes and, thus, in the
absence of specific authority to enact the Transfer Tax, the Intergovernmental Agreement is void.
In our view, plaintiffs overlook the fact that the City and not the School District enacted the Transfer
Tax and that none of the School Code provisions upon which they rely prohibits a school district
from receiving transfer tax revenues. Accordingly, we conclude that the trial court did not err in
dismissing count V.
IV. CONCLUSION
For the foregoing reasons, the judgment of the circuit court of De Kalb County is affirmed.
Affirmed.
HUTCHINSON and BURKE, JJ., concur.
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Rajterowski v. The City of Sycamore
Combined Opinion