The Village of Arlington Heights v. Pappas

2016 IL App (1st) 151802

SIXTH DIVISION
November 10, 2016

No. 1-15-1802

THE VILLAGE OF ARLINGTON HEIGHTS, ) Appeal from the
a Municipal Corporation, ) Circuit Court of
) Cook County.
Plaintiff-Appellant, )
)
v. )
)
MARIA PAPPAS, as County Treasurer of Cook County, )
)
Defendant and Third-Party Plaintiff-Appellee, )
)
) No. 2013 CH 23790
)
(The County Of Cook, The Forest Preserve District of )
Cook County, Wheeling Township, Arlington Heights )
School District No. 25, Township School District 214, ) Honorable
Harper Community College District 512, The Arlington ) Franklin U. Valderrama,
Heights Park District, The Metropolitan Water ) Judge Presiding.
Reclamation District of Greater Chicago, and The )
Northwest Mosquito Abatement District, Third-Party )
Defendants-Appellees ). )

JUSTICE ROCHFORD delivered the judgment of the court, with opinion.
Presiding Justice Hoffman and Justice Cunningham concurred
in the judgment and opinion.

OPINION

¶1 The Village of Arlington Heights (Village) appeals an order of the Cook County circuit

court granting summary judgment in favor of the Cook County Treasurer (Treasurer) on the

Village’s declaratory judgment action and finding that the Treasurer had the authority to seek

repayment from the Village for refunds the Treasurer made to taxpayers of certain incremental

tax payments received by the Village during the lifetime of two tax increment financing (TIF)

districts. In so finding, the circuit court rejected arguments that the Treasurer lacked the authority

to seek repayment and that third-party taxing districts were responsible for a pro rata share of the

repayment to the Treasurer of the refunds. We affirm.
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¶2 I. Background Information Regarding Property Tax Collection and TIFs

¶3 The Treasurer is the county collector for Cook County (35 ILCS 200/19-35 (West 2012))

and is responsible for collecting all property taxes for and distributing tax revenue to the

hundreds of local taxing districts located within Cook County. 35 ILCS 200/20-85 (West 2012).

The process the Treasurer must follow when collecting and distributing property tax revenue

varies depending on whether a TIF district has been established.

¶4 When a TIF district has not been adopted, the Property Tax Code establishes the process

the Treasurer must follow. Pursuant to the Property Tax Code, all taxing districts, other than a

school district subject to the authority of a Financial Oversight Panel pursuant to article 1H of the

School Code (105 ILCS 5/1H-15 (West 2012)), must certify the amounts of their annual property

tax levy to the county clerk. 35 ILCS 200/18-15(a) (West 2012). The county clerk determines the

total equalized assessed value (EAV) of real properties located within each taxing district and

calculates the appropriate tax rate on this EAV to produce the certified amount of the property

tax levy. 35 ILCS 200/18-45 (West 2012). The Treasurer collects the taxes, deposits them in the

so-called Class A fund (55 ILCS 5/3-11003 (West 2012)), and distributes to each taxing district

its respective share of property tax revenue in proportion to the rates established by the county

clerk. 35 ILCS 200/18-150 (West 2012). The property tax revenue is deposited in the taxing

districts’ respective “general corporate funds” to be used for general corporate purposes.

¶5 When there is a TIF district, the Tax Increment Allocation Redevelopment Act (TIF Act)

(65 ILCS 5/11-74.4-1 (West 2012)) applies. The TIF Act was adopted by the legislature “to

provide municipalities with the means to eradicate blighted conditions by developing or

redeveloping areas so as to prevent the further deterioration of the tax bases of these areas and to

remove the threat to the health, safety, morals, and welfare of the public that blighted conditions

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present.” Board of Education, Pleasantdale School District No. 107 v. Village of Burr Ridge, 341

Ill. App. 3d 1004, 1010 (2003) (citing 65 ILCS 5/11-74.4-2(a), (b), (c) (West 1994)). Under the

TIF Act, after notice and a hearing, a municipality may adopt an ordinance establishing a TIF

district for 23 years, approving a redevelopment plan, and designating redevelopment project

areas within that TIF district (65 ILCS 5/11-74.4-3.5, 11-74.4-4 (West 2012)), and the

municipality may pass an ordinance adopting tax increment allocation financing for the 23-year

life of the TIF district. 65 ILCS 5/11-74.4-8 (West 2012). If the municipality passes an ordinance

adopting tax increment allocation financing, the county clerk determines the total value for all

properties within the redevelopment project area inside the TIF district, referred to as the total

“initial equalized assessed value” (initial EAV). 65 ILCS 5/11-74.4-9(a) (West 2012). Each year

thereafter while the TIF district is effective, the county clerk determines the actual current EAV

of these properties. 65 ILCS 5/11-74.4-9(c) (West 2012). If the actual EAV of these properties

exceeds the initial EAV, then that incremental increase is taxed. The Treasurer collects the tax on

the incremental increase in property value (tax increment) through the Class A fund and pays all

of it to the municipal treasurer, who deposits it in a “special tax allocation fund” to pay the

redevelopment project costs and any obligations incurred in the payment thereof. 65 ILCS 5/11-

74.4-8(b) (West 2012). None of the tax increment goes to the other taxing districts in the TIF

district. In effect, the tax increment, some of which normally would have been distributed to the

other taxing districts in the absence of a TIF district, is diverted in total to the municipality for

the 23-year lifetime of the TIF district.

¶6 The Treasurer collects and distributes to the other taxing districts in the redevelopment

project area only the taxes on the initial EAV (or on the current EAV, whichever is lower) for the

23 years the TIF district is in effect, and thus the amount of property tax dollars that the taxing

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districts (other than the municipality) get from the TIF district is effectively frozen for 23 years.

65 ILCS 5/11-74.4-8(a) (West 2012).

¶7 At the expiration of the TIF district’s 23-year lifetime, the tax increment is no longer paid

only to the municipality for deposit in the special tax allocation fund but is distributed to all the

taxing districts in the former redevelopment project area pro rata for use in their general

corporate funds pursuant to the Property Tax Code. 35 ILCS 200/18-150 (West 2012).

¶8 II. The Facts of This Case

¶9 The Village established TIF District One in downtown Arlington Heights, south of the

Northwest Highway, in 1983, and established TIF District Two in downtown Arlington Heights,

north of the Northwest Highway, in 1986. The Village developed and redeveloped various

properties within those TIF districts, including three public garages, Harmony Park, a train

station, a performing arts theater, and older buildings in the downtown area. The tax increment

attributable to the increase in property values in TIF District One over 23 years was

approximately $45 million, while the tax increment attributable to the increase in property values

in TIF District Two over 23 years was approximately $29 million. Pursuant to the TIF Act, the

Village treasurer received 100% of those tax increments and deposited them in the special tax

allocation funds, and they were used to pay for the improvements to the properties.

¶ 10 Meanwhile, owners of certain taxable real property within TIF District One and TIF

District Two filed successful tax objections with the Cook County Board of Review to the

assessed value of their properties during the 23-year lifetimes of the TIF districts. As a result of

the successful tax objections, the circuit court of Cook County and the Illinois Property Tax

Appeal Board (IPTAB) ordered the Treasurer to issue refunds to these taxpayers in the amounts

of the tax increments that the taxpayers overpaid plus interest. The Treasurer issued the refunds

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to comply with the orders of the court and the IPTAB and to prevent the accrual of statutory

interest. See 35 ILCS 200/23-20 (West 2012).

¶ 11 After paying these refunds out of the Class A fund, the Treasurer sought reimbursement

from the Village. The Treasurer alleges that for refunds made during the 23-year statutory

lifetime of TIF Districts One and Two, she reimbursed herself by deducting the refund amounts

from the next tax increments that were being distributed to the Village for deposit into the special

tax allocation funds pursuant to the TIF Act. However, some of the refund orders for over-

assessments of tax increments during the TIF districts’ lifetimes were entered after the expiration

of the TIF districts, when the Property Tax Code, and not the TIF Act, controlled the distribution

of the tax increments. Under the Property Tax Code, the tax increments were distributed to all

the applicable taxing districts pro rata for use in their general corporate funds rather than

distributed in their entirety to the Village for deposit in the special tax allocation funds. See 35

ILCS 200/18-150 (West 2012). As the special tax allocation funds were no longer receiving new

tax increments, the Treasurer looked to the Village for the monies necessary to reimburse her for

the tax increment refunds she made after the TIF districts’ 23-year statutory lifetimes (sometimes

referred to herein as the post-TIF refund amounts).

¶ 12 On June 4, 2012, the Treasurer sent a letter to the Village’s Finance Director requesting

that the Village reimburse her for her post-TIF refund payments.

¶ 13 The Village then filed a complaint seeking a declaration that it was not liable to repay the

Treasurer for the post-TIF refund payments, or, in the alternative, that the burden of repaying the

Treasurer was shared by all the taxing districts located within the Village’s TIF districts. The

complaint also sought to enjoin the Treasurer from deducting the amount of the post-TIF refunds

from any distribution of general property tax revenue due and owing to the Village under the

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Property Tax Code. The Treasurer filed her answer and counterclaim seeking a declaration that

the Village was liable to repay the post-TIF refunds made to the taxpayers in the Village’s TIF

districts. The Treasurer also sought recovery against the Village under the doctrine of unjust

enrichment.

¶ 14 The Treasurer subsequently filed a third-party complaint against various taxing districts

located in the boundaries of the Village’s TIF districts: County of Cook, the Forest Preserve

District of Cook County, Wheeling Township, Arlington Heights School District No. 25,

Arlington Heights Township High School District 214, Harper Community College District 512,

the Arlington Heights Park District, the Metropolitan Water Reclamation District of Greater

Chicago, and the Northwest Mosquito Abatement District (third-party defendants). The third-

party complaint sought a declaration that, in the event the court finds that the Village is not

exclusively liable to repay the Treasurer for the post-TIF refunds she made to the taxpayers in

the Village’s TIF districts, the third-party defendants are liable to repay their proportionate share

of the refunds. The Treasurer also sought recovery against the third-party defendants under the

doctrine of unjust enrichment.

¶ 15 The third-party defendants filed a motion to dismiss the third-party complaint. The

Village filed a motion for summary judgment on its complaint, and the Treasurer filed a cross-

motion for summary judgment on her counterclaims.

¶ 16 III. The Circuit Court’s Findings

¶ 17 The circuit court found that the legislature has not expressly given the Treasurer the

authority to recover the post-TIF refund amounts from the Village. However, the court found that

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sections 23-20 and 20-175(a-1) 1 of the Property Tax Code gave the Treasurer the implied

authority to recover the post-TIF refund amounts from the Village. The circuit court stated:

“Section 23-20 of the Property Tax Code provides that [the Treasurer] is required

to make refunds pursuant to successful property tax objections ‘from the next funds

collected after entry of the final order until full payment of the refund and interest thereon

has been made.’ 35 ILCS 200/23-20 (West 2012). Section 20-175[a-1] of the Property

Tax Code provides that [the Treasurer] may deduct refunds for erroneous assessments or

overpayments, ‘pro rata, from the moneys due to taxing bodies which received the taxes

erroneously paid, or their legal successors.’ 35 ILCS 200/20-175[a-1] [(West 2014)].

Thus, the Court finds that [the Treasurer’s] express authority to be reimbursed for refunds

paid pursuant to successful property tax objections fairly implies [the Treasurer’s]

authority to recover the [post-TIF refund amounts] from [the Village].”

¶ 18 The circuit court (1) denied the Village’s motion for summary judgment on count I of its

complaint for a declaratory judgment that it is not required to repay the Treasurer for the post-

TIF refund amounts, (2) denied the Village’s motion for summary judgment on count II of its

complaint seeking to enjoin the Treasurer from deducting the post-TIF refund amounts from any

distribution of general property tax revenue due and owing to the Village, (3) granted the

Treasurer’s cross-motion for summary judgment on count I of her counterclaim for a declaratory

judgment that the Village is liable for the post-TIF refund amounts, and (4) granted the

Treasurer’s motion for summary judgment on count II of her counterclaim against the Village for

1
Prior to January 1, 2015, the relevant language in subsection 20-175(a-1) was located in
subsection 20-175(a). See Pub. Act 98-1026 (eff. Jan. 1, 2015) (amending 35 ILCS 200/20-175)
(making other changes not relevant to this appeal). For the sake of clarity, we refer to subsection
20-175(a-1).

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unjust enrichment. The circuit court ruled the third-party defendants’ motion to dismiss the third-

party complaint was moot.

¶ 19 IV. The Village’s Appeal

¶ 20 The Village appeals the order denying its motion for summary judgment on its complaint

for a declaratory judgment and for injunctive relief and granting the Treasurer’s cross-motion for

summary judgment on her counterclaims. Summary judgment is appropriate when the pleadings,

depositions, and admissions on file, together with any affidavits, viewed in the light most

favorable to the nonmoving party, show there is no genuine issue of material fact and that the

moving party is entitled to judgment as a matter of law. Shuttlesworth v. City of Chicago, 377 Ill.

App. 3d 360, 365 (2007). Where parties file cross-motions for summary judgment, they agree

that only a question of law is involved and invite the court to decide the issues based on the

record. Illinois Emasco Insurance Co. v. Tufano, 2016 IL App (1st) 151196, ¶ 17. “However, the

mere filing of cross-motions for summary judgment does not establish that there is no issue of

material fact, nor does it obligate the court to grant summary judgment.” Pielet v. Pielet, 2012 IL

112064, ¶ 28. Our review is de novo. Tufano, 2016 IL App (1st) 151196, ¶ 17.

¶ 21 The issue on appeal, underlying the grant of summary judgment in favor of the Treasurer

and against the Village, can be summarized as follows: does the legislature authorize the

Treasurer (either in the TIF Act or the Property Tax Code) to be reimbursed for her payment of

the post-TIF refund amounts from the Village?

¶ 22 This case presents an unusual procedural posture, in that the excessive tax increments

were initially collected by the Treasurer and paid to the Village, which deposited them into the

special tax allocation funds during the 23-year lifetime of TIF Districts One and Two, pursuant

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to section 11-74.4-8 of the TIF Act (65 ILCS 5/11-74.4-8 (West 2012)); however, the excessive

tax increments were refunded after the expiration of the 23-year period, when the tax collecting

process had returned to its pre-TIF state and was controlled by the Property Tax Code and not

the TIF Act. Accordingly, we look to the Property Tax Code instead of the TIF Act in

determining whether the legislature authorized the Treasurer to be reimbursed by the Village for

her post-TIF refunds of the protested property taxes. 2

¶ 23 Initially, we note the property taxes collected by the Treasurer do not belong to her;

rather, those revenues belong to the taxing districts that levied for the taxes and are processed

through the Class A fund. See 55 ILCS 5/3-11003 (West 2012). Accordingly, the Property Tax

Code provides that the ultimate liability for any refunds of property taxes rests with the taxing

body that received the erroneously overpaid taxes and not with the Treasurer. Specifically,

section 23-20 of the Property Tax Code states, “[i]f the final order of the Property Tax Appeal

Board or of a court results in a refund to the taxpayer, refunds shall be made by the collector ***

from the next funds collected after entry of the final order until full payment of the refund and

interest thereon has been made.” (Emphasis added.) 35 ILCS 200/23-20 (West 2012). Section

20-175(a-1) of the Property Tax Code provides that when a taxpayer has overpaid his taxes, the

Treasurer may refund him out of the funds present in the Class A fund and then “deduct the

amount thereof, pro rata, from the moneys due to taxing bodies which received the taxes

erroneously paid, or their legal successors.” 35 ILCS 200/20-175(a-1) (West 2014).

¶ 24 “The fundamental rule of statutory construction is to ascertain and effectuate the

legislature’s intent. [Citation.] The most reliable indicator of the legislative intent is the language

of the statute itself, which must be given its plain and ordinary meaning. [Citation.] Where the

2
We also note that even looking to the TIF Act, no provision therein addresses post-TIF
refunds of protested property taxes or the Treasurer’s right to reimbursement therefor.

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language is clear and unambiguous, a court may not depart from the plain language by reading

into the statute exceptions, limitations, or conditions that the legislature did not express.”

Hayashi v. Illinois Department of Financial & Professional Regulation, 2014 IL 116023, ¶ 16.

All provisions of a statute are to be viewed as a whole, and each provision must be interpreted in

light of other relevant sections of the statute. Carpenter v. Exelon Enterprises Co., 399 Ill. App.

3d 330, 337 (2010). The construction of a statute is a question of law that is reviewed de novo.

Hayashi, 2014 IL 116023, ¶ 16.

¶ 25 Read as a whole, sections 23-20 and 20-175(a-1) of the Property Tax Code indicate that,

after the entry of the refund orders, the Treasurer was required to make the post-TIF refunds and

is to reimburse herself from the next property tax funds she collects that are due to be distributed

to the taxing district that received the erroneously paid taxes.

¶ 26 The erroneously paid taxes at issue here were made by taxpayers in TIF Districts One and

Two whose properties were over-assessed and who therefore paid higher tax increments than

they should have paid during the TIF districts’ lifetimes. The Village received all the erroneously

paid tax increments for the 23-year lifetimes of the TIF districts and deposited them into the

special tax allocation funds, where they were used for the development and redevelopment of

various properties in the Village’s downtown area. As such, the Treasurer is entitled to

reimbursement of the post-TIF refunds from the next property tax funds she collects from the

Village.

¶ 27 We note that county collectors are permitted to “ ‘exercise discretion to accomplish in

detail what is legislatively authorized in general terms.’ ” Phoenix Bond & Indemnity Co. v.

Pappas, 194 Ill. 2d 99, 105 (2000) (quoting Lake County Board of Review v. Property Tax

Appeal Board, 119 Ill. 2d 419, 428 (1988)). The legislature never set forth a reimbursement

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mechanism specifically for post-TIF refunds, but it did set forth a general mechanism for the

refunding and reimbursement of overpaid taxes in sections 23-20 and 20-175(a-1) of the

Property Tax Code. The specific policy adopted by the Treasurer here, in making the post-TIF

refunds out of the Class A fund and then seeking reimbursement from the next property taxes

collected by the Village, is consistent with the general statutory scheme established by the

legislature in sections 23-20 and 20-175(a-1) of the Property Tax Code.

¶ 28 Accordingly, we affirm the grant of summary judgment in favor of the Treasurer. As a

result of our disposition of this case, we need not address the other arguments on appeal.

¶ 29 Affirmed.

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