Krause v. Peoria Hous. Auth

• Decision Date: 26 January 1939
• Docket Number: No. 25005.,25005.
• Citation: 370 Ill. 356,19 N.E.2d 193
• Parties: KRAUSE et al. v. PEORIA HOUSING AUTHORITY et al.
• Court: Illinois Supreme Court

370 Ill. 356

19 N.E.2d 193

KRAUSE et al.

v.PEORIA HOUSING AUTHORITY et al.

No. 25005.

Supreme Court of Illinois.

Jan. 26, 1939.

Suit by Paul A. Krause and others, tax-payers of the city of Peoria, to enjoin the city of Peoria and the Peoria Housing Authority from taking any action under certain contracts entered into pursuant to Illinois Housing Authorities Act. From an adverse decree, the plaintiffs appeal.

Affirmed.Appeal from Circuit Court, Peoria County; Joseph E. Daily, judge.

Shelton F. McGrath and Harry B. Hoffman, both of Peoria, for appellants.

Frederic V. Arber, Corp. Counsel, of Peoria, Walter F. Dodd, of Chicago, and Willard B. Gaskins, of Peoria, for appellees.

FARTHING, Justice.

Appellants, taxpayers of the city of Peoria, seek an injunction restraining the Peoria Housing Authority and the city of Peoria from taking any action under certain contracts. These consist of loan and annual contributions contracts between the Peoria Housing Authority and the United States Housing Authority and a coöperation agreement between the Peoria Housing Authority and the city of Peoria. They were entered into pursuant to the provisions of the Illinois Housing Authorities Act, Ill.Rev.Stat.1937, chap. 67 1/2, and the United States Housing Act, U.S.C.A. title 42, chap. 8, § 1401 et seq. This injunction suit is brought on the theory that certain provisions of the Illinois Housing Authorities Act under which these contracts were entered into are invalid under our State and Federal constitutions.

The purpose of the Illinois Housing Authorities Act, as stated in section 2, Laws of 1938, first sp. sess. p. 33, Smith-Hurd Stats. c. 67 1/2, § 2, is the eradication of slums. It provides: ‘It is hereby declared as a matter of legislative determination that in order to promote and protect the health, safety, morals and welfare of the public, it is necessary in the public interest to provide for the creation of municipal corporations to be known as housing authorities, and to confer upon and vest in said housing authorities all powers necessary or appropriate in order that they may engage in low-rent housing and slum clearance projects; and that the powers herein conferred upon the housing authorities, including the power to acquire property, to remove unsanitary or sub-standard conditions, to construct and operate housing accommodations, to regulate the maintenance of housing projects and to borrow, expend and repay moneys for the purposes herein set forth, are public objects and governmental functions essential to the public interest.’ This act enables our State and municipalities to take advantage of the provisions of the Federal Housing Act extending loans and grants of money to State and local housing authorities under certain conditions.

Substantially, the act provides that the governing body of any city, village or incorporated town having more than 25,000 inhabitants, or any county, may, by resolution, determine the need for a housing authority. This resolution, with the findings in support thereof, must be considered by the State Housing Board. If the State Housing Board determines that a need exists for such local housing authority it issues a certificate to the presiding officer of such city, village, incorporated town or county providing for the creation of such authority. The housing authority, consisting of five commissioners, is appointed by the presiding officer of the city, village, incorporated town or county with the approval of the State Housing Board. The local authority is authorized, in the furtherance of slum clearance, to acquire and manage property, to issue bonds which are not to be obligations of the city, county, or State, and to exercise the right of eminent domain. The persons entitled to direct benefit in the projects must belong to a designated low-income class. The investment of sinking, insurance, retirement, compensation, pension and trust funds in the bonds of housing authorities is authorized. Provision is made for coöperation between the municipality and the housing authority in vacating streets, zoning the development for residential purposes, lending money, loaning employees, etc.

The financial aid offered by the United States Housing Authority is in the form of loans and annual contributions. The loans are secured by the revenues of the projects and the annual contributions made for such projects by the Federal government. Funds for these loans are made available out of proceeds from the sale of United States Housing Authority bonds which bonds are guaranteed as to principal and interest by the United States government. In addition to such loans, the United States Housing Authority is authorized to contract to pay the local authority annual contributions toward meeting part of the difference between financial charges on the project (including debt requirements) and the income, through rentals which the occupants of the project can afford to pay.

The loan contract provides that the United States Housing Authority shall purchase bonds of the Peoria Housing Authority in the principal amount of $2,559,000, but not to exceed ninety per cent of the actual development cost of the housing project. This contract is conditioned upon the exemption of the project from all State and local taxation, except for certain service charges, and is further conditioned upon the furnishing, to the project and its tenants, of the ordinary municipal services and facilities without cost or charge.

The annual contributions contract between the Peoria Housing Authority and the United States Housing Authority is also conditioned upon a local, annual contribution in the form of a tax exemption, except for certain service charges. It is further conditioned on the execution of a contract between the Peoria Housing Authority and the city of Peoria, obligating the city to eliminate an equal number of unsafe and unsanitary dwelling units. By it the city agrees to furnish the project and its tenants the ordinary municipal services and facilities.

The coöperation agreement between the city and local housing authority obligates the city in accordance with the provisions of the aforesaid annual contributions contract, and requires it to employ its corporation counsel and other officials to assist in condemnation of property to be used in the project. By this contract it is agreed that the city will not levy, impose or charge any tax against the project, but it provides for an annual service charge of five per cent of the shelter rentals of the project for the first ten years, and three per cnet thereafter. This charge is to be paid to the city by the Peoria Housing Authority and the money is to be distributed among the several taxing bodies in proportion to their tax rates.

Appellants contend that the General Assembly has not authorized an exemption of the local authorities' property from taxation. Except as to property owned by the national government within the State, the exemption of property from taxation requires affirmative action by the General Assembly. Constitution of 1870, art. 9, sec. 3, Smith-Hurd Stats.; People v. University of Illinois, 328 Ill. 377, 159 N.E. 811;Glen Oak Cemetery Co. v. Board of Appeals, 358 Ill. 48, 192 N.E. 673. While it is true that tax-exemption statutes are construed most strongly against the exemption, nevertheless, if a clear intention to exempt certain property appears, it must be given effect. Appellees claim that such clear intention is found in three statutory provisions enacted at a special session of the General Assembly in 1938, and in certain provisions of the Revenue act. Section 29 of the Illinois Housing Authorities Act (Laws of 1938, first sp. sess. p. 38; 67 1/2 S.H.A. § 27b), added by amendment of 1938, reads as follows:

‘With respect to any housing project of a housing authority, the housing authority shall, after such project has become occupied, either in whole or in part, file with the proper assessing authority on or before April 1 of each year, a statement of the aggregate shelter rentals of each such project collected during the preceding calendar year; and, unless a different amount has been agreed upon between the housing authority and the city, village, incorporated town or county for which the housing authority was created, five (5) per cent of such aggregate shelter rentals shall be charged and collected as a service charge for the services and facilities to be furnished with respect to such project, in the manner provided by law for the assessment and collection of taxes, and the amount so collected shall be distributed to the several taxing bodies in such proportions that each taxing body will receive therefrom the same proportion as the tax rate of such taxing body bears to the total tax rate that would be levied against the project if it were not exempt from taxation. A city, village, incorporated town or county for which a housing authority has been created may agree with the housing authority, with respect to any housing projects, either separately or jointly or one or more of them, for the payment of a service charge in an amount greater or less than five (5) per cent of the aggregate annual shelter rentals of any project, upon the basis of shelter rentals or upon such other basis as may be agreed upon, but not exceeding the amount which would be payable in taxes thereon were the property not exempt, and, if such an agreement is made, the amount so agreed upon shall be collected and distributed in the manner above provided. Shelter rental shall mean the total rentals of a housing project as such project is defined in the twelfth subsection of section 2 of ‘An Act for the assessment of property and for the levy and collection of taxes,’ approved March 30, 1872, as amended, exclusive of any charge for utilities and special services such as heat, water, electricity and gas. The records of each housing project shall be open to...