Town of Benton v. City of Zion

• Decision Date: 06 March 1990
• Docket Number: No. 2-89-0248,2-89-0248
• Citation: 551 N.E.2d 1078,195 Ill.App.3d 71
• Parties: , 141 Ill.Dec. 735 The TOWN OF BENTON, Plaintiff-Appellant, v. The CITY OF ZION, Defendant-Appellee.
• Court: United States Appellate Court of Illinois

Page 1078

551 N.E.2d 1078

195 Ill.App.3d 71, 141 Ill.Dec. 735

The TOWN OF BENTON, Plaintiff-Appellant, v. The CITY OF ZION, Defendant-Appellee.

No. 2-89-0248.

Appellate Court of Illinois Second District.

March 6, 1990.

Rehearing Denied April 12, 1990.

William G. Rosing and Stephen G. Applehans, Rosing, Applehans & Smith, Ltd., Waukegan, for Town of Benton, Lake County.

Lee A. Sparks, Law Office of Lee A. Sparks, Berle L. Schwartz, and Andi C. Goldfine, Highland Park, for City of Zion, Lake County.

Justice McLAREN delivered the opinion of the court:

Plaintiff, Town of Benton, a township governmental unit in Lake County, appeals from the judgment entered in favor of defendant, City of Zion. Defendant annexed various portions of plaintiff township's territory pursuant to the automatic annexation provision of section 1 of "An Act to authorize county boards in counties under township organization, to organize certain territory situated therein as a town, and to provide for annexation of territory to and the disconnecting of territory from said town" (the Act) (Ill.Rev.Stat.1987, ch. 139, par. 127). Pursuant to another provision of section 1 of the Act, plaintiff demanded payment of funds equal to the real estate taxes collected on the annexed territory. Defendant refused; plaintiff filed a complaint; the matter was tried; judgment was entered in favor of defendant; and this appeal followed.

No issue of fact is presented. The only property in contention was property annexed by defendant on the effective date of the Act as amended by section 2 of "An Act in relation to the annexation by a city coterminous with a township of territory located in an adjacent township" (the Amendatory Act of 1986) (Pub. Act 84-1261, eff. Aug. 11, 1986) (amending Ill.Rev.Stat.1985, ch. 139, par. 127). The sole issue on appeal is whether section 1 of the Act requires defendant to compensate plaintiff for lost real estate tax revenue derived from the property "automatically" annexed by defendant and disconnected from plaintiff on the effective date of the Amendatory Act of 1986.

The trial court ruled that the compensation provision of the Act did not apply to the automatic annexation provision of the Act for two reasons. First, since the "automatic" annexation took place "on" the effective date of the amendment, and the compensation provision applied only to annexations occurring "after" the effective date, the compensation provisions did not apply to the "automatic" annexations made on the first day the statute took effect. The trial court assumed that the drafters of the statute, by using different language, intended the distinction between "on" and "after." Second, the trial court interpreted the limited legislative history as indicating that the compensation provisions were intended by the legislature as an incentive to adjacent townships to agree to disconnection in situations where a referendum is mandated. Further, since an automatic annexation did not mandate a referendum, no incentive via reimbursement for taxes would be needed to induce a disconnecting township to agree to the disconnection.

We disagree with the trial court's interpretation of the statute and its legislative history. Our following analysis concludes the trial court incorrectly entered judgment for the defendant.

Prior to 1986, the Act provided that, whenever a city annexed property that was in an adjacent township, the township boundaries would change automatically and the territory would be disconnected from the adjacent township and annexed to the coterminous township. (Ill.Rev.Stat.1985, ch. 139, par. 127.) The alteration of township boundaries occurred automatically when a city annexed more property so that the township boundaries and the city boundaries remained coterminous. (Henke v. City of Zion (1976), 63 Ill.2d 46, 344 N.E.2d 466; Springfield Lakeshore Improvement Association v. City of Springfield (1975), 62 Ill.2d 173, 174, 340 N.E.2d 289.) Townships adjacent to expanding cities were reduced in size without any public referenda being held in the affected townships. (62 Ill.2d at 175, 340 N.E.2d 289.) Piecemeal annexations created the undesirable result of grotesquely shaped townships and several small areas completely isolated from the balance of the governing township. (62 Ill.2d at 178, 340 N.E.2d 289.) Other abuses would arise when a city annexed valuable properties with a high tax base and disconnected the properties from the adjacent township. Such annexations could severely undermine a township's ability to function as a viable governmental unit as its revenue base was inexorably eliminated. (See Nameoki Township v. Cruse (1987), 155 Ill.App.3d 889, 900, 108 Ill.Dec. 503, 508 N.E.2d 1080 (the disconnected township alleged that the annexing city promised the owner of the annexed property, a steel foundry and its primary taxpayer, tax reductions when the property under it would be annexed); cf. In re Petition to Create Emmett-Chalmers Fire Protection District (1978), 58 Ill.App.3d 897, 902, 16 Ill.Dec. 351, 374 N.E.2d 1126 (disconnection of territory from fire-protection district would impair the ability of the district to render adequate services to territory remaining within the district because of lost tax revenue).) However, the old Act did allow the piecemeal dissolution of a township, without a public referendum, up until the last parcel of the township was annexed. Springfield, 62 Ill.2d at 177-78, 340 N.E.2d 289.

This environment led to the introduction into the House of Representatives of House Bill 1467 (84th Ill.Gen.Assem., House Bill 1467, 1985 Sess.), which eventually was enacted as Public Act 84-1261.

Section 2 of the Amendatory Act of 1986 created a new section 1 of the Act that was 140 lines long. Section 1 consists of 11 undemarcated paragraphs, most of which consist of a single sentence containing numerous clauses and exceptions. Although the cause before the court concerns only the last two paragraphs of section 1, we must discuss the whole statute in which those paragraphs operate.

In its final form, section 2 of the Amendatory Act of 1986 amended section 1 of the Act to provide for a referendum procedure. That part of the former statute providing for a territory's automatic disconnection from the adjacent township upon annexation by a city was deleted. Now, whenever a city proposes to annex property in an adjacent township, the city clerk must file a certified copy of the city's annexation ordinance with the clerk of the adjacent township subject to the proposed disconnection. If the board of trustees of that township determines that the disconnection would not be in the best interests of that township, the town board may request that a referendum approving or disapproving the disconnection be submitted to the voters of that township in an election. If the proposition is approved by a majority vote in the election, the territory is disconnected from the adjacent township and connected to the township coterminous with the city. If the proposition fails, the territory remains connected to the adjacent township.

Under the present Act, the town board may request a referendum on any disconnection except in two instances. First, a city may annex up to 1% of an adjacent township's territory per year causing disconnection from the adjacent township and connection to the coterminous township without a referendum. The 1% is calculated on the basis of the total equalized assessed value of the adjacent township. Second, any unincorporated territory surrounded or nearly surrounded by a coterminous township shall automatically, by operation of law, become annexed to the city, disconnected from the adjacent township and connected to the coterminous township without the referendum procedure. This last provision is referred to as the "automatic" annexation provision regarding the problems of "doughnut hole" annexations (as referred to in the Senate debate (84th Ill.Gen.Assem. Senate Proceeding June 18, 1986, at 74)). See also Ill.Rev.Stat.1987, ch. 24, par. 7-1-13.

The Act also provides the following provisions regarding compensation:

"After the effective date of this amendatory Act of 1986, whenever territory is disconnected from a township and connected to a coterminous township, the coterminous city shall provide, on or before December 31 of each year for a period of 10 years, to the township from which the territory was disconnected an amount equal to the real estate tax that was collected on the property in the tax year immediately preceding the disconnection." (Emphasis added.) Ill.Rev.Stat.1987, ch. 139, par. 127.

Because the trial court based its determination on the wording of the statute, we quote the automatic annexation provision as well in its entirety:

"Whenever, on the effective date of this amendatory Act of 1986, any unincorporated territory in a township which is adjacent to a township which is coterminous with a city (a) is wholly bounded by the coterminous township or (b) is bounded solely by (1) the coterminous township and (2)(A) a river or lake, (B) property owned by the State of Illinois, except highway right-of-way owned in fee by the State, (C) a forest preserve district, or (D) the Illinois State boundary, that territory shall automatically, by operation of law, become annexed to the city, disconnected from the adjacent township and included in the coterminous township without having the proposition to disconnect submitted to the voters in the adjacent township, except that when the unincorporated territory is, and as long as it remains, predominantly agricultural in nature, the automatic annexation shall not occur." (Emphasis added.) (Ill.Rev.Stat.1987, ch. 139, par. 127.)

Section 3 of the Amendatory Act of 1986 provided that the Amendatory Act of 1986 took effect upon becoming a law, which...