Opinion filed April 17, 2014 ______________________________________________________________________________

IN THE

APPELLATE COURT OF ILLINOIS

THIRD DISTRICT

A.D., 2014 ____________________________________________________________________________

) THE BOARD OF EDUCATION OF ) Appeal from the Circuit Court GARDNER-SOUTH WILMINGTON ) of the 13th Judicial Circuit, HIGH SCHOOL DISTRICT 73, ) Grundy County, Illinois, ) Plaintiff-Appellee, ) ) Appeal No. 3-13-0364 v. ) Circuit No. 12-L-46 ) THE VILLAGE OF GARDNER, ) ) The Honorable Robert C. Marsaglia Defendant-Appellant. ) Judge, Presiding. ) ______________________________________________________________________________

JUSTICE McDADE delivered the judgment of the court, with opinion. Justices Carter and Wright concurred in the judgment and opinion. ______________________________________________________________________________

OPINION

¶1 In 1986, the Village of Gardner (Village) entered into an agreement with the Board of

Education of Gardner-South Wilmington High School District 73 (District). The agreement

granted the Village a license to use the District's outdoor recreational facilities within the

designated redevelopment area. In 2012, the District sued the Village, alleging that the Village

failed to make the payments called for by the agreement. The trial court agreed and granted

summary judgment in favor of the District. The Village appeals and argues that it was not required to make payments to the District because the District sought to spend the funds in

violation of the Tax Increment Allocation Redevelopment Act (TIF Act) (65 ILCS 5/11-74.4-1 et

seq. (West 2012)).

¶2 Because neither the contract itself nor the TIF Act limits how the District may spend the

funds it is paid by the Village under the license agreement, we affirm.

¶3 BACKGROUND

¶4 On December 29, 1986, pursuant to the TIF Act, the Village adopted a redevelopment

plan and established the Gardner Redevelopment Project Area (TIF district). In aggregate, the

TIF district encompassed an area of approximately 1½ acres within the Village. The

redevelopment plan and project were subsequently amended four times, most recently in 2007.

¶5 The District owned some recreational property within the TIF district, which consisted of

tennis courts and a baseball field. On December 29, 1986, the District and the Village entered

into an agreement pursuant to the TIF Act, the Intergovernmental Cooperation Act (5 ILCS

220/1 et seq. (West 2012)), and the Illinois Constitution (Ill. Const. 1970, art. VII, § 10). In the

agreement, the parties found that it would substantially benefit the property within the TIF

district to provide public recreational facilities within the redevelopment area. The agreement

granted the Village a nontransferable "license" to use the District's outdoor recreational facilities

within the TIF district. The license would last until the area was no longer designated as a

redevelopment project area and the TIF district was dissolved by the Village.

¶6 In exchange for the license, the Village agreed to pay the District yearly "a percentage of

the total annual amount due." The agreement defined "total annual amount due" as follows:

"The total annual amount due shall be the positive

difference between the CURRENT EQUALIZED ASSESSED

2 VALUE of all taxable property in the redevelopment area

multiplied by School District's RATE PERCENT OF TAX, less

the TOTAL INITIAL EQUALIZED ASSESSED VALUE of all

taxable real property in the redevelopment area multiplied by the

School District's RATE PERCENT OF TAX."

The percentage of the total amount due that the Village would pay to the District would be

determined by the ratio of taxes the Village actually received from the TIF district compared the

total amount of taxes it was entitled to receive.

¶7 The agreement contained no express restriction on what the District could do with the

payments it received from the Village. The agreement also contained an integration clause,

stating that it was "the complete and final understanding of the parties with respect to the subject

matter."

¶8 Since 1986, the Village has paid the District over $4.5 million pursuant to the agreement.

However, in 2012, the Village withheld payment. 1 On October 4, 2012, the District filed a

complaint against the Village in the circuit court of Grundy County. The District alleged that it

had made the facilities available to the Village as called for by the contract and that the Village

had breached the contract by failing to pay. The District alleged it was due $400,000 under the

terms of the agreement. The Village answered, admitting it withheld payment but denying

liability. The Village also set forth two affirmative defenses. First, it alleged that the District

failed to satisfy a condition precedent of the contract because the District sought to spend funds

on employee salaries or benefits, which did not comply with the TIF Act. According to the

Village, the District could only spend the funds it received on capital costs. Second, it alleged

that the District's expenditures frustrated the Village's reporting obligations under the TIF Act. 1 It does not appear that any subsequent payments were withheld. 3 ¶9 The District moved for partial summary judgment on the issue of liability, and on

December 31, 2012, the court granted summary judgment in favor of the District. The court

stated that the Village had paid the District "for 26 years, pursuant to the agreement, and without

restriction." The court rejected the Village's affirmative defenses, finding that the agreement was

a license agreement executed pursuant to section 11-74.4-4(c) of the TIF Act (65 ILCS 5/11-

74.4-4(c) (West 2012)), and ruled that this section of the statute did not restrict how the District

could use the funds it received.

¶ 10 The District then moved for summary judgment on the issue of damages, while the

Village filed a motion to reconsider the court's prior order. In its motion, the Village argued that

the trial court had erred in interpreting the TIF Act. In addition, the Village argued that the

agreement was ambiguous and that the court had erroneously made a finding of fact. Among the

affidavits the Village attached to its motion, it included affidavits from the current mayor and

former mayor of Gardner. They stated that the agreement was administered "with the

understanding" that the District would use the funds it received from the Village to pay for

capital costs. Finally, the Village argued that the agreement was unconscionable because the

value granted to the Village from the use of the District's recreational facilities was grossly

inadequate compared to the amount of money the Village was required to pay.

¶ 11 On May 8, 2013, the court entered two orders. First, it denied the Village's motion to

reconsider. The court admitted that it had erred in its original order when it stated that the

payments had not had any restriction; whether the funds had been paid to the District without any

restriction on their use was a disputed factual matter which could not be resolved at summary

judgment. However, the court reiterated its conclusion that, as a matter of law, the TIF Act did

not impose any restriction on how the District could use the funds it received under the license

4 agreement. It also rejected the Village's unconscionability argument, finding that the agreement

was negotiated at arm's length, with full knowledge by the parties. In its second order, the court

entered summary judgment as to damages, awarding the District $419,111.71.

¶ 12 The Village filed a timely notice of appeal.

¶ 13 ANALYSIS

¶ 14 On appeal, the Village argues that it was not obligated to pay the District because the

District sought to spend the license income on employee benefits and salaries. According to the

Village, the District was required to spend the funds it received under the agreement on capital

costs and improvements. Although the agreement itself contains no such requirement, the

Village argues that this restriction is imposed by the TIF Act. In the alternative, the Village

argues that the agreement is ambiguous and that the matter should be remanded for trial to

determine whether the parties intended that the District use the license fees it received solely on

capital costs. In response, the District contends that the trial court correctly determined that the

TIF Act does not restrict how the District may spend funds received pursuant to the license

agreement.

¶ 15 When interpreting a contract, our primary goal is to give effect to the intent of the parties.

International Supply Co. v. Campbell,

(2009). The best indication of

the intent of the parties is the contract's plain language, and when a contract is plain and

unambiguous, it must be enforced as written. TH Davidson & Co. v. Eidola Concrete, LLC,

.

¶ 16 The arguments of the parties also require us to interpret relevant provisions of the TIF

Act. When interpreting a statute, this court's primary objective is to ascertain and give effect to

the intent of the legislature. Ramos v. City of Peru,

(2002). The best way

5 to determine legislative intent is from the plain language of the statute, which, if unambiguous,

should be enforced as written. Board of Trustees of the Teachers' Retirement System of Illinois

v. West,

(2009). "When the language of the statute is clear and

unambiguous, the court should not add exceptions, limitations, or conditions that the legislature

did not express." Fandel v. Allen,

(2010). We construe a statute as a

whole: each word, clause, and sentence is given a reasonable meaning and not rendered

superfluous, and we avoid an interpretation that would render any portion of the statute

meaningless. Lohr v. Havens,

(2007).

¶ 17 Both the construction of a contract and the interpretation of a statute are questions of law

which we review de novo. MD Electrical Contractors, Inc. v. Abrams,

(2008); Gallagher v. Lenart,

(2007).

¶ 18 We begin our analysis with some background on the TIF Act. The TIF Act provides a

means for a municipality to develop or redevelop blighted areas. Board of Education,

Pleasantdale School District No. 107 v. Village of Burr Ridge,

(2003). When a blighted area is designated as a redevelopment area and a TIF district is

established, the assessment of all taxable real property within the district at that point is

designated the total initial equalized assessed value. See 65 ILCS 5/11-74.4-8(a) (West 2012);

People ex rel. City of Canton v. Crouch,

(1980). This is the TIF district's base

value. Every taxing district within the redevelopment area assesses property taxes on this base

value. 65 ILCS 5/11-74.4-8(a) (West 2012); Crouch,

. Each year, the value of

all real property within the TIF district is reassessed to determine the current equalized assessed

value; the portion of taxes that is attributable to the current equalized assessed value over and

above the base value is known as tax increment revenue. See Crouch,

. This tax

6 increment revenue, which is in theory attributable to increases in property value within the TIF

district resulting from redevelopment projects, is deposited into a special fund to pay for those

redevelopment project costs and obligations incurred thereof. See 65 ILCS 5/11-74.4-8(b) (

); Crouch,

. In essence, "[t]he TIF Act enables a municipality to eliminate

blighted conditions by collecting real property tax increment revenues from local taxing districts

within the TIF [d]istrict and diverting the revenues to fund TIF [d]istrict development projects."

Malec v. City of Belleville,

(2011).

¶ 19 The TIF Act grants municipalities a number of different tools to help encourage

redevelopment and eliminate blighted conditions. Of relevance to this case, section 11-74.4-4 of

the TIF Act outlines a municipality’s powers and duties. 65 ILCS 5/11-74.4-4 (West 2012). In

particular, section 11-74.4-4(b) provides that a municipality may "[m]ake and enter into all

contracts with property owners, developers, tenants, overlapping taxing bodies, and others

necessary or incidental to the implementation and furtherance of its redevelopment plan and

project." 65 ILCS 5/11-74.4-4(b) (

). Section 11-74.4-4(c) specifically grants a

municipality the power to acquire or grant real property interests within the redevelopment area,

providing that a municipality may:

"Within a redevelopment project area, acquire by purchase,

donation, lease or eminent domain; own, convey, lease, mortgage

or dispose of land and other property, real or personal, or rights or

interests therein, and grant or acquire licenses, easements and

options with respect thereto, all in the manner and at such price the

municipality determines is reasonably necessary to achieve the

7 objectives of the redevelopment plan and project." 65 ILCS 5/11-

74.4-4(c) (

).

¶ 20 In the agreement at issue in this case, the Village and the District found that it would

substantially benefit the property within the TIF district to provide public recreational facilities

within the redevelopment area. Accordingly, the District granted the Village a license to use the

District’s outdoor recreational facilities. In exchange, the Village agreed to pay the District a

percentage of the "total annual amount due," which was a percentage of the tax increment

revenues. We conclude that this was a license agreement executed pursuant to section 11-74.4-

4(c) of the TIF Act. The plain language of section 11-74.4-4(c) does not restrict how a licensor

of real property may spend the revenues it receives from a municipality when they enter into a

license agreement under the TIF Act. Nor does section 11-74.4-4(b) limit what a party entering

into a contract with a municipality may do with the funds it receives under that contract. We thus

reject the Village’s argument that the TIF Act limits how the District could spend these funds.

¶ 21 We are not persuaded by the Village’s argument that other provisions of the TIF Act

require that payments to taxing districts under a license agreement be spent exclusively on

capital costs. The Village’s argument, as we interpret it, proceeds in three steps. First, the

argument is premised on the idea that TIF revenues may only be spent on redevelopment project

costs. See 65 ILCS 5/11-74.4-8(b) (

) (providing that tax increment revenues shall be

deposited into a "special tax allocation fund of the municipality for the purpose of paying

redevelopment project costs and obligations incurred in the payment thereof"). Second, the

Village cites section 11-74.4-4(j) of the TIF Act, which provides that a municipality may incur

"project redevelopment costs" if those costs are consistent with the objectives of the

redevelopment plan. See 65 ILCS 5/11-74.4-4(j) (

). Third, the Village cites section

8 11-74.4-3(q)(7)—which is part of the definition of "redevelopment project costs"—and argues

that this definition requires that TIF funds transferred from a municipality to another taxing

district may only be spent on that taxing district’s capital costs. 65 ILCS 5/11-74.4-3(q)(7)

(

).

¶ 22 The plain language of the statute does not support the Village’s interpretation. The

definition of "redevelopment project costs" in the TIF Act is broad and contains no such

restriction. The definition provides:

" 'Redevelopment project costs', except for redevelopment project

areas created pursuant to subsection (p-1), means and includes the

sum total of all reasonable or necessary costs incurred or estimated

to be incurred, and any such costs incidental to a redevelopment

plan and a redevelopment project. Such costs include, without

limitation, the following:***." 65 ILCS 5/11-74.4-3(q) (

).

The definition then lists a number of redevelopment project costs. Some of the listed

redevelopment project costs include: costs of studies, surveys, and the costs of the

implementation and administration of the redevelopment plans, which includes certain

professional services (section 11-74.4-3(q)(1)); costs relating to marketing the redevelopment

area to businesses, developers, and investors (section 11-74.4-3(q)(1.6)); property assembly

costs, which include the acquisition of land and other interests in real or personal property, and

site development costs (section 11-74.4-3(q)(2)); costs of rehabilitation, reconstruction, and

repair of existing structures (section 11-74.4- 3(q)(3)); job training and retraining costs (section

11-74.4-3(q)(5)); financing costs (section 11-74.4-3(q)(6)); and qualifying interest costs incurred

9 by developers (section11-74.4- 3(q)(11)). The provision on which the Village relies, section 11-

74.4-3(q)(7), provides:

"To the extent the municipality by written agreement accepts and

approves the same, all or a portion of a taxing district's capital

costs resulting from the redevelopment project necessarily incurred

or to be incurred within a taxing district in furtherance of the

objectives of the redevelopment plan and project." 65 ILCS 5/11-

74.4-3(q)(7) (

).

¶ 23 The significance of section 11-74.4-3(q)(7) is that it allows a municipality, by agreement,

to use TIF funds to pay another taxing district for capital costs that the taxing district incurred in

furtherance of the redevelopment plan. Had the District and the Village executed an agreement

pursuant to section 11-74.4-3(q)(7), we might agree that the District was obligated to spend the

funds on capital costs. But the agreement at issue is a license agreement under section 11-74.4-

4(c), so we find section 11-74.4-3(q)(7) irrelevant. The TIF Act simply does not require that TIF

funds paid to another taxing district under a license agreement be used for that taxing district's

capital costs. 2

2 To the extent that section 11-74.4-8(b) requires that the license agreement needs to

qualify as a redevelopment project cost to authorize the Village's payment of tax increment funds

to the District, the license agreement clearly qualifies. The parties found that the license for

outdoor recreational facilities within the TIF district would substantially benefit the

redevelopment, making it a reasonable or necessary expense. See 65 ILCS 5/11-74.4-3(q) (

) (defining redevelopment project costs as all reasonable or necessary expenses incurred and

incidental expenses to the redevelopment plan and project).

10 ¶ 24 We also reject the Village’s three arguments that the agreement is ambiguous. First, the

Village relies on the affidavits from the current and former mayors stating that the agreement

was to be administered with the “understanding” that the District would use the funds received

for capital improvements. The unambiguous language of the agreement, however, contains no

limitations on what the District could do with the license fees it received. Its integration clause

forecloses reliance on any "understanding" not specified in the in the contract. We presume that

had the parties intended such a restriction, they would have included it in the plain language of

the agreement. See Wright v. Chicago Title Insurance Co.,

(1990)

("There is a strong presumption against provisions that easily could have been included in the

contract but were not."). In addition, where the language of an agreement is clear and

unambiguous, the intent of the parties should be determined from the agreement itself and

extrinsic evidence may not be considered. See Richard W. McCarthy Trust v. Illinois Casualty

Co.,

(2011). Therefore, despite the Village's attempts to demonstrate

an ambiguity through extrinsic evidence, we conclude the agreement itself demonstrates no

intent to restrict the District's use of the funds.

¶ 25 Next, the Village argues the TIF plan it adopted in 1986 limits the District to spending

the funds at issue on capital costs. According to the Village's brief, "paragraph 15 [of the TIF

plan] specifically limits the use of TIF funds transferred to 'other taxing authorities' for use in

'their respective capital development funds.' " The manner in which the Village presented this

provision of the TIF plan to this court is blatantly misleading. The paragraph referenced by the

Village actually states: "The Villages recognizes [sic] the importance of the services provided by

other taxing authorities with [sic] the Redevelopment District. It may from time to time consider

grants for their respective capital funds." This language plainly does not limit the use of TIF

11 funds received by taxing authorities to capital development costs, other than through such grants.

Also, even if the TIF plan actually said what the Village contends, the TIF plan was never

expressly incorporated into the agreement of the parties and therefore does not govern the

agreement. See Peterson v. Residential Alternatives of Illinois, Inc.,

(2010) (stating that another document is not incorporated into a contract without an express

reference demonstrating an intent to do so).

¶ 26 Finally, the Village argues that the agreement is ambiguous because the trial court

referred to the agreement as a "license/lease agreement" in its order of May 8, 2013. This

argument is completely without merit. The agreement clearly grants the Village a mere license,

and there is no genuine contention that the District actually granted the Village a lease to its

recreational facilities. The trial court's mistaken use of a term in its order does not render the

underlying agreement ambiguous.

¶ 27 In sum, we conclude that the Village and the District entered into a valid license

agreement pursuant to section 11-74.4-4(c) of the TIF Act. Nothing in section 11-74.4-4(c) or in

the TIF Act's definition of redevelopment project costs imposes a limitation on the District's use

of funds. Moreover, the plain language of that agreement does not limit how the District could

spend the license fees it received. We therefore affirm the grant of summary judgment on

liability and damages in favor of the District.

¶ 28 CONCLUSION

¶ 29 For the reasons stated, the judgment of the circuit court of Grundy County is affirmed.

¶ 30 Affirmed.

12