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Wednesday, April 23, 2014

Village Liable under TIF Agreement with School District

In 1986, the Village of Gardner entered into an agreement with the Gardner-South School District.  The agreement granted the Village a license to use the District's outdoor recreational facilities located within a TIF district in exchange for the Village paying the District a set percentage of taxes received by the Village through the TIF.  

From 1986 to 2012, the Village paid the District over $4.5 million under the agreement.  In 2012, however, the Village withheld payment. The District sued to enforce the agreement, and the Village responded with two reasons for its non-payment: (1) the District was spending the money on employee salaries and benefits which was not allowed under the TIF Act and (2) the District's expenditures adversely affected the Village's reporting obligations under the TIF Act.  

The court rejected the Village's argument in Village of Gardner v. Gardner-South School District (April 17, 2014), and ruled in favor of the School District.  First, the court held that the agreement did not restrict the District's use of the money it received from the Village in any way. Second, the TIF Act expressly allows a municipality to enter into agreements to provide payments to other taxing districts like the license agreement between the Village and the District.  Finally, the TIF Act itself does not limit how a taxing district spends funds received through a license agreement with a municipality. 

Post Authored by Julie Tappendorf, Ancel Glink


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