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Friday, November 18, 2016

Village Responsible for TIF Refund Reimbursement

The Village of Arlington Heights adopted its first TIF district in 1983, and a second one in 1986. The Village developed a variety of properties within the TIF districts over the years, including public garages, a park, train station, theater, and various other improvements. Pursuant to the TIF Act, the Village received all tax increment attributable to the increase in property values within the TIF district for a period of 23 years. 

While the TIFs were still active, owners of property within TIF 1 and 2 filed successful tax objections, and the Cook County Treasurer was ordered to issue refunds to these taxpayers in the amount of the tax increments that were overpaid, plus interest. The treasurer issued the refunds, and then sought reimbursement from the Village. Because there was no longer any revenue in the TIF funds held by the treasurer (the TIFs had expired), the treasurer looked to the Village for money necessary to reimburse her for tax increment refunds she made after the TIFs expiration. 

The Village filed a lawsuit seeking a declaration from the court that it was not liable to repay the treasurer for "post-TIF" refund payments on its own, and that such refunds should be shared by all of the taxing districts. Both the trial and appellate courts disagreed, finding that the treasurer had the right to seek reimbursement from the Village for funds overpaid to the Village during the lifetime of the TIFs, even after the TIFs had expired. Since the Village was the sole taxing body that benefited from these overpayments, it should be the one to reimburse the treasurer for the refunds the treasurer had to make to property owners. If the Village refused to repay the treasurer, the treasurer could collect those funds from the next property taxes collected by the Village, even if those taxes were not TIF funds.  Village of Arlington Heights v. Maria Pappas, 2016 IL App (1st) 151802.

Post Authored by Julie Tappendorf


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