Illinois Parking Excise Tax Act & Municipal Parking Garages and Lots

Illinois Parking Excise Tax Act & Municipal Parking Garages and Lots

  Wednesday, June 26, 2019    Julie Tappendorf

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The Illinois legislature slipped a little-known provision into House Amendment 3 of Senate Bill 690 (part of the "Leveling the Playing Field for Illinois Retail Act) that would establish a parking excise tax. Beginning January 1, 2020, the Parking Excise Tax Act would impose a state excise tax on the privilege of using a parking space in a parking garage or area at the rate of 6% for hourly, daily, or weekly parking and 9% for parking paid on a monthly or annual basis. The tax would be collected by the "operator" of any parking area or garage, as defined in the proposed legislation. The bill (which also includes changes to the internet sales tax, gaming expansion, and increases to the gas and cigarette taxes, among other provisions) has been approved by the Illinois legislature and has been sent to the Governor. 

The question many local governments have asked is whether parking spaces in a parking garage or lot operated by a municipality or other unit of local government (including a commuter parking lot or garage) would be subject to this new tax. 

The answer to that question may turn on the definitions of "operator" and "person" under the proposed legislation. 

"Operator" is defined as any person who engages in the business of operating a parking area or garage..." 

"Person" is defined as "any natural individual, firm, trust, estate, partnership, association, joint stock company, joint venture, corporation, limited liability company, or a receiver, trustee, guardian, or other representative appointed by order of any court." 

It is relevant that the definition of person in the proposed legislation does not include any reference to municipalities or other units of local government. Where the state legislature has enacted an excise tax and has defined "person" for purposes of interpreting that tax, it has expressly included in the definition of person a reference to governmental entities where applicable. For example, the Motor Fuel Tax Act includes in the definition of person the following "or any city, town, county, or other political subdivision in this State.” Similar language is also included in the Simplified Municipal Telecommunications Tax Act, the Electricity Excise Tax, and other excise tax statutes. Here, no such language is included, which suggests that the legislature did not intend the tax to apply to parking garages or lots operated by municipalities or other units of local government. Perhaps it would have been clearer if the legislature had expressly exempted municipal and other local government parking areas and garages from the tax as the legislature did for the federal government.

We have reached out to various organizations and agencies to confirm our interpretation, and will update our readers when we have more information. We certainly hope to have more information prior to the proposed legislation being enacted. 

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"Ongoing Investigation" Does Not Provide Blanket Exemption to FOIA Request

"Ongoing Investigation" Does Not Provide Blanket Exemption to FOIA Request

  Monday, June 24, 2019    Julie Tappendorf

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The Illinois appellate courts don't often decide FOIA cases, so it's always an interesting read when they do (most of our FOIA posts deal with PAC opinions). 

In Kelly v. Village of Kenilworth, et al., 2019 IL App (1st) 170780, an appellate court considered the appeal of a denial of a FOIA request for records relating to a 50 year old investigation into the murder of a 21 year old in her Kenilworth home. Kelly had filed various FOIA requests with the Village, the state police, the Cook County states attorneys office, among other government entities seeking all records pertaining to the murder investigation. The Village and other public bodies denied the request on the basis that the records were for law enforcement purposes and disclosure would interfere with an active or ongoing criminal investigation. 

Subsequently, Kelly filed a lawsuit against the Village and other defendants. After the trial court reviewed some of the requested records "in camera," the court ruled in favor of the Village and other defendants, finding that disclosure could interfere with an ongoing investigation.

On appeal, the appellate court first held that the Village could assert a FOIA exception over records held by the other defendants, including Cook County and the state police. Second, the appellate court held that trial court correctly determined that there was an ongoing investigation into the murder for purposes of the FOIA exemptions contained in 7(1)(d).  

However, the appellate court expressed concerns about the trial court's application of a blanket exemption over the requested records relating to the ongoing investigation. The appellate court determined that section 7(1)(d) requires a public body to redact and release that portion of the investigative records where release would not interfere with an ongoing investigation or obstruct an ongoing criminal investigation. The appellate court did, however, acknowledge that the scope of the requested records was extensive, and that the Village and other defendants may have properly asserted the "unduly burdensome" exception in response to the FOIA request. Although that exception had not been raised in the initial denial, the appellate court remanded the case to provide the defendants with the opportunity to raise that exemption, and work with Kelly to narrow his request to a more manageable proportion, as allowed by the FOIA statute.

Although the appellate court did not preclude the defendants from asserting the "unduly burdensome" exception on remand, this case is still a reminder of the importance of asserting any potential exception at the outset, in the initial response. 

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US Supreme Court Overrules Williamson County "State Litigation" Requirement

US Supreme Court Overrules Williamson County "State Litigation" Requirement

  Friday, June 21, 2019    Julie Tappendorf

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In a 5-4 decision, the U.S. Supreme Court overruled longstanding precedent in Williamson County Regional Planning Comm'n v. Hamilton Bank, 473 U.S. 172 (1985), that required property owners to pursue their claims against government in state court before they could bring a federal lawsuit alleging a "taking" in violation of the Fifth Amendment of the U.S. Constitution. See Knick v. Township of Scott (USSCT, June 21, 2019). The Williamson County ripeness doctrine allowed government bodies to defend these property and land use cases in state court, where state court remedies were available. The U.S. Supreme Court's decision in Knick overruling Williamson County's "state-litigation" requirement will certainly affect local governments across the country, including Illinois, as litigants can now initiate their land use and property claims in federal court in a civil rights 1983 action. 

We will report on this case in more detail next week.

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Ancel Glink talks “Law in Plain English” on GovLove Podcast

Ancel Glink talks “Law in Plain English” on GovLove Podcast

  Thursday, June 20, 2019    Julie Tappendorf

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Check out Ancel Glink partner David Silverman’s appearance on ELGL’s GovLove podcast discussing “Law in Plain English,” as part of their #GovLoveLegal series. A description of the podcast is below and you can listen to the podcast here. 

Writing legalese for residents. GovLove Legal returns with a discussion of how to write about complex legal topics in a way that is understandable for residents and elected officials. Jenny Kosek, Communications Strategist in West Allis, WI, and David Silverman, Partner at Ancel Glink Law Firm, share their perspectives and tips for taking complex legal topics and communicating them clearly.

Post Authored by Dan Bolin, Ancel Glink

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Court Upholds Termination of Employee for Violating Residency Requirement

Court Upholds Termination of Employee for Violating Residency Requirement

  Tuesday, June 11, 2019    Julie Tappendorf

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The Illinois Appellate Court recently interpreted a municipal ordinance residency requirement to uphold the municipality's termination of a firefighter for failing to comply with that requirement. Cannici v. Village of Melrose Park, 2019 IL App (1st) 181422-U.

Cannici, a firefighter in Melrose Park, purchased a duplex in Melrose Park in 2000, about the same time he began working at the Village. He continued to live there with his wife and two children until 2008, when he purchased a home in Orland Park. His wife and two children moved into the new home, and he claims he stayed in the Melrose Park duplex and visited his family in Orland Park on the weekends. For a couple of years, he attempted to sell the Melrose Park house but a sale never happened. Instead, he entered into a lease to rent out the home in 2013 to another family who stayed until 2016.

In 2016, the Village sought to terminate Cannici for violating the residency requirement. The Board of Fire and Police Commission held a hearing, heard testimony from Cannici, and at the conclusion of the hearing, voted to terminate Cannici, finding that he had abandoned the Melrose Park residency when he leased the home in 2013. Cannici sued to challenge the Board's decision. The circuit court upheld the Board's decision to terminate, and he appealed to the First District Appellate Court. 

On appeal, the Appellate Court first reviewed the municipal ordinance requirement and held that the ordinance clearly defined "residency" for purposes of the employment residency requirement to require a village employee to occupy a dwelling place used as a home as the employee's principal place of residence and abode. In this case, the court found that Cannici did not occupy the Melrose Park home for three years while it was being rented out, and his primary residency and abode was in the Orland Park home where his family lived.  The court rejected Cannici's argument that the court should have applied the residency test used by the Appellate Court in the Maksym case involving the challenge to former Chicago Mayor Emanuel's residency, which examined the person's intent to return to the home. The court acknowledged that the court in the Maksym case had to craft a definition of residency because the statute at issue in that case (residency for purposes of eligibility for municipal office) did not define "residency." Here, however, the court noted that Melrose Park's ordinance at issue did, in fact, define residency, and that definition required actual occupancy rather than intent.

Municipalities with residency requirements may want to look at their own ordinances to determine whether they have a clear definition of residency, as that could be helpful in defending any challenge to the application of the ordinance.

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Quorum Forum Podcast 25: Recreational Cannabis

Quorum Forum Podcast 25: Recreational Cannabis

  Monday, June 10, 2019    Julie Tappendorf

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There is a lot of information available in news articles, blogs, and social media about the recreational cannabis legislation recently passed by Illinois, which is awaiting the Governor's signature. For those of you who want to learn more, or just prefer to "hear" your news, we've put together a Quorum Forum podcast episode on the legislation.  More information below:

Quorum Forum Episode 25: Recreational Cannabis

The Illinois General Assembly recently approved recreational cannabis and, with the Governor’s expected signature, the new law will bring sweeping changes for local governments and employers. Ancel Glink’s Adam Simon and Matt DiCianni discuss questions local governments will have about cannabis business regulations, personal use, possession, home cultivation, state and local taxes, prosecutions, expungements, and more! We also discuss how recreational cannabis will affect employers and employees in the workplace. 

Questions about the new law? Do you know who might have climbed in to our podcast studio? Email us at podcast@ancelglink.com.

Disclaimer: This podcast is provided as a service to our public and private sector clients and friends. It is intended to provide timely general information of interest, but should not be considered a substitute for legal advice. Read our full disclaimer.

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Illinois Levels the Playing Field for Internet Sales Taxes

Illinois Levels the Playing Field for Internet Sales Taxes

  Thursday, June 06, 2019    Julie Tappendorf

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Last June, we posted about a Supreme Court decision that eliminated the requirement that a retailer have a physical presence in a state for it to be subject to the assessment of sales taxes. After the Wayfair decision, Illinois adopted Public Act 100-0587 amending the Use Tax Act and Service Use Tax Act to incorporate language to tax Internet transactions. Unfortunately for municipalities, the Use Tax and Service Use Tax is not distributed to municipalities based on the point of sale or point of delivery, but on a per capita basis. So, while Illinois has been taxing Internet transactions, this was not the golden goose many communities had hoped for when the Wayfair case was decided.

Now, Illinois municipalities can truly celebrate. In the flurry of legislative activity over the weekend, monumental changes to Illinois’ sales tax laws were adopted (pending the Governor’s approval) in SB 690, including a new law called “Leveling the Playing Field for Illinois Retail Act.” As its name indicates, the purpose of the law is to facilitate the payment and collection of sales taxes from “remote retailers,” including Internet sales.

Significant to municipalities, the bill would now require the payment of the Retailers’ Occupation Tax and eliminate the payment of Use Tax or Service Use Tax on such sales, effective July 1, 2020. That means these sales taxes will now include the 1% local share. Not all Internet sales are subject to a tax under the law. A remote retailer is only responsible for paying a tax (and therefore collecting it from purchasers) if (1) the cumulative gross receipts from sales to purchasers in Illinois are $100,000 or more; or (2) the retailer enters into 200 or more separate transactions with purchasers in Illinois.

Another change worth noting is that the taxing jurisdiction that will receive the local tax is determined based on where the purchase is shipped or delivered. This is a “point of delivery” rule, which is different from the “point of sale” rule that applies to in-state transaction.

In addition to the changes described above, the bill directs the Illinois Department of Revenue to designate certified service providers who will perform the tax collection function for remote retailers and to create automated software systems to simplify the tax collection process. Part of the software system will include an electronic, downloadable database which (1) classifies the taxability of each type of personal property, (2) defines the tax rates for each jurisdiction in the State, and (3) assigns delivery addresses to each taxing jurisdiction. With any luck, this should create a turnkey solution to help remote retailers comply with the obligation to pay sales tax on transactions with Illinois residents.

As we continue to review the legislation, and any Department rules to implement these changes, we will provide updates on whether municipalities need to amend their local tax ordinances to capture their local sales taxes on remote transactions in addition to the local share of the State sales tax.

Post authored by Adam Simon

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Police Scheduling Calendar Subject to FOIA

Police Scheduling Calendar Subject to FOIA

  Wednesday, June 05, 2019    Julie Tappendorf

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The PAC issued its fifth binding opinion in 2019 last week in PAC Op. 19-005. In this opinion, the PAC found the Chicago Police Department in violation of FOIA for denying a request for release of "extradition calendars." 

CPD personnel who work in the field services section on prisoner extradition matters put together a working schedule calendar containing various assignments to assist the officers and their supervisors in keeping track of court dates and related activities in the department. In response to a FOIA request for a copy of the calendar, the CPD denied the request, citing 7(1)(f), which exempts draft or predecisional documents from release.  The CPD argued that the calendar was created by the officers, not the CPD itself, and that the calendar was constantly updated based on evolving schedules. The requester filed an appeal with the PAC, which rejected the CPD's basis for denial, finding the extradition calendar to be releasable under FOIA. Specifically, the PAC stated that because the calendar was purely factual in nature, it did not fall under the "deliberative process" exemption under 7(1)(f).

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Illinois General Assembly Passes Recreational Marijuana Bill

Illinois General Assembly Passes Recreational Marijuana Bill

  Tuesday, June 04, 2019    Julie Tappendorf

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The Illinois General Assembly was quite busy last week, passing legislation legalizing the recreational use of marijuana, expanding gambling, putting forth a ballot question on modifying the state income tax provisions of the Illinois constitution, passing a budget, among many other bills. It is expected that Governor Pritzker will sign these bills into law. 

Although all of these will have an impact throughout the state, the legalized marijuana bill (HB 1438) may have the most impact on local governments. We had reported previously on an earlier draft of the recreational marijuana bill but the bill that passed both houses was substantively changed from that first bill. 

The bill allows state residents over the age of 21 to possess up to 30 grams of cannabis beginning January 1, 2020. Personal cannabis use will be allowed in most private residences, but not in prohibited areas including any public place or in close physical proximity to underage persons. An earlier proposal allowed households to grow up to five cannabis plants, but this new law would limit home cultivation to medical cannabis patients.

So, how does the bill affect local governments?

Will your Community Allow Cannabis Businesses?

The bill allows local governments to ban or significantly limit cannabis businesses in their jurisdiction, including dispensaries, cultivation centers, craft growers, processing organizations, and transportation organizations. Unlike in earlier proposals, the new law would not impose a time limit or require a referendum to adopt these restrictions.

How will your Community Regulate any Allowed Cannabis Businesses?

The bill allows local governments to adopt (1) reasonable zoning ordinances that do not conflict with the Act; and (2) ordinances and rules governing the time, place, manner, and number of cannabis businesses consistent with the Act.

Will your Community Allow Cannabis Lounges?

The bill grants local governments broad authority to authorize and regulate privately-owned facilities where cannabis and cannabis products may be consumed on-site (i.e., “cannabis lounges”) similar to hookah lounges.

Will Your Community Tax Recreational Cannabis?

Both home rule and non-home rule municipalities can adopt ordinances to impose a local tax on the operation of a cannabis dispensary. The rate of tax cannot exceed 3% of the dispensary's gross receipts from the sale of non-medical cannabis. If imposed, the tax may only be imposed in 0.25% increments. The tax will be collected and enforced by the Department of Revenue, which is entitled to retain 1.5% of the amount distributed to each municipality as an administrative fee.

How will your Community Engage in Crime Prevention?

In a change from prior proposals, the Cannabis Regulation Fund will now transfer 8% of the state tax revenue to the Local Government Distributive Fund (LGDF) to fund crime prevention programs, training, and interdiction efforts, including detection, enforcement, and prevention efforts, relating to the illegal cannabis market and driving under the influence of cannabis.

How will your Community Prosecute Cannabis Use and Possession?

While local ordinances cannot prohibit home cultivation for medical use or unreasonably prohibit personal cannabis use, local governments can regulate these activities consistent with the Act and should consider adopting ordinances enforceable through municipal prosecutions.

What Law Enforcement Records Should be Automatically Expunged?

In a significant change from prior proposals, expungements will now take place in three different processes: petitions (for Class 4 felonies), pardons from the Governor, and automatic expungements (for offenses of simple possession of no more than 30 grams, in certain circumstances). Many of the records will relate to municipal code violations, which will be required to be expunged according to a schedule described in the bill that will give municipalities until January 1, 2025 to expunge records that precede January 1, 2000.

How will you Manage Recreational Cannabis and your Employees?

Employers will likely want to update their personnel policies once the new law becomes effective. Employers will have the authority to adopt zero tolerance policies or other policies concerning drug testing, smoking, consumption, storage, or use of cannabis in the workplace provided that the policy is applied in a nondiscriminatory manner. In addition, employers will have the power to discipline or terminate an employee for violating an employer’s employment policies or workplace drug policy, subject to an appeals process. An employer may consider an employee to be impaired or under the influence of cannabis if the employer has a good faith belief that the employee manifests specific, articulable symptoms while working that decrease or lessen the employee’s performance of the duties or tasks. Additionally, the law prohibits discrimination against employees for use of “lawful products” like cannabis during nonworking and non-call hours.

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City’s Sign Restrictions Not Enforceable

City’s Sign Restrictions Not Enforceable

  Monday, June 03, 2019    Julie Tappendorf

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Lawrence Willson, a homeowner in Bel-Nor, Missouri, displayed three free-standing stake-mounted signs in his front yard. One sign stated “Black Lives Matter,” and had been in his yard since 2014.  The other two signs (which had been in place since 2016) stated “Clinton Laine,” and “Jason Kander U.S. Senate.” Each of the signs was approximately 18 by 24 inches in size. In 2017, the City issued a citation for violation of a local law restricting homeowners from displaying more than one “stake-mounted” sign at a time, among other restrictions.

Willson subsequently sued the City, claiming the City’s ordinance violated his free speech and other constitutional protections. The district court ruled in the City’s favor, finding the ordinance was content-neutral and narrowly tailored to address the City’s interests in aesthetics and traffic safety.

On appeal, however, the 8^th District Court of Appeals blocked Bel-Nor from enforcing its sign law. Citing the U.S. Supreme Court’s ruling in Reed v. Town of Gilbert, the court noted that “content-based laws - those that target speech based on its communicative content - are presumptively unconstitutional and may be justified only if the government proves that they are narrowly tailored to serve compelling state interests.” In this case, the 8^th District found a provision in the City’s ordinance that treats signs and flags differently, depending on their content, problematic. Specifically, the court noted that whether a particular “fabric” is a sign or a flag under the City’s ordinance depends on the “topic discussed or the idea or message expressed.” Since the topic or message of the sign/flag determines whether a sign or flag is prohibited by the ordinance, the ordinance is a “content-based” regulation under the Reed case, and the court found that the City could not show a compelling government interest to justify the regulation.

To read Willson v. City of Bel-Nor, click here.

Post Authored by Megan A. Mack and Julie Tappendorf

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