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Monday, March 25, 2024

In the Zone: Illinois Appellate Court’s Interpretation of Annexation Agreement Favors Municipality

In 2000, an industrial developer (Industrial Developer) began construction of a transportation and logistics hub in unincorporated Will County. The development was located adjacent to Union Pacific Rail tracks that run parallel to an Illinois highway. Because the development was projected to increase traffic on nearby roads, in 2001 the Village petitioned the Illinois Commerce Commission (ICC) for a permit to construct a ground-level railroad crossing for an extended road that would relieve traffic to and from the highway. The Village’s petition was granted and the railroad crossing was completed in 2004.

In 2007, the Industrial Developer and the Village entered into an annexation agreement (Agreement) to annex the development site into the Village. As part of the Agreement, the Industrial Developer agreed to construct all roadways required by the Illinois Department of Transportation (IDOT) at its own expense, and the Village agreed to provide any documents required for the Developer to obtain any IDOT approvals or permits for building the required roadways. As part of the concept plan for the development, the Industrial Developer indicated that it planned to extend the road that the Village had constructed to cross the rail tracks and create a four-way intersection with the highway to connect to other local roads. By 2010, this extension was complete and the intersection was open to vehicles.

Several years later, however, the ICC determined that the ground-level crossing was not safe for vehicles, but suggested that a elevated bridge over the rail tracks and the highway could provide a safe alternative for local traffic. During this time, the Industrial Developer deeded several lots to another company (Commercial Developer) that then sought to annex its land to the Village. As part of its proposal, the Commercial Developer offered to construct a bridge at the railroad crossing site. The Village declined this proposal. The Commercial Developer filed a petition with the ICC seeking a permit for the proposed bridge, but their application was incomplete without the agreement of the Village. The Developers sent a notice to the Village, arguing it was obligated under the Agreement to support their petition to the ICC for permits to build a bridge across the rail tracks and highway. Again, the Village declined, leading to litigation to determine the parties' rights and obligations under the Agreement. The trial court determined that the Village was obligated to support the Developers’ petition to the ICC to build a bridge. The Village appealed.

On appeal, the Appellate Court reversed the trial court’s decision and determined that the Annexation Agreement did not impose a duty on the Village to support the petition for a bridge. Village of Elwood v. LB Anderson Land Holding, LLC, et al. The Court relied on the plain language of the Agreement and found that although the Village had a duty to provide necessary documents and support to IDOT for the construction of roadways and intersections, the Agreement did not consider (1) the building of a bridge or (2) any applications or petitions to the ICC. The Court stated that “[a] bridge is not an intersection,” and distinguished the jurisdiction of the ICC and IDOT to determine that the proposed bridge was not a project considered by the parties when drafting the Agreement and considering collaboration on public improvements.

Based on the plain language of the Agreement, the Appellate Court held that the Village had reasonable discretion to decide it would not cosign the petition to build a bridge over the rail tracks and highway. While the closure of the ground-level crossing was an unexpected occurrence that impacted the Developers’ access to local roadways, the construction of the crossing in the first place demonstrated that the parties understood that the Village’s obligations to support the Developer only extended to roads and intersections. For these reasons, the Court determined that the Village had no duty to execute the petition in favor of a bridge over the rail tracks and highway.

Post Authored by Erin Monforti, Ancel Glink 


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