Illinois Supreme Court Upholds Road Impact Fees as Condition to Annexation
Last year, we reported on an Illinois Appellate Court decision that upheld the validity of an intergovernmental agreement (IGA) between a county and municipalities that provided for the imposition of road impact fees on developers as a condition to annexation. That ruling was appealed to the Illinois Supreme Court which issued a decision upholding the Appellate Court's ruling in Habdab v. County of Lake, et al.
In 2009, Mundelein (Village), Lake County (County), and two other municipalities entered an IGA to provide for construction funding for highway improvements that would serve each municipality. The IGA required that half of the costs of the improvements be paid by the public and the other half be paid by impact fees on future developers who build near the improvements. The fee amounts were calculated depending on the size and location of each parcel. The IGA required the municipalities to require that developers proposing to annex property into the municipality to enter into annexation agreements that would include provisions stating that a developer’s plans would not receive final zoning approvals until the required impact fees were collected.
A developer filed a lawsuit against Mundelein and the County when they tried to collect the road impact fees. The developer argued that the fees constituted road improvement impact fees that do not comply with the Impact Fee Law and that the fees were "unconstitutional conditions." Both the circuit court and Appellate Court rejected the developer's arguments and ruled in favor of the Village and County.
On appeal, the Illinois Supreme Court agreed with the Appellate Court that the road impact fees imposed through the IGA did not constitute "road improvement impact fees" under the Impact Fee Law. The Court distinguished between the IGA imposed fees (which are a condition to annexation) and the Impact Fee Law's "road improvement impact fees" (which are imposed as a condition to the issuance of a building permit or certificate of occupancy). In addition, the Illinois Supreme Court noted that the annexation agreement statute expressly authorizes municipalites to require contributions of either land or monies as a condition of annexation.
Finally, the Illinois Supreme Court rejected the developer's argument that the fees imposed through the IGA constituted "unconstitutional conditions," agreeing with the Appellate Court's finding that there was an essential nexus between the condition (impact fees) and a legitimaate state interest (preventing congestion and providing road improvements to ease it) and that a rough proportionality existed between the burden on the developer and the harm the government sought to remedy through the imposition of the fees.
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