Reminder: Sales Tax Rebate Reports Due April 1st

Reminder: Sales Tax Rebate Reports Due April 1st

  Tuesday, March 26, 2013    Julie Tappendorf

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Any municipality that enters or has entered into a sales tax rebate agreement to share sales taxes with a retailer within its borders is now subject to new reporting requirements with the Illinois Department of Revenue.  P.A. 976.  Reports must be filed by April 1st for all existing sales tax rebate agreements.  For all new sales tax rebate agreements or amendments to existing agreements, reports must be filed within 30 days of the execution of the agreement or amendment. 

 

The report must be on a DOR form and contain the following information:

 

1.   the names of the municipality and business that are parties to the agreement.

 

2.   the location or locations of the business within the municipality.

 

3.   a statement as to whether or not the company maintains other places of business in Illinois.

 

4.   the terms of the agreement, including (a) the manner in which the sales taxes are shared, rebated, or refunded for each year of the agreement; (b) the term of the agreement; and (c) the name of any other business that is not a party to the agreement who receives a share, refund or rebate of the tax.

 

5.   a copy of the agreement.

 

These reports will be redacted by the DOR prior to posting on its website to remove the sales figures, amount of sales tax collected, and amount of sales tax rebated. 

 

Post Authored by Julie Tappendorf, Ancel Glink

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Just Compensation Does Not Include Future Improvements

Just Compensation Does Not Include Future Improvements

  Monday, March 25, 2013    Julie Tappendorf

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Extensive flooding on a parcel of land reduced its value from $54,411 to $15,137.  The owners received a grant of $28,200 from FEMA to partially compensate for the loss in property value.  Shortly after the flood, the City made an offer to purchase the property from the owners to use it for drainage purposes, but the parties were not able to reach agreement. The owners applied for another grant to fund renovations to their property, this time from the County Health Department.  The City contacted the County and directed that the grant application not be further processed. Shortly thereafter, the City filed a condemnation action to acquire the property, and the parties agreed to settle the condemnation action for $13,500. 

 

The owners then filed suit against the City in federal court, claiming that the City's interference with its grant application violated their due process rights. The district court dismissed the suit, and the owners appealed to the Seventh Circuit. The Seventh Circuit affirmed, finding that the owners had already received just compensation for their property based on the valuation as of the date of the filing of the condemnation complaint. Consequently, the owners were not due any compensation for future improvements they were planning to make to their property if they received the grant, and they received all that they were entitled to under Illinois law.  Cary v. City of Watseka (March 15, 2013 unpublished opinion).

 

Post Authored by Julie Tappendorf, Ancel Glink

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Sign-In Requirement to Attend Public Meeting Upheld

Sign-In Requirement to Attend Public Meeting Upheld

  Tuesday, March 19, 2013    Julie Tappendorf

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An Ohio public body required all attendees at its public meetings to sign in before they were admitted into the meeting.   Plaintiffs filed suit against the public body alleging that the board's sign-in rule violated the Ohio Sunshine Law. Paridon v. Trumbull County Childrens Services Board. The plaintiffs argued that they have an "absolute, unfettered right to attend public meetings" and a public body is not entitled to impose any condition on their right to attend meetings. The circuit court denied the plaintiffs' request for an injunction, finding that the sign-in policy did not violate the state's open meeting law. 

The appellate court applied a "limited public forum" analysis, holding that a public body has the right to place limitations on the time, place and manner of access to its meetings, so long as its restrictions are content-neutral and narrowly tailored to serve a significant government interest. In upholding the sign-in policy, the court cited Hansen v. Westerville City S.D., a Sixth Circuit Court of Appeals decision that upheld a public body's policy limiting the overall length of public participation at a meeting, the number of speakers, and the duration of their comments as a permissible time, place, and manner restriction.  First, the County's interest was to protect the children it served.  Second, the sign-in requirement was content-neutral and was not aimed at certain groups or persons, but universally applicable. Third, the policy only required persons to sign his or her name, and the County did not use the information provided on the sign-in sheet. Finally, the court noted that if the legislature had intended to include an anonymity requirement in the open meeting law, it could have done so but no such language was included.  Consequently, the court upheld the trial court's finding that the sign-in requirement was lawful.

 

Post Authored by Julie Tappendorf, Ancel Glink

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Ordinance Banning Begging is Content-Based Speech

Ordinance Banning Begging is Content-Based Speech

  Thursday, March 14, 2013    Julie Tappendorf

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The City of Charlottesville passed an ordinance that prohibited the solicitation of money within an area of outdoor cafes and restaurants, known as the “Downtown Mall.” A group of men described as “reliant to a certain extent on begging,” brought a civil rights lawsuit against the City challenging the constitutionality of the ordinance. The plaintiffs argued that the ordinance violated their First Amendment right to beg and restrained their speech and livelihood.

The challenged ordinance provides, in pertinent part, as follows:

 

(a) It shall be unlawful for any person to solicit money or other things of value, or to solicit the sale of goods or services:

. . .

(9) On the Downtown Mall within fifty (50) feet (in any direction) of 2nd Street West and 4th Street East, when those streets are open to vehicular traffic.

. . .

Solicit means to request an immediate donation of money or other thing of value from another person, regardless of the solicitor’s purpose or intended use of the money or other thing of value. A solicitation may take the form of, without limitation, the spoken, written, or printed word, or by other means of communication (for example: an outstretched hand, an extended cup or hat, etc.). 

(c) Any person violating the provisions of this section shall be guilty of a Class 3 misdemeanor.
 

The district court held that the plaintiffs did have standing to sue the City but dismissed the case, finding that the plaintiffs failed to allege a cognizable First Amendment claim. The district court further found the ordinance to be content-neutral and a permissible time, place, and manner restriction.

The plaintiffs appealed to the Fourth Circuit, which reversed the district court’s dismissal of the action. The court reasoned that First Amendment protections are the strongest in traditional public forums, such as the Downtown Mall at issue. The court found that the City's ordinance prohibited content-based speech because it distinguished between types of solicitation. Also, the court found that the ordinance lacked a statement of purpose to lay out the reasons for its enactment. As such, the Fourth Circuit held that the complaint did state a valid First Amendment claim and remanded the case back to the district court for further proceedings. Clatterbuck v. City of Charlottesville, No. 12-1149 (4^th Cir. February 21, 2013).

Post Authored by Erin Baker, Ancel Glink.

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Illinois Bills Propose to Amend OMA and FOIA

Illinois Bills Propose to Amend OMA and FOIA

  Wednesday, March 13, 2013    Julie Tappendorf

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In this latest legislative session, there have been a number of bills introduced to amend the Open Meetings Act and Freedom of Information Act.  The Illinois Municipal League has done an excellent job summarizing 20 of these proposed bills on its website.  One of the proposed OMA bills seems particularly troubling to local governments. 

 

HB 2872 would amend the OMA to provide that if a person requests information from the corporate authorities of a public body during a meeting, and the public body does not respond to that request during the meeting, then the corporate authorities are required to follow up with a written response to the request prior to or at the next meeting of the public body.

 

There are plenty of issues with this proposed legislation, some of which are raised below.  

First, state law already provides a procedure for requesting and obtaining information from a public body.  Under the Freedom of Information Act, an individual can request a copy of a public record, or inspect a public record, and the public body has five business days to respond to that request.  The Open Meetings Act is not intended to be a public record or information statute. Instead, the purpose of the OMA is to govern the conduct of meetings of public bodies, including establishing certain notice obligations and permitting the public to attend. 

Second, it is unclear how the "corporate authorities" would provide a written response by the next meeting.  The corporate authorities of a public body (e.g., a village board or city council) act legislatively - must they first list their response on the next meeting agenda for action before they release it?  Did the bill sponsor mean to say the public body must respond? 

Third, how will this bill be enforced?  Since the new obligation is under the OMA (rather than FOIA), does that mean criminal penalties will apply for non-compliance? 

Fourth, public comment is intended to allow individuals to express their opinions, not engage in a debate - does this proposed legislation suggest that the corporate authorities (as a legislative entity, no less) are obligated to respond to questions? 

Fifth, what if there are different views or positions among members of the corporate authorities - must the corporate authorities respond with a majority and minority response? 

There is simply no need for the establishment of a new public information procedure within the OMA when a perfectly adequate procedure already exists under FOIA.  If an individual requests information at a public meeting and does not obtain that information, he or she always has the right to file a FOIA request to either inspect or receive a copy of the public record containing the information he or she seeks.

 

Post Authored by Julie Tappendorf, Ancel Glink

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Ordinance Banning Minors From Bar Does Not Violate First Amendment

Ordinance Banning Minors From Bar Does Not Violate First Amendment

  Tuesday, March 12, 2013    Julie Tappendorf

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The City of Fort Myers, Florida has an ordinance in place prohibiting anyone under the age of 21 from entering or remaining in bars and taverns in the City. The Indigo Room (a bar) hosted a petition drive sponsored by the "Occupy Fort Myers" movement. A 19-year old entered the Indigo Room to sign a petition and was issued a citation for violation of the City ordinance. Both the minor and the Indigo Room sued the City, claiming that the ordinance violated their First Amendment right to free speech. The plaintiffs argued that the ordinance had a chilling effect on the exercise of political speech and that the ordinance was unconstitutionally vague. The district court denied the plaintiffs a preliminary injunction, and they appealed to the 11th Circuit Court of Appeals. The 11th Circuit affirmed in The Indigo Room, Inc. v. City of Fort Myers (March 1, 2013).

 

First, the Court of Appeals held that the ordinance does not act as a prior restraint of speech. In fact, the ordinance does not regulate speech at all, and instead regulates the admittance of minors into bars and taverns.

 

Second, the Court of Appeals held that the ordinance was not unconstitutionally vague. The ordinance provides adequate notice of what conduct is prohibited (i.e., minors cannot enter bars and taverns). The fact that the ordinance exempts restaurants from the ban does not render the ordinance vague, where restaurants are clearly defined by the ordinance. The ordinance was not facially vague because persons of reasonable intelligence can derive a core meaning from the ordinance - that persons under the age of 21 are not permitted in bars and taverns. 

 

Post Authored by Julie Tappendorf, Ancel Glink

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City's Holiday Display Did Not Violate First Amendment

City's Holiday Display Did Not Violate First Amendment

  Friday, March 08, 2013    Julie Tappendorf

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In Freedom from Religion Foundation, Inc. v. City of Warren, the Sixth Circuit Court of Appeals dismissed the plaintiff's constitutional challenge to the City's annual holiday display in its civic center. The Foundation had requested that the City remove its holiday display from the atrium of the civic center that included both secular and religious symbols (lighted tree, reindeer, snowmen, and a nativity scene, among other displays). The City refused.  The Foundation then asked the City to include its "Winter Solstice" sign in the display that included language such as "religion is but a myth" and that "there is no god," among other statements. When the City refused to add the Foundation's sign to its display, the Foundation sued, claiming that the City's violated the establishment and free speech clauses of the First and Fourteenth Amendments.  The district court ruled in favor of the City, and the Foundation appealed.

 

On appeal, the Sixth Circuit first determined that the nativity scene did not amount to an establishment of religion or an impermissible endorsement of religion.  The Court cited the cases of Lynch v. Donnelly and County of Alegheny v. ACLU in which the U.S. Supreme Court had developed a framework for analyzing whether holiday displays would violate the establishment clause of the First Amendment, finding that multi-purpose, multi-symbol holiday displays did not offend the establishment clause.  Based on these cases, the Court similarly held that Warren's holiday display was similarly multi-symbol in nature and constitutional. 

 

Second, the Court rejected the Foundation's argument that the City was impermissibly advancing religion based on the Mayor's letter denying permission to include the Foundation's sign within the City's holiday display.  The Court held that the City did not violate the Foundation's free speech protections when it denied permission to install the Winter Solstice sign because the display was government speech and the First Amendment does not prohibit a government from making content or viewpoint distinctions for its own speech. The First Amendment also does not require strict neutrality, so long as the City did not violate the establishment clause or other constitutional guarantees.  Moreover, the City's civic center atrium has limited floor space, and the City had the right to control that space.

 

Post Authored by Julie Tappendorf, Ancel Glink

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No Evidence of Racial Discrimination in Zoning Case

No Evidence of Racial Discrimination in Zoning Case

  Thursday, March 07, 2013    Julie Tappendorf

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A property owner and the operator of a former hotel on the property desired to sell his property for development of a senior housing facility.  The owner sought zoning relief to allow senior housing, which was not permitted in the manufacturing district in which the property was zoned.  The City denied the zoning relief, and the owner brought suit against the City on various grounds, including that (a) the City had engaged in racial discrimination in amending its zoning code and denying zoning relief to allow the senior development and (b) the City's zoning code was unconstitutionally vague.

 

The Seventh Circuit ruled in favor of the City, finding that the owner did not provide any evidence of racial discrimination in the City's zoning process. The Court determined that it was not unreasonable for the City to restrict residential uses in a manufacturing district in order to protect the residents from the effects from heavy industrial and manufacturing-type uses.  As noted by the Court, "[i]t is even easier to see why a retirement home would be an inappropriate use in a heavy industrial district, and specifically in the M-2 district in which Parvati’s former hotel is located."  The Court also held that the owner did not provide evidence of any damages incurred because of the City's zoning process, and that the City had cured any alleged deficiency in the ordinance.

 

Post Authored by Julie Tappendorf, Ancel Glink

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Bill Would Require a Hearing to Increase Municipal Salaries

Bill Would Require a Hearing to Increase Municipal Salaries

  Wednesday, March 06, 2013    Julie Tappendorf

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The Illinois General Assembly has introduced SB 1222 that would amend the Open Meetings Act and the Illinois Municipal Act to require the corporate authorities of a municipality to conduct a public hearing before it could vote on any increase in a municipal officer's or employee's earnings that would exceed 6% over the previous year's earnings.  The bill would create an "exception to the exception" that allows public bodies to discuss the compensation of individual employees in closed session.  It would also require the public body to publish notice at least 15 days but no more than 30 days prior to the hearing, similar to the notice required for zoning hearings. Members of the public would be permitted an opportunity to present testimony and evidence in favor of or in opposition to the proposed salary increase.  The new law would pre-empt home rule authority.  The bill also applies to counties and townships, but not the State of Illinois or other governmental entities.

 

This legislation certainly raises a few questions as to its application.  First, it is not clear from the language in the proposed legislation whether a public body would have to notice and conduct a separate public hearing for each employee or officer who would fall under this new mandate. Second, the proposed legislation does not define what would be included in the definition of "salary."  Third, it is not clear how this legislation would affect existing or future collective bargaining agreements with public employees. 

 

Post Authored by Julie Tappendorf, Ancel Glink

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No Insurance for Crestwood in Water Contamination Cases

No Insurance for Crestwood in Water Contamination Cases

  Tuesday, March 05, 2013    Julie Tappendorf

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The Illinois Attorney General filed suit against the Village of Crestwood seeking an injunction and fines for failure to comply with certain laws and regulations relating to the Village's water supply. The Village was accused of knowingly and routinely mixing cheap, polluted water from a groundwater well into the municipal tap water supply to save money.  The well had been contaminated with PCE and other chemicals from a nearby dry cleaning industry. In 1985, the IEPA ordered the Village to stop using the water.  In addition, in 1988, a firm hired by the Village to test the water confirmed contamination.  Nevertheless, according to the court, the Village continued to use the well to provide up to 20% of the community's tap water for over 20 years. 

 

The Village's insurers refused to cover the Village's defense of the individual and class action lawsuits that were brought against the Village relating to its water supply, relying on the pollution exclusion clauses in the Village's policies.  The Village sued the insurance companies, and the circuit court ruled against the Village, finding that the claims fell within the pollution exclusions. 

 

The appellate court affirmed.  Village of Crestwood et al. v. Ironshore Specialty Insurance Company et al., 2012 IL App (1st) 120112.  The court analyzed the pollution exclusions in the various insurance policies, finding that they all excluded coverage for claims arising out of the discharge of a pollutant. The court rejected the Village's argument that it was not the "actual polluter" and coverage should not, therefore, be denied.  The court disagreed, finding that the Village's knowing contamination of its water supply with chemical-laden groundwater fell within the definition of a pollutant under the insurance exclusion clauses. The court also rejected the Village's argument that it was merely a negligent distributor of groundwater contaminated by another entity, finding that the Village caused the contamination by introducing the contaminated water into the clean water system.  Thus, the Village's insurance carriers will not be responsible for defending the Village in the various lawsuits relating to the use of contaminated water.

 

Post Authored by Julie Tappendorf, Ancel Glink

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Village Liable to Subcontractors in Developer Bankruptcy

Village Liable to Subcontractors in Developer Bankruptcy

  Monday, March 04, 2013    Julie Tappendorf

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The Village of Antioch approved two residential developments proposed by Neumann Homes.  Lake County Grading Company, LLC v. Village of Antioch, 2013 IL App (2d) 120474.  Conditions were imposed that required Neumann to construct certain public improvements to be dedicated to the Village. The approvals also required Neumann to provide the Village with surety bonds to secure the cost of the improvements.  Neumann entered into various contracts for that work, including a contract with Lake County Grading Company to perform grading work. Neumann filed for bankruptcy, and never paid Lake County for the grading work it completed.  Lake County Grading filed claims against the surety bonds provided by Neumann to secure the work.  However, because the language of the surety bonds guaranteed performance by Neumann but were silent regarding payments to subcontractors like Lake County Grading, the surety companies refused to pay the subcontractor.

 

Lake County Grading then filed suit against the Village, claiming that the Public Construction Bond Act required the Village to obtain both a performance bond to secure the work and a payment bond to protect subcontractors.  According to Lake County Grading, the Village's failure to comply with the payment bond requirement of the Act rendered it liable for third party beneficiary breach of contract.  The circuit court granted summary judgment to Lake County Grading on this theory, and the Village appealed, claiming that the payment bond provision should have been "read into" the surety bonds, and Lake County Grading's recourse was through its surety claims.

 

On appeal, the court first determined that Lake County Grading qualified as a third-party beneficiary. The court held that the payment bond requirement of the Bond Act is to be read into any public works contract between a public entity and a general contractor.  In this case, the court determined that the Village's approval of the Neumann Homes development was the type of "contract" covered by the Bond Act.  As a result, the Village was required to obtain a performance and payment bond from Neumann Homes for the public improvements work. Because it did not require both types of bonds, the Village violated the Bond Act and breached the contract.  As a third party beneficiary to that contract, Lake County Grading was entitled to recover its costs for the grading work from the Village under a breach of contract theory.  The court refused to follow the First District appellate decision in Shaw Industries, Inc. v. Community College District No. 515, where the court reached the opposite conclusion.  In the Shaw case, the Second District determined that a subcontractor was not a third party beneficiary under the express terms of the contract between a public entity and a general contractor.  Instead, the First District in the Lake County Grading case relied on federal cases in reaching its holding that Antioch was liable to the subcontractor.

 

Municipalities would be well advised to ensure that developers provide the appropriate security for public improvements to avoid being liable to subcontractors if the developer fails to pay their bills.

 

Post Authored by Julie Tappendorf, Ancel Glink

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Proposed Legislation Would Abolish Local Electoral Boards

Proposed Legislation Would Abolish Local Electoral Boards

  Friday, March 01, 2013    Julie Tappendorf

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In Illinois, when an objection is filed to a local government candidate's nominating papers, a local electoral board is convened to conduct a hearing and make a decision on the objection.  The local electoral board is made up of the mayor, clerk, and senior trustee in a municipality and the township supervisor, clerk, and senior trustee in a township. 

 

The composition of a particular electoral board convened to hear an objection can raise allegations of conflicts and bias of its members.  The Election Code addresses the situation where a member of the electoral board is a candidate for the same office as the candidate whose papers are being objected to. That person is statutorily ineligible to serve on that electoral board.  In addition, officials can be disqualified if they are necessary witnesses to the electoral board proceeding.  A perceived political bias of a particular member or board is not a valid basis to disqualify a member from serving on an electoral board, however.  That is true even if an electoral board member is a member of a competing party to the candidate or candidates being challenged. 

 

House Bill 2636 would abolish municipal, township, and community college electoral boards and require all objections to candidates for public office in these entities to be heard by the county officers electoral board.  The county officers electoral board is made up of the county clerk or designee, the states attorney or assistant states attorney, and the dircuit court clerk or designee, except in counties that have established a board of election commissioners to hear these objections.

 

There are still a number of unanswered questions about the proposed legislation, particularly as they relate to how the local election official is to process the objections, including receipt, service, and scheduling of hearings.  Given the sheer number of local objections filed each election cycle, this change will have a significant impact on counties who will be tasked with these additional responsibilities and hearings, all of which must take place in a very short period of time based on the statutory deadlines for transmitting, noticing, and hearing these objections.  This isn't the first time similar legislation has been introduced in the General Assembly, so this bill may not gain any traction.

 

We will certainly keep an eye on this piece of legislation.

 

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