GARDNER – An appellate court has upheld the Grundy County court’s decision in favor of Gardner-South Wilmington High School in its lawsuit against the village of Gardner for withholding tax money.
“It has been an epic battle,” Ken Florey, attorney for School District 73, said Friday.
The appellate court released its opinion in favor of the school Thursday.
Village of Gardner attorney Scott Belt said Friday he will meet April 28 with the Gardner Village Board, where what to do next will be decided.
If the Village Board wants to continue to fight the ruling, it has 28 days to petition for a review or to appeal, Belt said.
School District 73 filed the lawsuit in October 2012, alleging the village violated a 1986 Tax Increment Financing agreement under which the school should have received more than $400,000 in 2012.
Since that time, the village has paid all, but about $70,000 to the school – the amount the village disputed, Belt said.
The village had maintained that, under a new law, it is required to make sure the taxing bodies are spending the TIF funds properly, and it appeared the district was not.
“All municipalities that create TIF districts now have to provide specific accounting of TIF funds to the comptroller. That was the trigger that brought this to the discussion point,” Belt said.
A TIF district allows for municipalities to develop or redevelop blighted areas by freezing equalized assessed values and using the monetary difference between the frozen EAV and current EAVs to fix up the areas.
Following its TIF counsel’s guidance, the village argued the TIF money was only to be used for capital expenses, such as new construction and remodeling. When the village discovered some of the money, about $70,000, was being used for salaries and benefits, it withheld the money.
Gardner-South Wilmington school district argued – and Judge Robert Marsaglia and now the Third District Appellate Court of Illinois agreed – its agreement is a license agreement, differing from a traditional TIF agreement, and it allowed the district to use the funds however the school needs.
“It was a pretty straightforward breach of contract,” Florey said.
“Neither the statute or the contract placed restrictions on how we could spend our money,” he said.
The district and the village’s agreement is for use of its recreational facilities to be used by the public when the school is not using them. In return for the use, the district gets a portion of the village’s TIF funds.
The appellate court opinion states the agreement between the village and district is a license agreement to use the district’s recreational facilities within its TIF district. Therefore the TIF Act does not restrict how the district spends its funds.
Florey said the appellate court chose to publish this opinion, which he said signifies the importance of this case not only to Gardner-South Wilmington High School, but to schools in general.
“It strongly changes ways schools and local governments can use TIF funds [by doing licensing agreements],” he said.
“They can now enter into different agreements and get money back to the schools,” Florey continued.