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Vil. of Sherman v. Vil. of Williamsville

OPINION FILED MAY 12, 1982.

THE VILLAGE OF SHERMAN, PLAINTIFF-APPELLANT,

v.

THE VILLAGE OF WILLIAMSVILLE ET AL., DEFENDANTS-APPELLEES.



APPEAL from the Circuit Court of Sangamon County; the Hon. SIMON L. FRIEDMAN, Judge, presiding.

JUSTICE MILLS DELIVERED THE OPINION OF THE COURT:

Rehearing denied June 7, 1982.

A water contract for the benefit of two neighboring municipalities — Williamsville and Sherman.

Now Sherman seeks to renege.

The trial court held it can't.

We agree.

It is necessary to recount the background of this case in somewhat tiresome detail. Williamsville has always been the exclusive seller and distributor of water to Sherman. Even before Sherman was incorporated in 1958, Williamsville was providing water to customers in that area. Originally the water source for the Williamsville distribution system was a well in Williamsville. But as the villages grew their demand for water increased and a new source of water was needed. The villages created the Williamsville-Sherman Water Commission (the Commission) pursuant to section 11-135-1 et seq. of the Illinois Municipal Code. (Ill. Rev. Stat. 1979, ch. 24, par. 11-135-1 et seq.) The purpose of the Commission was to obtain water from Springfield and to finance the construction of facilities to transport and store the Springfield water.

In connection with acquiring the new water supply, an agreement dated August 17, 1971, was entered into by the Commission and the villages of Williamsville and Sherman (hereinafter referred to as the 1971 Contract). Pursuant to this agreement, Williamsville was to buy all of the water the Commission purchased from Springfield. The Commission was to be the exclusive supplier of water to Williamsville during the time any of the Commission's bonds remained unpaid, and Williamsville was to be the exclusive supplier of water in Sherman. This agreement expires on November 1, 2011, and provides for annual extensions thereafter.

The agreement was modified on June 6, 1972, in part to relieve Sherman of the immediate obligation to construct a water tower upon the payment of $25,000 to the Commission, but obligating Sherman to construct a tower at its own expense if one should ever be required in the Sherman area. The $25,000 payment was to be applied by the Commission to reduce outstanding bond indebtedness. In addition, the original agreement was amended to provide that Williamsville would be the exclusive distributor of water within Sherman for the entire term of the base agreement instead of being the exclusive supplier only during the period in which the Commission had outstanding revenue bonds.

On August 31, 1971, the Commission, Williamsville, Sherman, and the City of Springfield entered into a written agreement pursuant to which Springfield agreed to sell water to the Commission. This agreement also expires on November 1, 2011. During the 40-year period of this agreement, Springfield is to be the exclusive supplier of water to the Commission. Under the agreement, Williamsville agrees to provide minimum storage facilities equal to at least one day's water usage.

Thereafter, a 10-inch water transmission line from the north edge of Springfield to Sherman was constructed along with other facilities. The transmission line connecting the Williamsville system to Springfield provides a capacity of one million gallons per day, substantially in excess of the minimum needs in 1971 of the customers of the Williamsville distribution system. The excess capacity was to provide for future development in the Williamsville and Sherman areas. In order to recover a portion of the cost of this excess capacity, the Commission, Williamsville, and Sherman entered into an agreement providing for a water development fee. Under this agreement, developers are required to pay a fee of $200 per apartment in a multi-family development, $200 per residential lot, and $400 per single commercial development up to a 3/4-inch tap.

From August of 1971 to the present time, Sherman has experienced rapid growth. Several new developments have been proposed and constructed in Sherman since 1971. One proposed project, which never reached the construction stage, was a racetrack development known as Lincoln Land Downs. The only contact Williamsville had with this project was a letter sent from Lee Miller, Williamsville's president, to the secretary-treasurer of the project in response to an inquiry as to whether Williamsville would sue the project if it acquired its own water supply.

Sherwood Zimmerman, the president of Sherman, testified that developers in the Sherman area have had difficulties regarding water extension application denials. He cited two specific examples: projects known as Villa Vianny and The Rail. Sherman had determined that Villa Vianny was a commercial project, not a multi-family project and therefore a single commercial tap and water development fee should have been applicable. Williamsville considered the development a multi-family project and suggested a revised application with a larger tap fee and development fee. With respect to The Rail development, Mr. Zimmerman's testimony indicated that the developer's plans were yet to be ascertained. At one time the developer was going to develop a series of single-family condominiums and sought a single tap; however, this plan was changed.

Williamsville declared a moratorium on water main extensions throughout the water distribution system from December 1977 to March 1978. This was due in part to the fact that the system's storage facilities were inadequate under the Springfield contract which required Williamsville to provide minimum storage facilities and the fact that Springfield had threatened to institute legal proceedings to assure compliance with the minimum storage requirements.

To finance proposed improvements in its water and sewer systems, Williamsville passed Ordinance 80-11 which provided for an increase in water rates. This rate increase was found to be excessive and was later reduced. No refund was made to customers with respect to the excessive rates and the ...


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