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Illinois Dev. Finance Authority v. Bean





Appeal from the Circuit Court of Cook County; the Hon. Anthony J. Scotillo, Judge, presiding.


Rehearing denied December 10, 1985.

This is an appeal from the denial of plaintiff's motion for summary judgment and the granting of defendant's motion for summary judgment. Plaintiffs, Illinois public utilities, sought a declaration that certain construction projects proposed by them fell within the scope of the Illinois Development Finance Authority Act and were therefore financeable through tax-exempt Illinois bond issues. The trial court heard oral arguments on the parties' cross-motions for summary judgment and held in favor of defendant.

The Illinois Development Finance Authority (IDFA) is a political subdivision of the State of Illinois created by the Illinois Development Finance Authority Act (ACT). (Ill. Rev. Stat. 1983, ch. 48, par. 850.01 et seq.) Pursuant to the ACT, IDFA has the authority to finance the construction and improvement of industrial projects for the purpose of promoting and maintaining employment in Illinois. Bean is the Executive Director of IDFA, and has principal authority for the operation of IDFA and for compliance with its resolutions.

North Shore Gas and Peoples Gas are public utilities engaged in the distribution of natural gas in Cook and Lake Counties. Their sale of natural gas for residential use is regulated by the Illinois Commerce Commission.

On June 20, 1984, IDFA authorized, by resolution, the issuance of a maximum of $15 million in revenue bonds to finance a gas pipeline replacement and expansion program proposed by North Shore Gas. The project was expected to employ 40 North Shore Gas employees and 46 outside contractors. The IDFA resolution directed Bean to publish a notice and conduct a public hearing on the financing. Also on June 20, IDFA authorized a $200 million bond issue for a similar project proposed by Peoples Gas, which was expected to create 23 jobs. Each proposed project concerns improvements to pipes, mains, meters and storage facilities used by the utility. The advantage to the utilities in financing their projects through IDFA lies in the tax-exempt status of IDFA financing.

The IDFA's resolutions approving these bond issues are based upon recommendations made by the utilities' expert, Speer Financial, Inc. This report recommended approval because the projects would preserve or create jobs, reduce consumer utility rates due to interest savings on the tax-exempt debt, and result in an improved natural gas system. The report qualified its recommendation on the ground that: (1) the utilities are captive industries and cannot move their facilities to other States; (2) the projects will go forward in some form even without tax-exempt financing; and (3) the projects cannot be said to directly maintain or obtain employment.

On September 25, 1984, North Shore Gas received a letter from Bean stating that he would not take any action to effectuate the bond issues absent a judicial determination that; (1) the projects fall within the definition of financeable projects set forth in section 3(c) of the Act (Ill. Rev. Stat. 1983, ch. 48, par. 850.03(c)); and (2) the project's indirect employment benefits satisfy the purpose of the Act with regard to improving employment in Illinois.

On October 10, 1984, North Shore Gas and IDFA filed a verified complaint in the circuit court of Cook County seeking a declaratory judgment that the project was authorized by the Act. Bean answered, and cross-motions for summary judgment were filed.

On November 14, 1984, Peoples Gas applied to IDFA to amend its June 20, 1984, resolution in order to reduce the size of the financing to authorize $30 million in revenue bonds for the Will and Champaign counties portion of the project. On December 3, 1984, Peoples Gas received a letter from Bean virtually identical to the one received by North Shore Gas. On December 11, Peoples Gas and IDFA filed a similar declaratory judgment action. This action was consolidated with the North Shore Gas suit and heard as well on cross-motions for summary judgment.

Plaintiffs argue that the trial court erred in its ruling on the parties' summary judgment motions. The principles governing the granting or denying of a motion for summary judgment are well established. "A motion for summary judgment should be granted if the record shows that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." (State Farm Mutual Automobile Insurance Co. v. Schmitt (1981), 94 Ill. App.3d 1062, 1063, 419 N.E.2d 601, 602.) In the instant case the facts are not in dispute. The only question, therefore, is whether the trial court was correct in finding that defendant was entitled to summary judgment as a matter of law.

Plaintiffs contend that public utility projects qualify as "industrial projects" as defined by section 3(c) of the Act (Ill. Rev. Stat. 1983, ch. 48, par. 850.03(c)). The Act empowers IDFA to issue bonds for industrial projects located within areas of critical labor surplus. (Ill. Rev. Stat. 1983, ch. 48, par. 850.05.) The term "industrial project" is defined by section 3(c) of the Act, which reads as follows:

"(c) The term `industrial project' or `project' means (1) capital project, including one or more buildings and other structures, improvements, machinery and equipment whether or not on the same site or sites now existing or hereafter acquired, suitable for use by any manufacturing, industrial, research, transportation or commercial enterprise, including but not limited to use as a factory, mill, processing plant, assembly plant, packaging plant, fabricating plant, office building, industrial distribution center, warehouse, repair, overhaul or service facility, freight terminal, research facility, test facility, railroad facility, commercial facility, and including also the sites thereof and other rights in land therefor whether improved or unimproved, site preparation and landscaping, and all appurtenances and facilities incidental thereto such as utilities, access roads, railroad sidings, truck docking and similar facilities, parking facilities, dockage, wharfage, railroad roadbed, track, trestle, depot, terminal, switching and signaling equipment or related equipment, and other improvements necessary or convenient thereto; or (2) any land, buildings, machinery or equipment comprising an addition to or renovation, rehabilitation or improvement of any existing capital project." (Ill. Rev. Stat. 1983, ch. 48, par. 850.03(c).)

Plaintiffs contend that the two projects qualify as improvements to a "commercial" or "service" facility for use by a "commercial enterprise" and therefore fit within the Act's definition of an "industrial project." However, ...

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