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In re Application of the County Collector of Du Page County for Judgment For Delinquent Taxes For the Year 1992

February 20, 1998

IN RE APPLICATION OF THE COUNTY COLLECTOR OF DU PAGE COUNTY FOR JUDGMENT FOR DELINQUENT TAXES FOR THE YEAR 1992
(COUNTY COLLECTOR OF DU PAGE COUNTY, APPELLEE,
v.
ANVAN MIDWEST ET AL., APPELLANTS).



The opinion of the court was delivered by: Justice Miller

Docket No. 84160--Agenda 17--November 1997.

Several objectors filed in the circuit court of Du Page County objections to an application of the Du Page County collector for judgment for delinquent 1992 real estate taxes. The objections encompassed numerous Du Page County taxing districts. However, only issues concerning park districts are presented in this appeal. In order to simplify the objections relating to park districts, a stipulation was agreed to in the trial court in which Lisle Park District served as a test case.

The trial judge granted the objectors' motion for partial summary judgment. The judge found that the park district's tax extensions, which paid for bonds issued to refund preexisting debt instruments, violated the "tax cap" provided in the Property Tax Extension Limitation Act (the Act) (35 ILCS 245/1--1 et seq. (West 1992)). The judge ordered that the taxes extended in excess of the cap be refunded.

The Du Page County collector filed a motion for rehearing. The collector argued that the judge's ruling unconstitutionally impairs the contract rights of those who hold preexisting debt instruments because the park district is now limited in its ability to extend taxes and refund the preexisting debt instruments. The judge, upon reconsideration, agreed with the collector.

The judge found that section 1--7(b) of the Act (35 ILCS 245/1--7(b) (West 1992)) violates the contract clause of the federal and state constitutions (U.S. Const., art. I, sec. 10; Ill. Const. 1970, art. I, sec. 16) by impairing the park district's ability to refund the preexisting debt instruments. Thus, the judge denied the objectors' motion for partial summary judgment and overruled the objections to the bond levy of Lisle Park District.

The objectors appealed to the appellate court. The appellate court transferred the appeal to this court under Supreme Court Rule 365 (155 Ill. 2d R. 365), which provides for the transfer of cases appealed to the wrong court. The appellate court found that the appeal was properly before this court under Supreme Court Rule 302(a) (134 Ill. 2d R. 302(a)). Because the trial judge held a state statute invalid, the appeal is properly before us under Rule 302(a).

BACKGROUND

Several property tax objectors are involved in this case. The objectors designated Robert Pryor as the lead objector. The objectors paid their 1992 real estate taxes under protest and filed in the trial court various objections to taxes extended by numerous Du Page County taxing districts. In order to streamline the objections relating to the 21 park districts, a stipulation was agreed to in which Lisle Park District served as a test case to address common issues. Taxing districts other than park districts are not included in this appeal.

The Property Tax Extension Limitation Act (the Act) became effective on October 1, 1991. See Pub. Act 87--17, eff. October 1, 1991 (adding 35 ILCS 245/1-- 1 et seq. (West 1992)). Before the Act's effective date, the park district had issued alternate bonds and installment contract certificates pursuant to the Local Government Debt Reform Act (30 ILCS 350/1 et seq. (West 1992)) and the Park District Code (70 ILCS 1205/6--1 et seq., 8--15 (West 1992)). For ease of reference, we refer to these preexisting debt instruments as "initial bonds." The Local Government Debt Reform Act's definition of "bonds" includes installment contracts. See 30 ILCS 350/3(d) (West 1992).

After the Act's effective date, the park district issued nonreferendum general obligation bonds in order to meet the park district's obligations on the initial bonds. This "refunding" of the initial bonds is provided for in the Local Government Debt Reform Act (see 30 ILCS 350/3(d), 11 (West 1992)), the Park District Code (see 70 ILCS 1205/6--1, 6--4, 8--15 (West 1992)), and the Park District Refunding Bond Act (70 ILCS 1270/0.01 et seq. (West 1992)). For ease of reference, we refer to these subsequent bonds as "refunding bonds."

The objectors argued in the trial court, and argue here, that the property taxes extended to pay for the park district's refunding bonds exceed the extension limitation (tax cap) found in section 1--5 of the Act. See 35 ILCS 245/1--5 (West 1992). Unless approved by referendum or otherwise excluded, property tax rate increases are capped at either 5% or the percentage increase in the Consumer Price Index for the previous year, whichever is less. See 35 ILCS 245/1--5 (West 1992). The objectors claim they are entitled to a tax refund because the taxes extended to pay for the refunding bonds exceed the cap, were not approved by referendum, and are not otherwise excluded.

The objectors rely on section 1--7 of the Act. Section 1--7(a) provides that before levying a new rate or rate increase, a taxing district "shall submit the new rate or rate increase to direct referendum." 35 ILCS 245/1--7(a) (West 1992). Section 1--7(b) provides:

"Notwithstanding the requirements of subsection (a), any park district which is a taxing district subject to this Act which is authorized to issue general obligations bonds or other general obligations payable from taxes may issue those bonds or other obligations without direct referendum; provided however, that the extension to pay debt service on such obligations shall be part of the aggregate extension subject to the extension limitation under this Act." 35 ILCS 245/1--7(b) (West 1992).

Based on section 1--7(b), the objectors claim that the park district's extensions to pay for its nonreferendum refunding bonds must: (1) be included in the aggregate extension; and (2) be ...


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