Appeal from the Circuit Court of Du Page County. No. 05-T-06 Honorable Thomas C. Dudgeon, Judge, Presiding. Appeal from the Circuit Court of Du Page County. No. 06-T-01 Honorable Thomas C. Dudgeon, Judge, Presiding.
The opinion of the court was delivered by: Justice Bowman
JUSTICE BOWMAN delivered the judgment of the court, with opinion. Justices Schostok and Hudson concurred in the judgment and opinion.
¶ 1 Plaintiffs, 100 Lake, LLC, and 101 Ogden Avenue Partners, filed tax objection complaints against defendant, John Lotus Novak, county treasurer and ex officio county collector, for tax years 2004 and 2005. Relevant to this appeal, plaintiffs objected to general obligation bonds issued by the Board of Education of Elgin Community College District No. 509 (the District), on the basis of the interest rates. According to plaintiffs, the District was obligated to issue the bonds at the lowest possible interest rates. The District intervened as a defendant and moved for summary judgment, arguing that the bonds were issued at interest rates within the statutory limit. The trial court granted summary judgment in favor of the District and included language pursuant to Illinois Supreme Court Rule 304(a) (eff. Feb. 26, 2010). Plaintiffs appeal, and we affirm.
¶ 3 The District requested authority to issue $41 million in bonds to complete a number of building projects, among other things. The electors of the District approved the proposition on April 3, 2001, and the District issued bonds in the amount of $13 million on June 15, 2003, and in the amount of $8 million on December 15, 2003. Plaintiffs objected to these bonds, arguing that they were not issued at the lowest possible interest rates.
¶ 4 In particular, plaintiffs argued that, because the District had issued the June 2003 bonds at an interest rate not exceeding 7%, the bonds sold for "$14,225.572.40, which was at a premium of $1,225,572.40 in excess" of the $13 million that the District requested and that the voters approved. Likewise, plaintiffs argued that, because the District issued the December 2003 bonds at an interest rate of 9%, the bonds sold for $9,358,536.50, which was at a premium of $1,358,536.50 in excess of the $8 million that the District requested and that the voters approved.
¶ 5 Plaintiffs framed the issue as whether the District was authorized by any applicable statute to issue the bonds at interest rates that were more than the lowest interest rates possible. In support of their argument that the District was obligated to issue bonds at the lowest interest rates possible, plaintiffs relied on section 3 of the Registered Bond Act, entitled "Findings," which states that "[i]t is in the best interests of the citizens of this State that bonds or other evidence of indebtedness of public corporations be issuable in registered form to be sold at the lowest interest rate possible." 30 ILCS 310/3(b) (West 2002). According to plaintiffs, the bonds were not issued at the lowest interest rates possible but instead were intentionally issued at artificially high interest rates to generate bids in excess of the par value of the bonds, which resulted in a total bond premium of $2,584,108.90 ($1,225,572.40 $1,358,536.50).
¶ 6 In addition to citing the "Findings" section of the Registered Bond Act, plaintiffs supplemented their position with the "Findings" section of the Local Government Debt Reform Act, which provides:
"The General Assembly finds: (a) There have been many and important changes in the market for and practices with respect to the issuance of bonds of local governmental units in recent years.
(b) Various provisions of the Illinois law are inconsistent and outdated.
(c) Many of these provisions result in additional costs for the citizens of the State of Illinois residing in local governmental units because of the sale and issuance of bonds at higher rates than would otherwise be necessary." 30 ILCS 350/2 (West 2002). Plaintiffs maintained that the District violated its fiduciary duty to taxpayers by not issuing the bonds at the lowest interest rates possible.
¶ 7 The District moved for summary judgment. According to the District, the relevant statutes authorized the rates at which it issued the bonds, and plaintiffs could point to no statutory violation. The District relied on three statutes, beginning with section 10 of the Local Government Debt Reform Act:
"Bonds authorized by applicable law may *** bear interest payable at such intervals and at such rate or rates as authorized under applicable law, *** all as the governing body shall determine." 30 ILCS 350/10 (West 2002).
Second, the District cited section 3A-1 of the Public Community College Act:
"Any community college district may borrow money for the purpose of building, equipping, altering or repairing community college buildings *** and issue its negotiable coupon bonds therefor *** and bearing interest at a rate not to exceed the maximum rate ...