1. Funding the Blight Fight
Illinois Municipal League ANNUAL CONFERENCE
SEPTEMBER 18, 2014
LANCE C. MALINA

2. Funding the Blight Flight
I. PROBLEM
II. Taking control
A. Contact and Follow-Up
B. Vacant Property Registry
C. Code Enforcement
D. Administrative Adjudication
E. Nuisance Abatements
F. Nuisance / Injunction Lawsuits
G. Demolition / Repair Actions
III. ACQUISITION
A. Deeds in Abandonment
B. Foreclosure
C. TaX DEED Actions
D. Deed in Lieu
IV. Funding
A. Tax increment financing (TIF)
B. Special service areas (SSA)
c. Municipal bonds
D. LIENS

3. I. PROBLEM
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4. II. TAKING CONTROL Contact and Follow-Up Vacant Property Registry
Code Enforcement
Administrative Adjudication
Nuisance Abatements
Nuisance / Injunction Lawsuits
Demolition / Repair Actions

5. A. Contact and Follow-Up
II. TAKING CONTROL
A. Contact and Follow-Up
1. Owners
2. Residents
3. Lienholders
B. Vacant Property Registry
1. Contact Information
2. Minimum Requirements
3. Abatement of Violations

6. II. TAKING CONTROL 1. Ordinances C. Code Enforcement 2. Training
3. Resources
D. Administrative Adjudication
1. Statutory Authority - 65 ILCS 5/ ,
65 ILCS 5/ , 65 ILCS 5/ ,et seq.
2. Local Control
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7. II. TAKING CONTROL
E. Nuisance Abatements 1. General Municipal Code Authority - 65 ILCS 5/ Other Statutory Nuisances 3. Recovery in Mortgage Foreclosure Actions F. Nuisance / Injunction Lawsuits 1. Generally 2. Appointment of Receivers - 65 ILCS 5/ Chronic Public Nuisance Ordinances and Suits

8. II. TAKING CONTROL
G. Demolition / Repair Actions ILCS 5/ “Super Priority Liens” 3. Includes Attorneys’ Fees
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9. III. ACQUISITION A. Deeds in Abandonment B. Foreclosure
C. Tax Deed Actions
D. Deed in Lieu
E. Donation
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10. III. ACQUISITION A. Deeds in Abandonment 1. 65 ILCS 5/11-31-1(d)
a. Tax delinquency or
water bill delinquency
(2 years);
b. Unoccupied by legal
possessors; and
c. Dangerous or unsafe
building.
2. Advantage: acquire
property
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11. III. ACQUISITION B. Foreclosure 1. Ability exists to foreclose on
a wide variety of municipal
liens on property.
2. Lien priority must be
considered.
3. Must be prepared to take
ownership.
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12. III. ACQUISITION C. Tax Deed Actions 1. Authority from
35 ILCS 200/22-5, et seq.
2. Advantage: Clean Title
3. Disadvantage: Time
Consuming

13. III. ACQUISITION D. Deeds in Lieu 1. Avoids foreclosure expense.
2. Results in taxes being
voided.
3. Fast.
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14. IV. FUNDING A. Tax Increment Financing (TIFs)
Using future gains in taxes to subsidize current improvements
Projected to create the conditions for gains above the routine yearly increases which would occur without the improvements

15. IV. FUNDING Example 5-acre area in a municipality Vacant Buildings
Dilapidated
Low tax revenue for schools, county, library, parks, etc.
Municipality establishes a TIF District
Bonds to install streetlights, benches, planter areas, etc.
Promise to assist “Gap-like” retailers that improve their buildings
Area improves
Starbucks moves in
Other retailers follow
People shop and eat there
Property values increase  Taxes increase

16. IV. FUNDING What areas can be designated as TIF Districts?
65 ILCS 5/
Blighted Areas
Conservation Areas
Industrial Park Conservation Areas
“But for” designation of the area as a TIF District, development of the area will not occur.
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17. IV. FUNDING What can be located in a TIF District?
Almost anything, except:
A golf course and related clubhouse facilities on vacant land.
Anything at all on vacant land designated as public land for camping and hunting or for nature preserves and used for that purpose within the last five years. 65 ILCS 5/ (0).

18. IV. FUNDING What can TIF revenue be spent on? 65 ILCS 5/11-74.4-3(q)
Costs of redevelopment in a TIF district, including its own expenses, expenses of developers and expenses of certain other taxing districts
NOT direct financial aid to a retail entity opening in the TIF while closing at another Illinois location within 10 miles of the TIF district and outside the boundaries of the municipality.

19. IV. FUNDING Criteria for:
Forming a Blighted Area due to Detriment to Public Health and Safety
65 ILCS 5/ (a)(1)
Forming a Blighted Area with Vacant Land
65 ILCS (a)(2)
Forming a Conservation Area with 50% or More of Structures that are 35 years of age or older
65 ILCS 5/ (3)(b)
65 ILCS (a)(3)

20. IV. FUNDING B. Special Service Areas (SSAs)
The Illinois Constitution allows certain public bodies to levy additional real estate and other taxes in an area within its boundaries for the purpose of providing special services to that area that are not available to the entire community.
Statutory Authority - 35 ILCS 200/27-5, et seq.
Easier than using individual special assessments

21. IV. FUNDING Boundaries of a SSA
A contiguous area within a municipality. 35 ILCS 200/27-5.
The “hole in the doughnut” SSA – held to be valid
Does not have to be restricted to the areas directly benefited
Ciacco v. City of Elgin, 85 Ill.App.3d 507, 407 N.E.2d 108, 115, 40 Ill. Dec. 877 (2d Dist. 1980)

22. IV. FUNDING Permissible Taxes, Rates, and Debt Limits
Taxes may be levied or imposed in the SSA at a rate or amount sufficient to produce revenues required to provide the special services. 35 ILCS 200/27-25.

23. IV. FUNDING Procedures for Creating a SSA
Public Hearing – required to:
Form the district
Levy or impose a special service tax
Issue bonds to be retired by taxes levied in the district
Objection Petitions
The proposed district may be vetoed by 51% of electors and owners of record, filed within 60 days after the public hearing. 35 ILCS 200/27-55.
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24. IV. FUNDING Ordinance Establishing the District
The boundaries by legal description, permanent tax index numbers, and when possible, street location;
The nature of the proposed special services;
A statement as to whether the proposed special services are for new construction, maintenance, or other purposes;
The proposed tax rate limits, if any;
The proposed limit on the amount of bonds to be issued, if any;
The maximum number of years during which taxes are to be levied, if there is to be a maximum;
The form of notice to the property owners; and
The nature of the tax. 35 ILCS 200/27-25.

25. IV. FUNDING
C. Bonds
Principal and interest are secured by taxes levied against all taxable property within a municipality
They are used to finance the construction of buildings, make major equipment purchases, construct needed public improvements, and for a variety of other purposes

26. IV. FUNDING Non-Home Rule Concerns
Non-Home Rule - subject to a statutory debt limit of 8.625% of the equalized assessed valuation of the municipality. General obligation bonds are counted against this debt limit.
Because of the Property Tax Extension Limitation Law (“PTELL”), 35 ILCS 200/ et seq., in most cases, a non-home rule unit may not issue general obligation bonds until a referendum on issuance has been approved by a majority of the voters.

27. IV. FUNDING Non-Home Rule Issuance of Bonds:
Adopt referendum ordinance on issuance of the bonds.
Hold election on the question. Limited by 10 ILCS 5/2A-1.1.
Issue the Bonds – must wait 30 days. 30 ILCS 350/17.5.
Sell the bonds.
Adopt a bond ordinance setting out the terms of the sale, maturity schedule, interest rates, and a tax levy sufficient to retire the bonds.

28. IV. FUNDING Bonding for Economic Development
Corporate authorities of a municipality may appropriate and expend funds for economic development purposes. This includes, but is not limited to, providing grants to other governmental entities or commercial enterprise that are deemed necessary or desirable for the promotion of economic development within the municipality.
65 ILCS 5/

29. IV. FUNDING D. Liens Weed Liens (65 ILCS 5/11-20-7)
Pest Extermination Liens (65 ILCS 5/ )
Removal of Infected Trees (65 ILCS 5/ )
Garbage Liens (65 ILCS 5/ )

30. IV. FUNDING To perfect these liens (65 ILCS 5/11-20-15):
The municipality must, within one year after the removal cost is incurred, file notice of lien in the office of the recorder in the county in which the underlying parcel is located or, if the underlying parcel is registered under the Torrens system, in the office of the Registrar of Titles of that county.

31. IV. FUNDING To perfect a lien (65 ILCS 5/11-20-15) (cont.):
The notice must consist of a sworn statement setting out:         
(1) a sufficient description of the underlying parcel (include: common address, legal description and PIN);         
(2) the description of removal activity and amount of the removal cost;         
(3) the date or dates when the removal cost was incurred by the municipality. If, for any one parcel, the municipality engaged in any removal activity on more than one occasion during the course of one year, then the municipality may combine any or all of the costs of each of those activities into a single notice of lien; and
(4) state the substance of 65 ILCS 5/ and related implementation ordinance.

32. IV. FUNDING To perfect a lien (65 ILCS 5/11-20-15) (cont.):
Notice must be (i) personally served on or sent via certified mail to taxpayer of record, and (ii) delivered or sent out after removal activities are performed.
Municipalities have the right to foreclose on these liens under the Illinois foreclosure laws or mechanics’ lien statute (See, 65 ILCS 5/ (e)).
Foreclosure action must be brought within 2 years of date of filing notice of lien. Failure to file a foreclosure action does not affect the validity of the lien.
Upon payment of lien, a municipality is required to release the lien.
A release of lien may be filed by property owner at his/her expense.

33. IV. FUNDING
These liens are superior to all other liens and encumbrances EXCEPT FOR tax liens and these liens are not valid as to:
any purchaser whose rights in and to the underlying parcel arose after the removal activity but before the filing of the notice of lien; or
any mortgagee, judgment creditor, or other lien-holder whose rights in and to the underlying parcel arose before the filing of the notice of lien.

34. Abandoned Property Liens
IV. FUNDING
Abandoned Property Liens
Municipalities can place liens on abandoned properties in order to recover costs for:
Securing and enclosing said properties
Cutting and removal of neglected weeds, grass, trees and bushes
Pest extermination
Removal of infected trees
Removal of garbage and debris.

35. IV. FUNDING Benefits and Limitations:
It is a superior lien: it has priority over all other liens in a foreclosure sale, aside from tax liens.
The lien is subject to challenge by a lender or beneficiary or trustee of a deed in trust during a foreclosure action on several grounds, such as: noncompliance with statute, scope of work not reasonable or in excess of authorization or cost not commercially reasonable.
Applies only to property maintenance activities performed after March 1, 2010.

36. IV. FUNDING What is Abandoned Property?
Permanent residential dwelling units and manufactured homes that are treated as real estate
Property must be unoccupied by any lawful occupant(s) for at least ninety (90) days
After ninety (90) days, the municipality must make a good faith effort to contact the legal owner(s) or their agent(s)
No contact with owners must be made for property to be abandoned

37. IV. FUNDING Illinois Housing Development Authority Programs
Public Act
Created “Abandoned Residential Property Municipality Relief Program” and “Abandoned Property Municipality Relief Fund” – Controlled by IHDA
Fund issues grants to municipalities to assist with removal costs and securing or enclosing costs for abandoned residential properties per actions brought under 65 ILCS 5/

38. IV. FUNDING Illinois Building Blocks Program
IHDA offers financing for developers interested in redeveloping abandoned properties in each of the designated targeted communities. Once renovations are complete, IHDA provides up to $10,000 in down payment assistance to homebuyers interested in the properties to improve their marketability. This coordinated effort is intended to help stabilize neighborhoods, prevent foreclosure, and provide affordable homeownership to first time homebuyers.

39. IV. FUNDING Land Banking
Land banks were created to acquire, maintain, and build or rehabilitate abandoned properties in communities affected by property abandonment or which desire to develop affordable housing.
After properties are rehabilitated, they are sold, and profits are recycled to repeat the process.

40. Lance C. Malina lcmalina@ktjlaw.com (312) 984 – 6439
Questions?
Lance C. Malina (312) 984 – 6439

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Chicago, IL 60606
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