The Southwest Illinois Development Authority v. City National Environmental, L.L.C.

The issue in this case is whether the Southwestern Illinois Development Authority (SWIDA) properly exercised the power of eminent domain to take property owned by National City Environmental, L.L.C., and St. Louis Auto Shredding Company (collectively NCE), and convey that property to Gateway International Motorsports Corporation (Gateway). The circuit court of St. Clair County ruled that SWIDA had properly exercised its authority to take the land in question. The appellate court reversed. 304 Ill. App. 3d 542. On April 19, 2001, we reversed the decision of the appellate court, but subsequently granted rehearing. We now affirm the decision of the appellate court.

Background

SWIDA was created in 1987 by the Illinois General Assembly through passage of the Southwestern Illinois Development Authority Act (the Act) (70 ILCS 520/1 et seq. (West 1998) (formerly Ill. Rev. Stat. 1991, ch. 85, par. 6151 et seq.)). SWIDA is a political entity and municipal corporation whose stated purpose is to "promote industrial, commercial, residential, service, transportation and recreational activities and facilities, thereby reducing the evils attendant upon unemployment and enhancing the public health, safety, morals, happiness and general welfare of this State." 70 ILCS 520/2(g) (West 1998).

The Act mandates that SWIDA "promote development within the geographic confines of Madison and St. Clair counties." 70 ILCS 520/5 (West 1998). It is the duty of SWIDA to assist in the development, construction, and acquisition of industrial, commercial, housing or residential projects within these counties. 70 ILCS 520/5 (West 1998). A "[c]ommercial project" is defined as "any cultural facilities of a for-profit or not-for-profit type including *** racetracks *** [and] parking facilities." 70 ILCS 520/3(j) (West 1998).

To accomplish the purposes of the Act, the legislature empowered SWIDA to issue bonds for the purpose of acquiring, improving or developing projects, including those established by business entities attempting to locate or expand property within Madison and St. Clair Counties. 70 ILCS 520/7 (West 1998). SWIDA also has the authority to acquire property by condemnation. According to the Act, SWIDA's "acquisition by eminent domain of such real property or any interest therein by [SWIDA] shall be in the manner provided by the 'Code of Civil Procedure' [735 ILCS 5/1-101 et seq. (West 1998)], *** including Section 7-103 thereof [735 ILCS 5/7-103 (West 1998)]." 70 ILCS 520/8(b) (West 1998).

In June 1996, SWIDA issued $21.5 million in taxable sports facility revenue bonds. The proceeds of the bonds were lent to Gateway to finance the development of a multipurpose automotive sports and training facility in the region (the racetrack). Gateway signed a loan agreement and a note to evince its obligation to repay the loan. Revenues received by SWIDA pursuant to the loan agreement are pledged to secure payment of the bonds. 70 ILCS 520/7(d) (West 1998). If at any time SWIDA is unable to pay the principal and interest on the bonds, it shall so certify to the Governor, who then submits the amounts so certified to the General Assembly. As such, the bonds constitute a moral obligation of the state. 70 ILCS 520/7(f) (West 1998).

The racetrack was developed and has flourished. In 1997, the racetrack had a total attendance of 400,000 at various large and small events. Seating included 25,000 grandstand seats and 25,000 portable seats. In 1998, Gateway increased its seating capacity and desired to increase its parking capacity as well. It called upon SWIDA to use its quick-take eminent domain powers to acquire land to the west of the racetrack for the purposes of expanded parking facilities. The adjacent 148.5 acre tract of land sought was owned by NCE.

NCE operates a metal recycling center in an area of St. Clair County that, until recently, was National City, Illinois. NCE employs 80 to 100 persons full time and has been at its present location since 1975. NCE shreds cars and appliances and separates the reusable metals. It disposes of nearly 100,000 cars per year. Nonrecyclable by-products of the process, referred to as "fluff," are deposited in NCE's landfill, located to the east of its recycling center. When this landfill site reaches capacity, NCE plans to expand its landfill operations onto the 148.5 acre tract of land it owns to the east of the current landfill. NCE uses clay and dirt from the 148.5 acre tract to fill and cover fluff in the landfill area currently in use.

In early 1998, Gateway attempted to discuss the purchase of NCE's land with NCE's owner. NCE would not discuss the matter and, initially, Gateway made no offer to purchase the land. Instead, Gateway asked SWIDA to exercise its quick-take eminent domain powers to take the 148.5 acres of land and transfer it to Gateway.

Gateway completed a "Quick-Take Application Packet" and stated that it wanted to use the land as a parking lot for the purpose of increasing the value of Gateway's racetrack. Gateway paid SWIDA an application fee of $2,500, and the sum of $10,000 to be applied toward SWIDA's sliding scale fee of 6% to 10% of the acquisition price of property being condemned. In addition, Gateway agreed to pay SWIDA's expenses, including the acquisition price of the property, and other costs associated with the quick-take process.

Approval of the county board is required before SWIDA can use its quick-take eminent domain powers within unincorporated areas of a county. 70 ILCS 520/8(b) (West 1998). On February 23, 1998, the St. Clair County board adopted a resolution authorizing SWIDA to exercise its quick-take eminent domain authority to acquire the NCE tract of land for Gateway parking. The board noted that dramatic attendance increases could be expected at the racetrack and that it was necessary to create additional parking facilities to adequately serve patrons. The board also found that expansion of the racetrack facilities would enhance the public health, safety, morals, happiness, and general welfare of the citizens of southwestern Illinois by increasing the tax base in the area and generating additional tax revenues.

On March 5, 1998, SWIDA held a public meeting to address the proposed taking. Notice was given to NCE and adjacent property owners. Over the objections of NCE's counsel, SWIDA adopted a resolution manifesting an intent to assist Gateway with racetrack expansion through the acquisition of NCE's property. Like the St. Clair County board resolution, SWIDA's resolution recounted the numerous benefits that could be created for the region. SWIDA found that the acquisition of NCE's property was essential to the success of the proposed expansion and further development of the racetrack, and authorized its executive director, Alan Ortbals, to acquire title to the property by all necessary and appropriate means, including negotiations and quick-take eminent domain proceedings. SWIDA authorized the execution of an agreement with Gateway for acquisition of the property through quick-take eminent domain proceedings and subsequent conveyance of the property to Gateway.

In an effort to acquire the property through a negotiated sale, Ortbals attended a meeting on March 17, 1998, at which he delivered to NCE a written offer to purchase the property for $1 million. By letter dated March 19, 1998, NCE rejected the $1 million offer but indicated its willingness to meet with SWIDA the week of March 30, 1998, following an expected appraisal of the property. On March 20, 1998, SWIDA made another written offer to NCE to purchase the property for $1 million and advised NCE that SWIDA would initiate proceedings to condemn the property if NCE did not accept the offer by 5 p.m. on March 30, 1998.

NCE did not respond to the second offer and ultimatum until April 20, 1998. By letter, NCE indicated that it felt it was unnecessary to respond to the offer, as SWIDA was aware of NCE's prior rejection of the earlier offer to purchase the property for the identical sum of $1 million. However, to be clear on the matter, NCE indicated that it was again rejecting the offer of $1 million for the sale of its property.

Meanwhile, on March 31, 1998, SWIDA filed a complaint in the circuit court of St. Clair County seeking condemnation of, and acquisition of fee simple title to, the property. In addition, SWIDA filed a motion for immediate vesting of title, and asked the circuit court to fix a date for quick-take proceedings pursuant to sections 7-103 and 7-104 of the Code of Civil Procedure (735 ILCS 5/7-103, 7-104 (West 1998)). On the same date, NCE filed a motion to dismiss the complaint and on April 2, 1998, filed a traverse and motion to dismiss. NCE argued that the proposed taking was for an unconstitutional private use; the proposed taking was excessive; additional parking at Gateway's racetrack was not needed; and SWIDA had failed to make a good-faith effort to negotiate an acceptable purchase price with NCE. In addition, NCE filed a motion to strike SWIDA's request for immediate vesting of title. The circuit court denied both the motion to dismiss and the motion to strike the request for immediate vesting of title.

The circuit court held a quick-take hearing and on April 27, 1998, ruled in SWIDA's favor. Relying on testimony from Mike Pritchett of the Illinois Department of Transportation (the Department), the circuit court found that the taking was for a public purpose as there were serious public safety issues involved. Pritchett had testified that the Department was working with Gateway to develop a traffic plan that would move traffic into and out of the racetrack facility, while minimizing impact on the surrounding state and interstate highways. According to traffic pattern data studied by the Department, significant traffic congestion occurred on Interstate 55-70 when major events were held at the racetrack. According to Pritchett, a safety hazard was created because drivers do not normally anticipate stopped traffic on the interstate. Pritchett further testified that pedestrians often crossed Illinois Route 203 from the parking areas east of the highway to the racetrack. A traffic signal was in place to allow patrons to cross Route 203. However, the signals created even more automobile traffic delays. There was additional testimony that there was a risk pedestrians would be struck by automobile traffic as they crossed Route 203 at improper locations away from the designated crossing area and signal. Pritchett testified that construction of a parking lot on NCE's property, as suggested in the Department's 1996 traffic impact study, would provide parking to the west of the racetrack and alleviate traffic problems when major events were taking place at the racetrack. Therefore, according to Pritchett, there was some urgency in acquiring the property and developing parking facilities to alleviate stress on the highway system and improve safety.

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Click the case caption above for the full text of the Court's opinion.

I agree with the circuit court that SWIDA properly exercised its power of eminent domain. The taking of the Property was for a public use, not a private use. The majority errs in its application of the standard of review. The majority also errs in its willingness to dispense with strong evidence at trial supporting the circuit court's decision. Lastly, the majority commits great disservice to the State of Illinois and its citizens in engrafting upon the public use doctrine the requirement that property taken by eminent domain must be accessible to the general public as of right. This requirement is the death of social legislation in furtherance of economic development and revitalization. I respectfully dissent.

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