Laura M. Julien, Mickey, Wilson, Weiler, Renzi, Lenert & Julien, P.C.
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"De‑TIF, Re‑TIF": Winfield’s Court Win
Facts
In 2004, the Village of Winfield (Village) established a tax increment financing district (TIF 1) pursuant to the Tax Increment Allocation Redevelopment Act (TIF Act), 65 ILCS 5/11-74.4-1, et seq. Board of Education of Winfield School District 34 v. Village of Winfield, 2026 IL App (3d) 250182, ¶4. TIF 1 was established for a 23-year term and is scheduled to expire in 2027. Id.
In 2021, the Village began the process of establishing a second TIF district (TIF 2). Id. Because the Village sought to have certain parcels located in TIF 1 included in the TIF 2 district, it underwent a “de-TIF, re-TIF” process, whereby it removed the subject parcels from TIF 1 before creating TIF 2. Id.
Prior to the establishment of TIF 2, the Village also entered into a development agreement with a hospital that owned property within the area that would later be designated as part of the TIF. 2026 IL App (3d) 250182 at ¶32. The development agreement was entered into 14-months prior to the creation of TIF 2 and contained a provision that the Village may “seek to extend the duration of the existing TIF District or any portion thereof in a manner solely with the discretion of the Village and as authorized by the TIF Act, including the ‘de-TIF — re-TIF process.” 2026 IL App (3d) 250182 at ¶33.
As part of its establishment of TIF 2, the Village made all required findings under the TIF Act. 2026 IL App (3d) 250182 at ¶5. These findings included the determination that the proposed TIF qualified as a conservation area, that the parcels within the TIF met the TIF Act’s contiguity requirements, and that development of the area would not occur “but for” the creation of the TIF. Id. The TIF eligibility report also concluded that the area was TIF eligible due to “(1) lack of community planning, (2) deleterious land use/layout, (3) declining/lagging equalized assessed value . . . , (4) deterioration, and (5) obsolescence.” Id. This exceeded the TIF Act’s three-factor minimum required to declare a conservation area.
Following the Village’s establishment of TIF 2, Winfield School District #34 and the Board of Education of Community High School District #94 (collectively, “the Districts”) filed suit against the Village challenging the validity of TIF 2. 2026 IL App (3d) 250182 at ¶9. Specifically, the Districts asserted that the Village’s removal of parcels from TIF 1 and subsequent placement into TIF 2 was an impermissible attempt at circumventing the TIF Act’s 23-year limit on TIF districts. Id. The Districts also challenged the Village’s findings related to TIF 2’s establishment criteria, arguing that TIF 2 failed the TIF Act’s “but-for” test, did not meet contiguity requirements, and was improperly designated as a conservation area for not meeting the statutory criteria. 2026 IL App (3d) 250182 at ¶11.
Circuit Court
The Village filed a motion for partial summary judgment, asserting that the TIF Act did not contain any prohibition or limitation on removing parcels from one TIF district and placing them into another 2026 IL App (3d) 250182 at ¶10. The circuit court agreed with the Village and granted partial summary judgment on the issue. Id.
Following discovery on the remaining counts, both parties filed cross-motions for summary judgment. 2026 IL App (3d) 250182 at ¶11. The circuit court granted the Village’s motion for summary judgment, finding that no genuine issues of material fact existed and confirming that the Village had sufficiently demonstrated that it had met all of the TIF Act’s requirements when establishing TIF 2. 2026 IL App (3d) 250182 at ¶¶11 – 13. The Districts appealed the circuit court’s determination.
Appellate Court
The appellate court’s review of the circuit court’s judgment was two-fold. First, it was charged with determining whether the Circuit Court erred in determining that no material issues of fact existed. 2026 IL App (3d) 250182 at ¶27. Second, if no genuine issue of material fact existed, the appellate court was then charged with determining whether the judgment in favor of the Village was correct. Id. The appellate court proceeded by addressing each of the Districts’ arguments in turn.
“But-For” Test
Under the TIF Act, a municipality must demonstrate that the property located within the TIF district “would not reasonably be anticipated to be developed without the adoption of a redevelopment plan” (i.e., the property would not develop but for the creation of the TIF district). 2026 IL App (3d) 250182 at ¶30. The Districts argued that TIF 2 did not satisfy the statute’s “but-for” test because the parcels in TIF 2 already had private development interest that predated the establishment of TIF 2. Id. In support of this claim, the Districts noted that the Village had previously entered into a development agreement with an entity owning 34 of the 51 parcels located within TIF 2 and that at least 12 permits had been issued on those parcels prior to the creation of TIF 2. Id. The Village asserted that both the development agreement and the creation of the TIF district were necessary components for the redevelopment of those parcels.
The appellate court agreed with the circuit court, noting that even though the development agreement predated the creation of TIF 2, it was inextricably related to the creation of TIF 2 and the entity’s anticipated availability of TIF funds. 2026 IL App (3d) 250182 at ¶33. The appellate court also rejected the Districts’ argument that TIF 2 was created “solely for the purpose of obtaining funds for a new village hall,” further noting that the Districts did not provide any authority supporting the proposition that secondary benefits to a public entity negated the validity of a TIF District. 2026 IL App (3d) 250182 at ¶38. In addition, the appellate court rejected the Districts’ attempt at invalidating TIF 2 based upon its inclusion of publicly owned property, asserting that even had the issue been properly raised, the relevant inquiry required consideration of the redevelopment area as a whole, rather than an examination of individual parcels within the district. 2026 IL App (3d) 250182 at ¶36.
Contiguity
The appellate court next addressed the Districts’ argument that TIF 2 did not meet the TIF Act’s contiguity requirements because 11 of the 51 parcels constating largely of landscaped greens, were included for the “sole purpose of achieving contiguity,” and would not otherwise benefit the TIF District. 2026 IL App (3d) 250182 at ¶40. The Districts maintained that the TIF Act required everyparcel within the TIF to substantially benefit from the creation of the TIF. 2026 IL App (3d) 250182 at ¶42. The Village refuted this assertion, stating that the proposed improvement must substantially benefit the TIF District as a whole and that the TIF Act did not require that a municipality demonstrate a benefit to each individual parcel. 2026 IL App (3d) 250182 at ¶43. The appellate court agreed with the Village and affirmed the circuit court’s finding on this issue.
Conservation Area and Vacant Land
The Districts also asserted that TIF 2 was improperly designated as a conservation area due to the fact that 42 of the 51 parcels located within its boundaries were vacant and therefore, could not legally qualify as an “improved area” under the TIF Act. 2026 IL App (3d) 250182 at ¶47. The appellate court rejected this argument, noting that the TIF Act differentiated only between “vacant” and “improved” areas when seeking a designation of “blight” and that the same differentiation did not apply to conservation areas under a plain reading of the statute. 2026 IL App (3d) 250182 at ¶¶48 – 49.
Conservation Area and Eligibility Factors
The Districts further challenged the Village’s application of the TIF Act’s eligibility factors, arguing that genuine issues of material fact remained with regard to the Village’s eligibility findings. 2026 IL App (3d) 250182 at ¶51. The appellate court disagreed with the Districts, noting that under the TIF Act, a conservation area was required to satisfy only 3 of the 13 enumerated eligibility criterion. 2026 IL App (3d) 250182 at ¶52. While the Village’s findings asserted that TIF 2 satisfied 5 of the 13 factors, the circuit court disagreed and found that there was a genuine issue of material fact as to 2 of the factors. 2026 IL App (3d) 250182 at ¶53. However, because the circuit court believed that the Village had met its burden with regard to 3 of the factors, it found that the criteria for establishing a conservation area was satisfied. Id. The appellate court affirmed the circuit court’s determination and held that the Village made sufficient findings regarding the designation of TIF 2 as a conservation area. 2026 IL App (3d) 250182 at ¶61.
Forming TIF 2 with TIF 1 Parcels
Finally, the Districts argued that the transfer of parcels from TIF 1 into TIF 2 circumvented the 23-year statutory limitation on the term of the TIF. 2026 IL App (3d) 250182 at ¶63. The Village refuted the Districts’ characterization and clarified that the parcels were not transferred directly from one TIF into to another but, rather, were removed from one TIF and subsequently placed in a different TIF, each of which had independently qualified under the TIF Act. 2026 IL App (3d) 250182 at ¶63. The appellate court noted that nothing in the TIF Act expressly prohibited parcels that had once been in one TIF district from being placed into another TIF district as long as the requisite statutory requirements were followed. 2026 IL App (3d) 250182 at ¶65. The appellate court also noted that even following TIF 2’s inception, TIF 1 continued to exist separate and apart from TIF 2. Id. Accordingly, the appellate court affirmed the circuit court and declined to find that the creation of TIF 2 was an improper extension of the life of the TIF. 2026 IL App (3d) 250182 at ¶67.
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