Town of Normal v. Hafner

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State: Illinois

Court: 4th District Appellate

Docket No: 4-09-0121 Rel

Case Date: 11/20/2009

Preview:NO. 4-09-0121 IN THE APPELLATE COURT OF ILLINOIS FOURTH DISTRICT

Filed 11/20/09

TOWN OF NORMAL, ) Appeal from Plaintiff and ) Circuit Court of Counterdefendant-Appellee, ) McLean County v. ) No. 07MR98 F.J. HAFNER and FRED HAFNER, ) Defendants and ) Honorable Counterplaintiffs) G. Michael Prall Appellants. ) Judge Presiding. _________________________________________________________________ JUSTICE POPE delivered the opinion of the court: In September 2008, defendants and counterplaintiffs, F.J. and Fred Hafner (Hafners), filed a motion for summary judgment seeking an order that they complied with the terms and provisions of a real estate redevelopment agreement they entered with plaintiff and counterdefendant, Town of Normal (Normal). That same month, Normal moved for summary judgment on the ground the Hafners breached the agreement by failing to pay the prevailing wage to laborers working on the project. In December

2008, the court granted Normal's motion for summary judgment and denied the Hafners' motion for summary judgment. The Hafners

appeal, arguing the court erred in granting Normal's motion for summary judgment because (1) the agreement failed to include a prevailing-wage provision; (2) the Prevailing Wage Act (Act) (820 ILCS 130/1 through 130/12 (West 2004)) is not applicable to the agreement; and (3) if the agreement is interpreted to include a prevailing-wage provision, Normal was not entitled to terminate

the agreement for breach of the prevailing-wage provision. reverse. I. BACKGROUND A. Factual History On September 7, 2004, the parties entered into an agreement for the Hafners to redevelop three properties on Broadway Street in Normal in exchange for a portion of the increased tax revenues generated by the redevelopment. On

We

September 20, 2004, the president of the board of trustees of Normal approved the agreement in resolution No. 3584. The

resolution states Normal has adopted a Downtown Renewal Tax Increment Redevelopment Plan for the area in which the three Broadway properties are located. The resolution also notes one of the purposes of the agreement is "to attract other private development [to Normal]." The first page of the agreement states the agreement is intended to "alleviate certain private costs of the Redeveloper." Under a section entitled "Representation of the Redeveloper" on page 15, the Hafners are described as "sole proprietors." six describes the specific terms of the interest subsidy as follows: "(a) The annual payment by the Town shall not exceed fifty (50%) percent of the Tax Increment generated by the project; (b) To the extent that fifty (50%) - 2 Page

percent of the Tax Increment is not sufficient to make the full annual payment, then any shortfall shall carryover to the following year and become part of the annual payment for that year; (c) To the extent that fifty (50%) percent of the Tax Increment exceeds the annual payment in [a] year, the excess shall be used to pay any previous year[']s shortfall or shall be applied to [any] future year[']s annual payment; (d) The obligation of the Town to make these annual payments, including any obligations to pay for any shortfalls from prior years, shall cease upon the termination of the Redevelopment Project Area pursuant to the Act." Section 2.9 of the agreement states "all work with respect to the [p]roject, the [p]roject [s]ite[,] and any other structures or buildings on the [p]roject [s]ite shall conform to [a]pplicable [l]aw." Town of Normal ordinance No. 4947 was enacted to establish wages for workers employed in public works. Section 2

of the ordinance states "[n]othing herein contained shall be construed to apply said general prevailing rate of wages as - 3 -

herein ascertained to any work or employment except public works construction of the Town of Normal to the extent required by the aforesaid Act." 8, 2004). B. Procedural Background In April 2007, Normal filed a complaint for declaratory judgment, seeking a finding (1) the Hafners were required to pay prevailing wages under the terms of the agreement; (2) the Hafners were obligated to pay prevailing wages under the terms of the Act; and (3) the Hafners materially breached the agreement, rendering Normal exempt from performing its obligations under the agreement. In April 2008, the parties agreed to a stipulation of facts, stating, in pertinent part: (1) on September 7, 2004, the parties entered a redevelopment agreement providing for the Hafners' redevelopment of three residential properties on Broadway Street in Normal; (2) the Hafners developed 602, 604, and 607 Broadway Street in compliance with the agreed-upon plans; (3) the Hafners incurred costs of approximately $1,425,040; (4) to finance the project, the Hafners took out two mortgage loans with Soy Capital Bank & Trust in the following amounts: (a) $825,000 for 607 Broadway Street and (b) $1 million for 602 and 604 Broadway Street; (5) as an incentive to redevelop the property, Normal agreed to pay the Hafners 30% of the annual interest costs incurred on the project after its completion, - 4 Town of Normal Ordinance No. 4947,

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