Kaneland School District files lawsuit against Sugar Grove over Crown development's TIF district
At its May 12 meeting, Kaneland's school board voted to authorize the district to possibly take legal action over the TIF district for the development project. The lawsuit was filed on June 13 with the Kane County Circuit Court, according to case information on the county circuit clerk's website.
The project, called The Grove, is a planned 760-acre mixed-use development, commonly called the Crown development in reference to its developer, Naperville-based Crown Community Development, according to previous reporting. The planned development, which the village OK'd last September, is designed to include nearly 400 acres of residential properties, a walkable town center, more than 120 acres of commercial development and about 240 acres for a business park.
The lawsuit filed by Kaneland is over the TIF district for the project. A TIF district is a sort of economic development incentive, in which the value of a property is essentially frozen, and the extra or 'increment' taxes created by developing the property go into a special fund used to pay for costs related to improving the area.
According to an original proposal, 10% of the TIF funds were to go to the village for any improvements it needs to make in the area, but, in August, then-Sugar Grove Village President Jennifer Konen said Crown had agreed to give another 10% of the funds to be distributed among the other taxing bodies, of which Kaneland is expected to get $26 million.
The original TIF agreement also included payments from TIF district funds to offset the cost of schooling for students living in the new housing at the development.
Kaneland was previously in negotiations with Sugar Grove to create an intergovernmental agreement about the TIF district, according to past reporting. But, not satisfied with those terms, the district floated the possibility of taking legal action against the village in February.
A spokesperson for Kaneland said the district declined to comment on the lawsuit until the village had been served. As of Thursday morning, Sugar Grove's Village Administrator Scott Koeppel said they had not been served.
In the complaint, Kaneland says that the establishment of the TIF 'will deprive the school district of incremental property taxes levied against the Redevelopment Project Area for 23 years.' The lawsuit is arguing that there is an 'actual controversy' over whether the area qualifies for tax increment financing, per the filing.
The district is making this argument in a few ways. It is arguing that the project area should not be considered 'blighted,' which was part of the rationale for its qualifying as a TIF district, and that the TIF district is not contiguous. It is also alleging that the village has not provided sufficient proof that development would not have occurred in the area without the creation of the TIF district and providing financial incentives to the developer.
Per the lawsuit, the school district is asking Sugar Grove to dissolve the TIF district.
The Crown development has seen significant community backlash as the project has progressed, including a majority of voters supporting a non-binding referendum in April asking the village to reverse course on the development entirely. In the same election, incumbent Village President Jennifer Konen, who was in support of the project, was ousted, according to past reporting.
Pat Gallagher, the primary proponent of the petition for the advisory referendum, told The Beacon-News he felt the situation with the Kaneland lawsuit was avoidable, but he's supportive of it as 'the most appropriate next step.'
Sugar Grove Village President Sue Stillwell said in a statement that 'regardless of the nature of the litigation and any dispute,' she is 'committed to fostering a positive, collaborative relationship with the Kaneland School District as well as the other taxing bodies.'
According to a statement from Crown Community Development on Tuesday, construction at The Grove has not yet begun, but Crown is working with the village to secure the required permits to begin development.
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