Lake Zurich can’t use eminent domain to take downtown welding shop: Chicago IL Daily Herald, 3/28/07

By Madhu Krishnamurthy

In a reversal of fortune, Dave and Laura Majkowski may not have to move their welding shop out of downtown Lake Zurich after all.

The couple’s landlord, the village of Lake Zurich, tried to condemn the welder’s lease at 16 W. Main St. under the Tax Increment Financing Act and under provisions in the Illinois Municipal Code. The property figures prominently in the village’s downtown redevelopment plans as a future retail building.

On March 16, a Lake County Circuit Court judge dismissed the village’s eminent domain lawsuit against Comet Welding.

Eminent domain allows governments to seize private property for public use with just compensation based on fair market value.

Judge Raymond McKoski ruled that while the village made a “good faith attempt to agree on the amount of compensation,” it does not have authority to use eminent domain in this case.

The ruling came as a relief to Laura Majkowski, who said Tuesday the couple is open to either staying at the site until the lease expires in 2013 or selling the lease to the village for the desired compensation.

“We’ve lost business because of what the village has already done to us,” she said.

The village has 30 days from the ruling date to appeal. Both parties say they want to settle the matter.

Acting Village President John Tolomei said he is inclined to let the welder stay and back off on the eminent domain fight because he never was a fan of eminent domain.

“I feel we had to use it to jumpstart the downtown,” he said. “It (the Majkowskis’ case) made me rethink seriously if we really need to keep using it.”

Tolomei said the village could design its redevelopment around the Majkowskis’ shop and allow them to stay until the end of the lease.

Village Attorney Mark Burkland said the Majkowskis’ latest demand of more than $500,000 for their lease and other costs is too high.

The village is also liable for the Majkowskis’ attorney’s fees and costs of about $75,000.

A larger question raised by the judge’s ruling is whether it could affect past or future use of eminent domain by the village.

McKoski ruled the village made legal errors when establishing its tax increment financing district.

“You have a detailed statutory scheme to go through to ensure that the property is being taken for a valid public purpose,” said Margaret Borcia, the Majkowskis’ attorney.

The village is now five years into its tax increment financing district, which allows it to capture taxes from increased property values since the district was established in 2002 into a 23-year fund to be used for redevelopment purposes.

The village in its plan said the district funds could be used for other redevelopment areas not within the district.

McKoski ruled the village’s plan should have stated “the incremental revenues would be used exclusively for development of the project area.”

Burkland contends municipalities can use revenues from one redevelopment area for eligible costs in another as long as it is contiguous, or separated only by a roadway or forest preserve. Burkland said McKoski’s ruling will not have a broader effect.

Chicago IL Daily Herald: http://www.dailyherald.com