Court Upholds Municipality’s Provision Requiring Business to Pay Outstanding Debts Before Renewing a License
On June 10, 2016, the Illinois Third District Court of Appeals decided Willie Pearl Trust v. City of Kankakee, Case No. 2016 IL App (3d) 150655, finding that the City of Kankakee (the City) was justified when it required a business owner to pay off debts owed to the City before it would renew a property rental license.
The Court’s Decision
Willie Pearl Burrell Trust (the Plaintiff) owned several properties that it rented to tenants. When the Plaintiff submitted applications to renew its rental licenses, the City informed the Plaintiff that it would take no action on the applications until the Plaintiff paid off approximately $40,000 in fines owed to the City. Those fines accrued as a result of the Plaintiff’s numerous code violations. The City relied on a specific code provision requiring that, in order to obtain a City license, an applicant must have first paid off all debts owed to the City.
The Plaintiff sued, making three main arguments against the City:
- The City had a duty to issue the rental licenses. Casting aside this argument, the court found that under the City code, the Plaintiff was ineligible to receive rental licenses until it paid its debts. Thus, the Plaintiff could not demonstrate that it had a right to the licenses, or that the City had a duty to issue them.
- The City violated the Plaintiff’s constitutional due process rights by refusing to issue the licenses. Dismissing this argument, the court found that the Plaintiff had no protectable property interest in the renewal of its rental licenses and, thus, the City was not required to provide due process safeguards when it did not renew the Plaintiff’s licenses.
- The City’s demand for repayment of prior debts was an unconstitutional taking of property. The unconstitutional takings doctrine prevents the government from requiring that someone give up a constitutional right in exchange for a benefit conferred by the government when the benefit has little or no relationship to the burden imposed on the party. The court found that the City had not violated the takings doctrine because it did not require the Plaintiff to relinquish any constitutional rights in order to obtain rental licenses. Rather, the City merely required the Plaintiff to pay outstanding debts.
Having dismissed all of the Plaintiff’s arguments, the court ruled in favor of the City and found that it had not violated the Plaintiff’s rights by refusing to renew the rental licenses so long as the Plaintiff had outstanding debts.
Your Municipal Code
Municipalities should consider whether they are using the best available practice after the court’s decision in Willie Pearl. Municipalities that already have language in their codes allowing for collection of outstanding debts before issuing licenses should review their code language in light of the court’s decision. Municipalities without this type of provision in their codes should consider whether they want to add it to their collection practices.
The following is sample code language to reference in order to ensure that your municipality is best protecting its fiscal interests:
If you have any questions about how this applies specifically to your municipality, please contact your attorney.
This special alert is for general information only and is not intended to provide and should not be relied upon for legal advice in any particular circumstance or fact situation. The reader is advised to consult with an attorney to address any particular circumstance or fact situation. The opinions expressed in this special alert are those of the authors and not necessarily those of Tressler LLP or its clients. This announcement or some of its content may be considered advertising under the applicable rules of the Supreme Court of Illinois, the courts in New York and those in certain other states. For purposes of compliance with New York State Bar rules, our headquarters are Tressler LLP, 233 S Wacker Drive, 22nd Floor, Chicago, IL 60606, 312.627.4000. Prior results described herein do not guarantee a similar outcome. The information contained in this special alert may or may not reflect the most current legal developments. The articles are not updated subsequent to their inclusion in the special alert when published. Tressler LLP | Copyright 2016