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Local Government Q&A
When can a municipality use a recapture agreement?
65 ILCS 5/9-5-1 is often referred to as the "recapture
agreement statute." That section of the statute permits a municipality
to ask a developer, as part of the subdivision process, to oversize certain
water mains, sanitary storm sewers and other related facilities which will
also bring a benefit to other properties not yet subdivided or served by
such facilities. That statute has also been amended to permit the recapture
of developer-costs associated with the construction of roadways, traffic
signals or other traffic-related improvements. In addition to land which
is subdivided, a recapture agreement can be utilized even where a project
does not require a subdivision plat if the developer requests and receives
approval of a planned unit development.
The municipality and the developer generally enter
into a recapture agreement which provides that the municipality will not
permit the owners of property which will benefit from these public improvements
to connect to the sewer or water lines or to use the streets unless those
other property owners or developers pay their fair proportional share of
the installation of these oversized or expanded public facilities. The contract
between the municipality and the developer generally describes the area
to be benefited and provides that the municipality will not allow the owners
of those properties to use the oversized or expanded improvements installed
by the first developer unless reasonable recapture costs are paid. The statute
allows the contract to add interest costs to the original cost of the improvements.
Such agreements often run for periods of 10 or 20 years and provide that
the municipality will promptly collect and pay over the recapture amounts
received to the original developer. No public notice or public hearing is
required before a recapture agreement can be entered into. Some municipalities
require that a notice be sent to the benefited property owners before the
agreement is accepted. A recapture agreement is generally filed with the
Recorder of Deeds. That recording serves to notify the owners and other
persons interested in the "benefited property" that there will
be a charge when the property owner seeks to connect to or use the facilities
constructed under the contract.
Municipalities should protect themselves in such
agreements with a number of provisions. One of these is a provision which
requires the original subdivider to fully defend and hold harmless the municipality
and its officers and employees in the event that one of the "allegedly
benefited property owners" argues that no benefits occurred or that
the amount of the recapture fees are unreasonable. The original developer
should be required, upon request from the municipality, to post a cash bond
to pay for any of the municipality's costs of defending or implementing
such an agreement. If no bond is posted, the recapture agreement should
allow the municipality to permit the facilities to be used without the required
payment or under a compromise payment.
Lawyers in our firm have assisted municipalities
as special counsel in negotiating and drafting recapture agreements, annexation
agreements and impact fee agreements. Please contact this law firm if you
feel that we could assist you in this part of the development process. Ask
for Stewart Diamond or Bob Rolek.
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