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Town of Cedar Lake v. Certain Cedar Lake 2014 Annexation Territory Landowners

Court of Appeals of Indiana

October 11, 2017

Town of Cedar Lake, Indiana, Appellant-Respondent,
v.
Certain Cedar Lake 2014 Annexation Territory Landowners, Appellees-Petitioners.

         Appeal from the Lake Superior Court The Honorable Calvin D. Hawkins, Judge Trial Court Cause No. 45D02-1510-MI-20

          ATTORNEYS FOR APPELLANT Nicholas K. Kile Mark J. Crandley Hillary J. Close Barnes & Thornburg, LLP Indianapolis, Indiana David M. Austgen Austgen Kuiper Jasaitis P.C. Crown Point, Indiana.

          ATTORNEY FOR APPELLEES Stephen R. Buschmann Thrasher Buschmann & Voelkel, P.C. Indianapolis, Indiana.

          BRADFORD, JUDGE.

         Case Summary[1]

         [¶1] Appellant-Respondent the Town of Cedar Lake, Indiana ("the Town"), appeals from the trial court's setting aside of the annexation of approximately 2800 acres ("the Annexation Territory") in Lake County. In 2014, the Town enacted an ordinance to annex the Annexation Territory, and Appellees-Petitioners Certain Cedar Lake 2014 Annexation Landowners ("the Remonstrators") petitioned to set aside the annexation. The parties agree that the only issue of contention was whether the Town established that the Annexation Territory was "needed and can be used by the municipality for its development in the reasonably near future" as required by Indiana Code 36-4-3-13(c).

         [¶2] Following a bench trial, the trial court set aside the annexation, concluding that the proposed annexation did not satisfy the "needed and can be used" standard. The Town argues that (1) we should review the annexation ordinance at issue to determine if has a "rational basis" rather than review the trial court's judgment for clear error; (2) the trial court improperly failed to give its legislative judgment any deference and applied, essentially, an incorrect de novo standard of review; and (3) the trial court improperly applied the "needed and can be used" standard. Because we conclude that the trial court's judgment must be reviewed only for clear error, the trial court did not employ an incorrect legal standard, and the trial court's judgment was not otherwise clearly erroneous, we affirm.

         Facts and Procedural History

         [¶3] In the early 1900's, the Town originated as a vacation spot for Chicagoans with "a little bit of money[, ]" who patronized the hotels on the lake that eventually gave the Town its name. Tr. Vol. II p. 14. The Great Depression brought decline, and, in the 1960's a group of residents decided to incorporate the Town "and try to reclaim its glory[, ]" which finally occurred in October of 1968. Tr. Vol. II pp. 14-15. Over the past forty years or so, Lake County's population has steadily migrated from the northern part of the county to the southern, where the Town is located. Currently, the Town's borders include a section of U.S. Highway 41, which runs north-south a short distance west of the Town's center. The Town's population increased by approximately 25% between 2000 and 2010. The 2010 census determined that the Town's population was 11, 560.

         [¶4] In November of 2014, the Town adopted Ordinance 1212, proposing the annexation of the Annexation Territory, consisting of 232 parcels and 2795 acres. On June 2, 2015, the Town adopted Ordinance 1212A and resolution 1228B, providing for the annexation of the Annexation Territory and approving a fiscal plan, respectively. The fiscal plan contained no information regarding specific development in the Annexation Territory but did project a net increase in tax revenues to the Town of more than $350, 000 per year. On August 28, 2015, the Remonstrators, consisting of owners of 185 of the 232 parcels in the Annexation Territory, filed their remonstrance against the annexation.

         [¶5] On January 5, 2017, the trial court held a bench trial on the remonstrance. The Town introduced evidence regarding five major projects that could potentially add additional economic development in the Annexation Territory in the future. First, Indiana and Illinois have proposed construction of the "Illiana Toll Road, " connecting Interstates 55 and 65, with the intersection of the toll road with U.S. 41 occurring within the Annexation Territory ("the Toll Road Project"). Second, the Northern Indiana Commuter Transportation District is proceeding with plans to extend the South Shore commuter rail line to Dyer, which would allow access to commuter rail service to Chicago at a point approximately a twenty-minute drive from the Annexation Territory ("the Commuter Rail Project"). Third, Amazon has announced a new warehouse in Monee, Illinois, the site of which is approximately one half-hour from the Town, significantly larger than an Amazon warehouse in Joliet, Illinois, which employs 1500 persons ("the Amazon Project"). Fourth, the Great Lake Basin Railroad is planning an extension of its freight line, with the proposed route running parallel to the proposed Toll Road Project ("the Freight Rail Project"). Fifth, planning continues for a "South Suburban Airport" to serve as a third major airport for the Chicago metropolitan area, which would be in nearby Peotone, Illinois, and could spur growth in the annexation area ("the Airport Project").

         [¶6] The Town presented testimony that the planning for future development should be occurring now, regardless of when actual construction begins. The Town purchased a water utility and invested approximately $1, 000, 000.00 to extend water mains to the edge of the Annexation Territory and has studied the extension of sewer service to the Annexation Territory and plans to begin construction as soon as annexation occurs. The Town, however, did not introduce evidence that any developers have expressed an interest in developing land in the Annexation Territory.

         [¶7] The owners of approximately 40% of the land in the Annexation Territory testified at trial and indicated that none of them had been approached by any developer. Instead, several landowners have purchased land from developers for agricultural use. The President of the Town Council testified that he and the rest of the council had no objection if farming continued in the Annexation Territory for the next ten or twenty years and that the Town knew of no development proposals in the Annexation Territory for the next three to five years.

         [¶8] On February 21, 2017, the trial court issued its written judgment, which included the following relevant findings of fact and conclusions:

FINDINGS OF FACT
1. In November, 2014, the Town of Cedar Lake adopted Ordinance 1212 proposing to annex certain land that is adjacent to the Town. In conjunction with that Ordinance the Town of Cedar Lake also adopted Resolution 1128, which was a Fiscal Plan dated November 12, 2014. (Ex 1)
2. The 2014 Annexation Territory consists of 232 parcels of property totaling 2795 acres, most of which is used for agricultural purposes.
3. On January 20, 2015, the Town of Cedar Lake adopted Resolution 1128A amending the Fiscal Plan by a document dated January 19[, ] 2015. (Ex B, Ex 2)
4. On June 2, 2015, the Town of Cedar Lake adopted Ordinance 1212A annexing the 2014 Annexation territory together with Resolution 1128B, approving an amended fiscal Plan dated May 22, 2015. (Ex A, Ex C)
5. On June 6, 2015, the Town of Cedar Lake caused notice of the passage of Ordinance 1212A to be published.
6. On August 28, 2015, Certain Cedar Lake 2014 Annexation Territory Landowners, the Petitioners, owning 185 of the 232 parcels in the 2014 Annexation Territory (79.7%) filed their remonstrance against the annexation.
7. On December 7, 2015, this Court entered its Order certifying the sufficiency of the remonstrance petitions.
8. The Court held a hearing on the remonstrance on January 5, 2017. The Court heard evidence and was presented with a Stipulation from the parties.
9. The Town of Cedar Lake created three Fiscal Plans respectfully dated November 12, 2014 (Ex 1); January 19, 2015 (Ex 2) and May 22, 2015 (EX C) each of which projected costs and revenues for the succeeding five (5) year period. Each of the Plans projected that the costs of government services such as police protection, fire and EMS protection would increase as development occurred. The projected costs and revenues over the five (5) year period make no provision for any significant growth in revenues or costs of services that would be expected if the 2014 Annexation Territory was to be developed during that period.
10. In addition the Town of Cedar Lake's amended annexation ordinance delayed the effective date of the annexation for three years, thus establishing that the Town of Cedar Lake did not need and could not use the 2014 Annexation Territory for its development by the Town of Cedar Lake for the next three years. (Ex C)
11. The Fiscal Plan granted the "agricultural exemption" for properties zoned as agricultural land under Ind. Code §36-4-3-4.1, which would exempt such properties from the additional municipal taxes until such time as the properties were rezoned. Despite this exemption, the Fiscal Plan showed that as a result of the Annexation the Town of Cedar Lake would receive an estimated $350, 000 in additional tax revenues, exclusive of any additional utility charges. The Petitioners presented evidence that for those that would pay the municipal rates, the increased taxes would be significant. (Ex C)
12. The Town of Cedar Lake asserted that the construction of the Illiana Tollway, which had a proposed route through the 2014 Annexation Territory would create development in the Annexation Territory. The Tier I and Tier II Environmental Impact Studies on the portion of the Tollway running through Illinois have been declared invalid by the United States District Court, Southern District of Illinois and the Governor of the State of Illinois has stated that Illinois will not spend money to advance this project. (Stipulation 4, Ex T). The construction of the Iliana Tollway in this location is speculative and will not lead to development in the 2014 Annexation Territory in the reasonably near future.
13. The Town of Cedar Lake provided evidence of other regional projects that would promote development in Northwest[] Indiana. These projects include:
A. The West Lake Corridor Project NICTD railway is projected to become operational across Northern Lake County, with a spur running to Dyer, Indiana by 2023. While this project if completed on time, would benefit Northwest Indiana, there was no evidence that it would result in development in the 2014 Annexation Territory in the reasonably near future.
B. The State of Illinois is considering the construction of a South Suburban Airport in Illinois. (Ex S, Ex W). Pursuant to the website of the Illinois Department of Transportation, this is an ongoing process. The completion of this project at this location is speculative and the Town of Cedar Lake provided no evidence that this proposal would result in development in the 2014 Annexation Territory in the reasonably near future.
C. Amazon has announced plans for a fulfillment center in Monee, Illinois. While this project could potentially have a positive impact for Northwest Indiana, the Town of Cedar Lake provided no evidence this project would result in development in ...

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