70 ILCS 2605/8c

(70 ILCS 2605/8c) (from Ch. 42, par. 327c)

Sec. 8c. Every lease of property no longer or not immediately required for corporate purposes of a sanitary district, from such district to others for a term not to exceed 99 years, in accordance with Section 8 of this Act, shall be negotiated, created and executed in the following manner:

(1) Notice of such proposed leasing shall be published for 3 consecutive weeks in a newspaper of general circulation published in such sanitary district, if any, and otherwise in the county containing such district.

(2) Prior to receipt of bids for the lease under this Section, the fair market value of every parcel of real property to be leased must be determined by 2 professional appraisers who are members of the American Institute of Real Estate Appraisers or a similar, equivalently recognized professional organization. The sanitary district acting through the executive director may select and engage an additional appraiser for such determination of fair market value. Every appraisal report must contain an affidavit certifying the absence of any collusion involving the appraiser and relating to the lease of such property.

(3) No lease may be awarded unless the bid of such highest responsible bidder provides for an annual rental payment to the sanitary district of at least 6% of the parcel's fair market value determined under this Section, provided however, if the sanitary district determines that a parcel contains a special development impediment, defined as any condition that constitutes a material impediment to the development or lease of a parcel, and includes, but is not limited to: environmental contamination, obsolescence, or advanced disrepair of improvements or structures, or accumulation of large quantities of non-indigenous materials, the sanitary district may establish a minimum acceptable initial annual rental of less than 6% of the parcel's fair market value for the initial 10 years of the lease. In no event will the annual rental payment for each 10-year period after the initial 10 years of the lease be less than the 6% of the parcel's fair market value determined under this Section. Every lease must be awarded to the highest responsible bidder (including established commercial or industrial concerns and financially responsible individuals) upon free and open competitive bids. In determining the responsibility of any bidder, the sanitary district may consider, in addition to financial responsibility, any past records of transactions with the bidder and any other pertinent factors, including but not limited to, the bidder's performance or past record with respect to any lease, use, occupancy, or trespass of sanitary district or other lands.

(4) Prior to acceptance of the bid of the highest responsible bidder and before execution of the lease the bidder shall submit to the board of commissioners and executive director, for incorporation in the lease, a detailed plan and description of improvements to be constructed upon the leased property, the time within which the improvements will be completed, and the intended uses of the leased property. If there is more than one responsible bid, the board of commissioners may authorize and direct the executive director to solicit from the 2 highest responsible bidders written amendments to their prior bids, increasing their rental bid proposal by at least 5% in excess of their prior written bid, or otherwise amending the financial terms of their bid so as to maximize the financial return to the sanitary district during the term of the proposed lease. Upon the executive director's tentative agreement with one or more amended bids, the bids may be submitted to the board of commissioners with the recommendation of the executive director for acceptance of one or rejection of all. The amendments may not result in a diminution of the terms of the transaction and must result in an agreement that is equal to or greater in value than the highest responsible bid initially received.

(5) The execution of such lease must be contemporaneous to the execution by the lessee, each member of the board of commissioners and the executive director of an affidavit certifying the absence of any collusion involving the lessee, the members and the executive director and relating to such lease.

(6) No later than 30 days after the effective date of the lease, the lessee must deliver to the sanitary district a certified statement of the County Assessor, Township Assessor or the county clerk of the county wherein the property is situated that such property is presently contained in the official list of lands and lots to be assessed for taxes for the several towns or taxing districts in his county.

(7) Such lease may be subject to annual adjustments based on changes in the Consumer Price Index published by the United States Department of Labor, Bureau of Labor Statistics, or some other well known economic governmental activity index. Any lease, the term of which will extend for 15 years or more, shall provide for a redetermination of the fair market value (independent of improvements to the property subsequent to the effective date of the lease) after the initial 10 years and every 10 years thereafter, in the manner set forth in paragraph (2) of this Section, which redetermination shall be referred to as the decennial adjustment. Where the property rental is less than 6% of fair market value due to the existence of a special development impediment, the first decennial adjustment shall not occur until the twentieth year of the lease. Such redetermination shall be as of the first day of each succeeding 10 year period, and annual rental payments shall be adjusted so that the ratio of annual rental to fair market value shall be the same as that ratio for the first year of the preceding 10 year period. The decennial adjustment shall not exceed 100% of the rental in effect on the last day of the preceding 10-year period, except when the property rental is less than 6% of fair market value due to the existence of a special development impediment, in which case, the decennial adjustment shall not be so limited until the twentieth year of the lease. The rental payment for the first year of the new 10 year period may be subject to Consumer Price Index or other allowable index adjustments for each of the next 9 years, or until the end of the lease term if there are less than 9 years remaining.

(8) A sanitary district may require compensation to be paid in addition to rent, based on a reasonable percentage of revenues derived from a lessee's business operations on the leasehold premises or subleases, or may require additional compensation from the lessee or any sublessee in the form of services, including but not limited to solid waste disposal; provided, however, that such additional compensation shall not be considered in determining the highest responsible bid, said highest responsible bid to be determined only on the initial annual rental payment as set forth in paragraph (3) of this Section.

(9) No assignment of such lease or sublease of such property is effective unless approved in writing by the executive director and the board of commissioners of the sanitary district. The district may consider, for any assignment or sublease, all pertinent factors including the assignee's or sublessee's responsibility in accordance with subparagraph (3) of this Section. The sanitary district may also condition its consent upon the redetermination of the annual rental required to be paid under any lease initially executed on or before January 1, 1983, for which the annual rent being paid thereunder is less than 6% of the current appraised fair market value of the leased property. The redetermination of any annual rental under this Section shall be consistent with the requirements of subparagraphs (2) and (3) of this Section. No assignment or sublease is effective if the assignee or sublessee is a trust constituted by real property of which the trustee has title but no power of management or control, unless the identity of the beneficiaries of the trust is revealed, upon demand, to the executive director and the board of commissioners of the sanitary district.

(10) Failure by the lessee to comply with a provision in the lease relating to improvements upon the leased property or any other provision constitutes grounds for forfeiture of the lease, and upon such failure the sanitary district acting through the executive director shall serve the lessee with a notice to terminate the lease and deliver possession of the property to the sanitary district within a particular period.

(11) If the executive director and the board of commissioners conclude that it would be in the public interest, said sanitary district may lease without complying with the prior provisions of this Section, in accordance with an Act concerning "Transfer of Real Estate between Municipal Corporations", approved July 2, 1925, as amended, to the following, upon such terms as may be mutually agreeable: (a) the United States of America and the State of Illinois, County of Cook, any municipal corporation, with provisions that the property is to be applied exclusively for public recreational purposes or other public purposes; (b) any academic institution of learning which has been in existence for 5 years prior to said lease, provided that such lease limit the institution's use of the leased land to only those purposes relating to the operation of such institution's academic or physical educational programs; or (c) any lease involving land located in a county with a population of 100,000 or less and which is leased solely for agricultural or commercial recreational uses. Any lease issued in accordance with this paragraph shall contain the provisions that such lease is terminable in accordance with service of a one-year notice to terminate after determination by the board of commissioners and the executive director that such property (or part thereof) has become essential to the corporate purposes of the sanitary district.

(Source: P.A. 95-604, eff. 9-11-07; 95-923, eff. 1-1-09.)