Court Opinion

ID: 9740939
Source: CourtListenerOpinion
Date Created: 2023-08-26 20:45:22.287349+00
Date Added: 2024-06-11T07:24:21.142481
License: Public Domain

*372NAJAM, Judge,
concurring.
I concur but write separately to emphasize the aspect of this case which I believe requires a determination that the guaranty is not a mere personal obligation but a covenant which is ancillary to the transfer of a real property interest and, hence, is annexed to and runs with the land.
As noted by the majority, Section 4.1 provides that the obligations under the guaranty arise when the bonds have been issued, sold and delivered by the Authority. Thus, there is a definite connection between the covenant of the guaranty and the land. The guaranty does not operate independently but only as an integral part of the development plan. The guaranty was issued to further secure payment of the bonds, and the bonds were issued, in part, upon the faith of the guaranty.
In its operation and effect, the economic development mechanism known as tax increment financing (TIF) created the transfer of a real property interest to which the covenant of the guaranty can attach. The interest created is not a traditional common law title or estate conveyed by deed or other instrument from one party to another but an economic property interest, inherent in the statutory scheme, that attached to the allocation area when the real estate was submitted to the TIF regime. As we have noted, under this mechanism, the bond proceeds are invested to enhance the economic value of the allocation area, and the tax increment from real property located within that area is dedicated to repayment of the bonds and related expenses.
NDC contends correctly that for an affirmative covenant to touch and concern the land it must affect the physical use and enjoyment of the land. See Moseley v. Bishop (1984), Ind.App., 470 N.E.2d 773, 777. (for covenant to run with land, grantor's contract must have some logical connection to subsequent purchaser's use and enjoyment of land). However, I cannot agree with NDC's argument that the guaranty here does not meet that requirement. Brief of Appellees at 12. The guaranty affects the physical use and enjoyment of the land because it was, in part, on the faith of the guaranty that the bonds were issued and the infrastructure improvements were made. Those improvements enhanced the economic and asset value of the allocation area, which inured to the benefit of both NDC and Mercantile Bank, its mortgagee. In sum, on these facts, the covenant of the guaranty, as a condition of the TIF development plan, carries with it both benefits and burdens which run with the land.