Procedure
The two units of government proposing to enter into a 425 Agreement negotiate the terms and conditions of the plan. For it to take effect, it must be approved by a majority of the members of the governing body of each respective party. The contract is recorded by the County Clerk and the Secretary of State.
The agreement creates a temporary transfer of jurisdiction for the affected land rather than an outright annexation. The agreement defines the responsibilities that each party has with respect to the affected area. For example, the city as party to such an agreement might have the right to collect city income tax from residents or employees within the transferred area even though they do not actually live or work within the city itself. The township would still retain policing jurisdiction and provide municipal services to the new development.
425 Agreements can be effective for up to 50 years. At the end of the term of the agreement, the agreement itself defines what should happen to the affected land at the termination of the contract. The law permits for the parties to agree for the land to revert to the original party or permanently attached to the other party.
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