Read the allegations in the complaint that the Illinois Appellate Court recounted in Strauss v. City of Chicago, No. 1-19-1977 (Mar. 5, 2021), and they will make your hair curl in horror.
In short: a family rented the ground floor of its mixed residential-commercial building in Chicago to Double Door Liquors (a live music venue). The local alderman “had a personal and financial relationship with the Double Door’s owners.” Slip op. at 3. He “told defendant that only Double Door would be allowed in the building.” Id. (It’s good to have friends, no?) But Double Door was not an ideal tenant, and the noise, drug and alcohol use, and property damage by patrons were a problem to the owners and neighbors. So the owners evicted the club.
So, according to the family’s complaint, the alderman struck back. Read pages 3- 6 for the details. If true, the allegations are harrowing. The alderman instituted multiple downzonings on this property alone, which would have prohibited the residential leases on the upper floors of the building. The alderman “warned plaintiff that if Double Door was not allowed back in the building, the alderman would make the zoning process very lengthy and expensive and that the building could be vacant for years.” Slip op. at 3-4. “Alderman Moreno asserted that he decides what kind of tenant goes into the building and all of these issues could be avoided if Double Door was allowed back into the building at a rent far less than what the market would bear.” Id. at 4. He threatened to sic building inspectors on them. He met with potential buyers, after which they backed off. “Prior to a zoning committee meeting on September 11, 2017, a conversation about the B2-2 proposal was recorded between Alderman Moreno and his chief of staff. Alderman Moreno said he was going to ‘F*** with them, it makes their lawsuit weaker ***.'” Slip op. at 5. The building’s commercial space remained empty. Eventually, the family sold the whole building.
They sued for due process violations, equal protection, and a taking. Case dismissed for failure to state a claim, and the appellate court affirmed. You can guess why the substantive due process and the equal protection claims failed – the rational basis test. Yes, the complaint alleged a lot of bad reasons for the downzoning, but the court can simply make up some good reasons: “Under the rational basis test, the court may hypothesize reasons for legislation, even if the reasoning advanced did not motivate the legislative action.” Slip op. at 15. Here, the court concluded it didn’t need to make up any reasons, the complaint itself supplied them: the bad tenant, the Double-Door-alderman’s-friend, created problems that the downzoning was rationally designed to address. How’s that for bootstrapping? But yes, that is the rational basis test in its full glory.
No better luck on the takings claim, either. Jump to page 17 if you want the details. But the long-story-short is that in the eventual sale of the property forced, apparently, by the “good faith planning activities” of the City (see above), the owner only lost about a million bucks. Chump change, we guess.
Applying the factors here, plaintiff has not alleged facts showing that the economic impact of the ordinance was sufficiently severe so as to be a taking. Plaintiff ultimately sold the building for $9.1 million. That figure is less than the $10 million that plaintiff estimated was the previous market value for the building and less than the $9.6 million that was agreed to with Buyer A. But a decrease in market value is not enough to state a claim. “ ‘Mere diminution in the value of property, however serious, is insufficient to demonstrate a taking.’ ”
Slip op. at 21. Penn Central strikes again.
Strauss v. City of Chicago, No. 1-19-1977 (Ill. Ct. App. Mar. 5, 2021)