Even When Development Plans Change, Takings Can Still Be Constitutional

A corrected court opinion, filed on December 22, 2020 in the Appellate Court of Illinois, First District, affirmed the lower court’s findings. The case revolved around the City of Chicago’s taking of Defendant’s vacant property at Grand Avenue and North Jefferson Street in Chicago, Illinois, and its constitutionality, though the value of the property was addressed along the way.

Back in 1999, the City of Chicago originally intended on making the area around Defendant’s property, which included Blommer Chocolate Company’s factory, a planned manufacturing district, or PMD, aimed at protecting existing manufacturing jobs and facilities and promoting investment in the industries. PMD’s do not include residences. The City implemented a River West Tax Increment Finance Redevelopment Plan, called River West TIF for short, to fund the PMD. A private firm was commissioned to study the River West TIF and in its report found Defendant’s property fell under a “conservation area” which, although not yet blighted, could become so due to various issues applicable to the property. After the study and report, the City approved the River West TIF.

After the River West TIF plan was adopted, Blommer submitted a proposal for redevelopment of its property by expanding its facilities through obtaining the 4.2 acres surrounding its current property, including Defendant’s property. Blommer offered to purchase Defendant’s property, but Defendant refused to sell. The City then stepped in and passed an ordinance authorizing the redevelopment plan and its intent to take Defendant’s property, which it would then transfer to Blommer since it fell under the objectives of the River West TIF.

In 2005, the City of Chicago filed its Complaint for Condemnation, which is the name of the court process used when an entity, such as a state or municipality like Chicago, exercises its eminent domain power, allowing it to take private property for public use. The jury in the first trial awarded $2.5 million to Defendant; Defendant appealed for both the compensation award amount and the denial of its motion to traverse, which challenges the constitutionality of the taking. The appellate court found the taking constitutional, since Blommer’s redevelopment plan served the purposes of the River West TIF and development of the area. The appellate court also sent the case back to the lower circuit court for a new trial only addressing the just compensation amount, as it found that certain evidence had been erroneously excluded.

While the case went back to the trial court on the issue of just compensation, the City reviewed its industrial corridors with the goal of updating its land uses in order to promote “economic growth and job creation.” Ultimately, under the North Branch Framework, it deemed the area that both Blommer’s facilities and Defendant’s property fell within should have its zoning updated so that later it could change its use to at least 50% for employment purposes and able to include “high density office; retail and select residential uses,” which can include a “multistory high-rise residential structure.” The City of Chicago passed an ordinance that would allow this change in zoning in the future for the area; its zoning at the time was changed to Downtown Service, or DS, which does not include residential uses. A company by the name of Fuji Oil Holdings, Inc. purchased all outstanding shares of Blommer and planned to expand the company in North America, although it stated it would not change its management or business structure.

At the second trial, the jury determined that Defendant’s property has a highest and best use as a “multistory high-rise residential structure with ancillary commercial use.” Highest and best use is the measure all properties must be evaluated against in eminent domain matters in order to further protect property owners’ rights and to compensate them appropriately. Even with having to change the zoning from DS to DX, or Downtown Mixed Use, thereby allowing residential structures, the jury awarded Defendant the amount of just compensation award at $7.1 million.

Defendant filed a post-trial motion, challenging the validity of the taking overall, not the amount of just compensation. Defendant contended that the redevelopment plan was unconstitutional since his property was originally deemed a conservation area by the River West TIF and that it was not being taken for public purposes, but rather, for the interest and benefit of one company, Fuji Oil Holdings, Inc., since the North Branch Framework would actually move the Blommer campus to a different area and not expand it in its current location. The trial court denied the motion; Defendant failed to raise this issue at the second trial, thereby waiving his ability to challenge on this basis, as the redevelopment plan was incorporated into the evidence at the second trial. Furthermore, the trial court found that the redevelopment plan still maintained the goal of economic revitalization in the area, and therefore, it is still in the public’s best interest and hence constitutional.

The appellate court, reviewing all the evidence and history of the case, affirmed the trial court’s decision. The case was first sent back only on the issue of the amount of just compensation award, not its constitutionality. Even so, it found no abuse of discretion, nor did it find any newly discovered evidence that would change the outcome of the case. It was deemed that the North Branch Framework still served the purposes of the River West TIF, and therefore, the outcome would not change the finding that this taking is constitutional.

The full, corrected court opinion can be read at https://courts.illinois.gov/Opinions/AppellateCourt/2020/1stDistrict/1191053.pdf. To learn more about eminent domain, your property rights, and a law firm that works hard to protect your investment, visit www.blynchlaw.com, or give us a call today at 312-573-2727 if you are facing the power of eminent domain and wish to protect your constitutional rights.