Small businesses and property owners beware. New Illinois eminent domain legislation awaiting Governor Rod Blagojevich's signature would allow the City of Chicago to take property on behalf of private parties, such as larger developers and businesses, so long as it serves a “public purpose,” which would include "economic development" and the "elimination of blight." Such legislation could have national implications
The City also would be free to use eminent domain for development of O’Hare Airport and within 140 existing TIF (tax increment financing) districts thanks to the lobbying efforts of the Illinois Municipal League (IML), which secured amendments excluding those projects from the original version of the State Equity in Eminent Domain Act (SB3086).
Because TIF districts can remain active for up to 23 years, the legislation would provide broad, long-term license for the City’s eminent domain powers in roughly 30% of Chicago’s land area.
Critics charge that the amended version of SB3086 does little to prevent eminent domain abuse. “As passed out of the Senate, it was a very good bill," said Jim Tarbet of Citizens Initiative Against Overdevelopment, who also criticized the bill’s effect on low income families. "These ‘little changes’ requested by IML and the City of Chicago virtually neuter the bill.
“In the case of Chicago TIF districts, you are displacing lower and moderate income families and businesses and ultimately driving up their costs and creating losses. The people lose for government gains,” Tarbet added.
The bill’s broad definition of “blight” raises concerns that any small business or property can be condemned. “In Illinois and in so many other places, ‘blight’ is really in the eye of the beholder,’ said Bert Gall, a staff attorney who works on eminent domain abuse cases nationwide for the Institute of Justice. “Unfortunately, ‘blight’ can be so expansively defined that you can be condemned for things like not having two full bathrooms, which was the case in Lakewood, Ohio.”
Although the IML officially remains opposed to SB3086, a spokesman defended the changes to the bill.
The amendments “improved the bill greatly and made it more livable,” said Roger Huebner, who serves as general counsel for the IML. The final version of SB3086 is “going to make the taking of property for economic development more challenging. It’ll make it more costly, but it sets up a process where you’re able to take property under certain subsections for economic development.”
Real estate policy expert Jon Devries believes municipalities have a legitimate need to protect the use of eminent domain to promote their local economies. The original form of SB3086 was “an excessive reaction to a few abuses” that would limit the ability of mayors and city planning departments “to better assist projects for job creation in the future” according to Devries, who serves as director of the Marshall Bennett Institute of Real Estate at Roosevelt University in Chicago.
Chicago Mayor Richard M. Daley’s office did not respond to the requests for comments regarding the bill.
Amendments to SB3086 allow properties to be condemned for "blight" so long as they are located within a designated "blighted" area, such as a TIF district, even if the property itself does not have any "blighting factors."
Under the bill’s final version, the State, a school district, or any unit of local government can exercise eminent domain to acquire private property for public ownership and then transfer control to a private party to operate businesses, such as restaurants, stores, gas stations, parking garages, and rental car facilities, that are “related to the condemning authority’s operation of a university, medical district, hospital, exposition or convention center, mass transportation facility, or airport.”
Those provisions for “public ownership-private control” raise deep concerns among property rights activists, who point to the recent U.S. Supreme Court ruling of Kelo v. New London, which allowed a city to condemn 15 houses for a private developer to build a luxury hotel, condominiums, and office buildings.
“The city [of New London] was going to condemn the properties and then lease them back for 99 years at $1 a year to a developer," said Gall, illustrating the problem that SB3086 can pose for small property and business owners. "Even though the city was going to have title to the property, the developer was going to be controlling the property.”
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