Judge weighs dismissing Chicago TIF suit

Do grassroots groups have legal standing to challenge Lincoln Yards development?

Attorney Aneel Chablani discusses the suit against Chicago’s TIF program after Wednesday’s court hearing at the Daley Center. (One Illinois/Ted Cox)

Attorney Aneel Chablani discusses the suit against Chicago’s TIF program after Wednesday’s court hearing at the Daley Center. (One Illinois/Ted Cox)

By Ted Cox

CHICAGO — A Cook County judge weighed dismissing a suit against Chicago’s tax-increment-financing program Wednesday after oral arguments delivered in court at the Daley Center.

Chicago attorneys pressed a motion to dismiss the suit, challenging whether the grassroots groups that filed it have the legal standing to make such a case.

Attorneys for the Grassroots Collaborative and Raise Your Hand for Illinois Public Education, which filed the suit in April, countered that Cook County Circuit Court Associate Judge Neil Cohen should “read the statute as the legislature intended” to find that Chicago is abusing the TIF program, most recently and most glaringly with the $1.3 billion TIF to benefit the Lincoln Yards development on the Near Northwest Side.

Cohen seemed torn, at one point calling it a case of “social justice” and comparing it to real-estate “redlining” — legally permitted in Chicago for decades until the clear bias of banning races from various neighborhoods was successfully challenged in court. Cohen described the public motivation behind that as “a history of discrimination in this city and we want to change that.”

But he also seemed receptive to the city’s arguments that the groups lacked the legal standing to file the suit. He cited opinions by U.S. Supreme Court Justice William Brennan and local federal Judge James Zagel that the groups need to show an “injury in fact” to the organizations and not a “self-proclaimed” interest, even if in the public good. He quoted Zagel in an opinion on a suit filed by the Better Government Association against then-Gov. George Ryan in his case involving the corrupt sale of driver’s licenses as secretary of state, saying, “Good intentions are not enough for standing.”

“There must be more according to the case law,” Cohen said. “I respect everything you guys are doing,” he added, but there was no place for personal sympathies in the law. “So tell me, where’s your concrete injury?” Cohen said. “Just because you don’t get what you want doesn’t give you standing.”

Attorney Thomas Silverstein called the BGA opinion “something of an outlier” and said Illinois had traditionally held a more liberal and open definition of legal standing. He pointed out the grassroots groups had diverted financial resources to fight this battle that they might have spent elsewhere in the communities they serve.

“It’s not an outlier,” Cohen countered, “but this case will make new Illinois law.”

He mildly dressed down Silverstein, saying, “I know the way millennials think, but we’re not here to give you everything.”

Silverstein’s fellow attorney Aneel Chablani was more successful in pointing out that, in most similar Illinois cases, the issue of legal standing is never even raised. He pushed the arguments that the city was ignoring the requirements that TIFs be used exclusively for “blighted areas” that would go undeveloped “but for” the TIF government subsidy, and he urged the judge to “read the statute as the legislature intended.”

Chablani also raised the issue that the Lincoln Yards properties owned by developer Sterling Bay had been undervalued in property-tax assessments in order to make the case it was a “blighted” area to the Chicago City Council, only to see dramatically elevated assessments completed six weeks later — a ploy exposed just last month by the Chicago Tribune’s Hal Dardick, who pointed out former Mayor Rahm Emanuel had pushed for immediate council approval before he left office.

Timna Axel (left) and Jennie Biggs (center) prepare to address the media after Wednesday’s court hearing. (One Illinois/Ted Cox)

Timna Axel (left) and Jennie Biggs (center) prepare to address the media after Wednesday’s court hearing. (One Illinois/Ted Cox)

Alderman Michele Smith of neighboring Lincoln Park charged at the time that former Assessor Joe Berrios had assessed properties in the area at little or no value — even a former city dump-truck lot sold to Sterling Bay for $105 million.

“I understand what people did here. I understand there was a rush to judgment,” Cohen said. “I’m not trying to cover for it.”

Cohen and Chablani agreed that Sterling Bay had invested $200 million in Chicago real estate in the years between 2013 and 2016, and that the Lincoln Yards area is expected to appreciate in value up to $2.8 billion, but Cohen said that didn’t alter that the council had made its TIF decision in good faith with the information it had at the time. “I agree and understand, but a deal’s a deal,” he said. “There’s no redos.”

City attorney Maggie Sobota said Chablani’s “but for” argument had no impact on her motion to dismiss the case on the issues of legal standing and whether the groups had legitimate private rights of action in filing the suit. She also included an affidavit in her legal brief testifying that the city was not aware of the Lincoln Yards reassessment when the TIF was approved.

Chablani, however, countered that appellate courts have determined that “the range of interests is wide” in such cases in granting legal standing, including suits filed by private individuals, businesses, and even school districts.

Cohen announced his intention to deliver a written decision next week. Chablani said, “We will evaluate all options” if the case is dismissed, including possibly refiling the suit with new plaintiffs.

But in the meantime the suit is still pending with the potential to dramatically upend the city’s TIF system, which currently includes 170 TIF districts. The Grassroots Collaborative and Raise Your Hand for Illinois Public Education have charged that TIFs siphon off tax money that should be going to schools and other public investments, and Chablani added Wednesday that the Lincoln Yards TIF is an “exemplary” illustration of the city ignoring the state requirements for TIFs to be used only in “blighted areas.” The suit also includes charges that Chicago uses TIFs to benefit white, well-to-do areas of the city instead of blighted areas, and as such violates civil-rights laws.

“We seek to freeze this TIF,” said Timna Axel of the Chicago Lawyers’ Committee for Civil Rights, which joined in filing the original suit, at a news conference after the hearing. She pointed out they’ve already filed for an injunction to prevent spending TIF funds on Lincoln Yards, and she expected that part of the suit to move forward if it’s not dismissed overall. “We ask the city to reform a TIF system that has long been unlawful, unfair, and racially discriminatory.”

“Lincoln Yards was not qualified for TIF funding at the time that it was passed,” added Jennie Biggs, spokeswoman for Raise Your Hand. Citing the Trib expose, she said, “This should be a huge scandal, but in Chicago it’s just business as usual. We are here to change that.”