WBEZ | eminent domain

Chicago considers eminent domain to curb foreclosures

Mon, 20 Aug 2012 07:00:00 -0500

Earlier this summer, San Bernadino County, an area east of Los Angeles hit hard by the mortgage crisis, considered a plan that could potentially help homeowners whose mortgage payments exceed the actual value of their property. The ostensibly simple idea, proposed by the California firm Mortgage Resolution Partners, would have the county purchase so-called underwater loans at market value using eminent domain, thus allowing homeowners to refinance and stay put, rather than face foreclosure.

MRP, which says the plan could be tailored according to the needs of local communities, would help local governments broker the deal for a fixed fee. San Bernadino has not moved forward with the plan, but their interest caught the attention of a number of cities and counties around the country, among them Chicago.

Alderman Ed Burke held a hearing at City Hall last week (which, as noted by local media, attracted the likes of John Cusack) to consider the idea.

“Renegotiation of underwater mortgages by the private sector has failed to keep pace with this epidemic,” Burke said in a statement. “Even with record low interest rates, many homeowners have found it difficult to refinance due to newly tightened lending standards and depressed home values.”

To be sure, Cook County could use a fresh injection of ideas, when it comes to the foreclosure crisis. According to the Woodstock Institute, one in four homes in Cook County is underwater. The crisis has hit black and Latino areas especially hard.

Without Mayor Rahm Emanuel’s approval, the idea is likely to be dead on arrival. "I don't think it's the right way to address the problem," Emanuel told reporters at an unrelated news conference. "I don't think it's (in) the power of the city to do, to deal with the housing issue.”

Chicago Alderman Roberto Maldonado, whose ward covers the Humboldt Park area, thinks using eminent domain could be an effective way of stabilizing home prices and avoiding foreclosured properties, which can remain vacant for years and blight a neighborhood. He joins Eight Forty-Eight on Monday to discuss eminent domain, along with Chicago magazine Deal Estate columnist Dennis Rodkin.

Northwestern University law professor David Dana will also join the discussion. He supports the idea of doing something to reduce principals for homeowners with underwater mortgages, but thinks the Mortgage Resolution Parners approach raises constitutional questions.

“In eminent domain law, you have to meet both state and federal constitutional requirements, and this is uncharted territory,” Dana said.

Settlement could lead to big park for Mexican neighborhood

Fri, 12 Aug 2011 22:35:00 -0500

The city of Chicago could be near the end of a five-year legal battle for control of a former industrial site with potential to help form a 24-acre park. If an eminent-domain settlement holds up, the land could be an asset for a Mexican-American area of the Southwest Side.

Cook County Circuit Court Judge Sanjay T. Tailor this week signed off on the deal, under which the city will pay more than $7.5 million for about 19 acres owned by 2600 Sacramento Corp.

“I don’t get a penny,” company owner Joanne Urso said Friday afternoon. The money will go to the Cook County Treasurer’s Office and remain there as Urso tries to settle with a bank that has filed suit to foreclose on the property, according to her attorney.

Urso’s land could combine with an adjacent five acres the city already controls. The park would total about five blocks, all just west of South Sacramento Avenue and north of West 31st Street. The perimeter would pass residential buildings, industrial properties and the Cook County Jail.

Activists in the Little Village neighborhood hailed the settlement. “We have not seen any park development in over 75 years,” said Kim Wasserman, executive director of the Little Village Environmental Justice Organization.

Wasserman said the deal could inspire other neighborhoods to push for public amenities and services. “Regardless of language and regardless of immigration status, as long as there is determination in these communities, we can continue to get the things that we need,” she said.

The park concept has the backing of the local alderman. “That’s what we’re pushing for,” said Juan Manzano, an aide to Ald. George Cárdenas, 12th Ward.

The property served industrial manufacturers for more than 70 years, according to the U.S. Environmental Protection Agency. Their output included asphalt, coal tar and driveway sealer. Celotex Corp. made roofing products on the site from 1967 to 1982, the EPA says.

Allied Chemical and Dye Corp. purchased that operation. A series of mergers and acquisitions turned Allied into New Jersey-based Honeywell International Inc. The corporation dismantled the Celotex facilities between 1991 and 1993, according to the EPA. Urso’s company bought the property later.

After cancer-linked chemicals turned up in nearby homes and yards, the EPA designated the area a Superfund site. A Honeywell cleanup consisted largely of covering the land with gravel. The cleanup finished last year, the agency says in a statement.

Chicago filed the eminent-domain suit in 2006. The case became more complicated in August 2010, when Texas-based United Central Bank filed the foreclosure suit, a nearly $10 million claim, in federal court. The loan involves both the Celotex site and another Urso property.

The city’s payment for Urso's land will consist of $6 million from the Chicago Park District and more than $1.5 million from city general-obligation bonds, according to Jennifer Hoyle, a spokeswoman for Mayor Rahm Emanuel.

But the timeframe for creating the park is not clear. Ownership of Urso’s property will transfer to Chicago upon payment, due September 7, but the city is not specifying a date for turning over the acreage to the Park District. “Possibly later this year,” Hoyle wrote Friday afternoon.

A possible obstacle is a Chicago Fire Department facility on the adjacent five acres.

The biggest challenge could be funding the park construction. Wasserman’s group is calling for playgrounds, a farm, sports fields, an amphitheater and a community center. Building all those amenities could cost hundreds of millions of dollars, the group says.

Joliet lashes back at federal prosecutors over housing suit

Fri, 05 Aug 2011 21:38:00 -0500

A top Joliet official is lashing back at federal prosecutors for suing his city to block condemnation of a low-income housing complex called Evergreen Terrace.

The suit, a civil complaint filed Thursday in U.S. District Court in Chicago, accuses Joliet of violating the Fair Housing Act, trying to “perpetuate segregation,” and attempting to “limit or reduce the number of Black or African-American residents residing within the city.”

City Manager Tom Thanas called the suit a legal maneuver to “wear us down” by lengthening Joliet’s six-year legal battle for authority to condemn the complex. “This is at a time when Joliet doesn’t have the financial resources to take on big litigation,” Thanas said Friday afternoon. “We, like other municipalities around the country, are suffering with declining revenues and increasing expenses.”

Thanas stuck by the city’s claim that Evergreen Terrace, a privately owned 356-unit development, has too many police and fire calls. But whether to keep fighting for condemnation authority is up to Joliet elected officials, Thanas added. “That’s something we’ll be reviewing with the mayor and city council,” he said.

The complex houses about 765 low-income residents, nearly all African-American, and abuts the Des Plaines River across from downtown Joliet.

Joliet’s attempts to close Evergreen Terrace stretch back more than a decade. The city tried to block refinancing for the complex but the U.S. Department of Housing and Urban Development sunk in millions of dollars.

In 2005, Joliet asked a state court for condemnation authority. The HUD stake sent the condemnation bid into the federal court system, where it remains.

The property’s owners, New West Limited Partnership and New Bluff Limited Partnership, filed a federal suit against the condemnation. A group of residents filed another federal suit against it. One of those residents, Teresa Davis, also filed a complaint with HUD, which led to Thursday’s U.S. Department of Justice suit.

Joliet officials say the city for years has planned to redevelop the site for affordable housing and help relocate the residents.

But Thursday’s suit claims “the city has no meaningful plan” for those aims.

Patrick Johnson, an assistant U.S. attorney for the Northern District of Illinois, said Friday afternoon that prosecutors held discussions with Joliet officials before filing the suit. Johnson called those talks unsuccessful and said the sides have scheduled no other settlement negotiations. Next week, he added, the government will motion for its suit to be joined with the other federal suits aimed at preserving Evergreen Terrace. Johnson said the case’s discovery phase could last at least a year.

Asked whether the government was just trying to wear down Joliet, a spokesman for U.S. Attorney Patrick Fitzgerald said prosecutors would have no further comment.

An Evergreen Terrace resident, for his part, said the federal suit was already having an effect — bringing some positive attention to the complex. “I don’t see much wrong with the place,” said Elvis Foster, 53, who lives in a one-bedroom apartment and serves on the tenant council. “You’re close to downtown. You got the Joliet Junior College just two blocks away. And [the complex] is not feared as much as people would say.”

Venture: Do aldermen have too much power over small businesses?

Mon, 04 Apr 2011 05:01:00 -0500

The biggest economic news in Chicago this week may be what happens in politics.

On Tuesday voters in Chicago will choose almost a third of the city council. And for small business owners, that has big ramifications. They know their success can hinge on who their alderman is.

In Lincoln Square, just north of Lawrence on Western Avenue, a block of small business owners learned firsthand a few years ago how powerful an alderman can be. Alderman Eugene Schulter of the 47th ward pushed forward a proposal for the city to acquire their properties and sell them to a private developer to turn into condos and retail stores.

Tim Van Le owns Decorium Furniture in the targeted block. Now, three and a half years later, he still heaves a sigh when he describes how it felt knowing he might have to relinquish his store.

“Absolutely we feel so hopeless,” Le said. “We really felt like we had no word.”

Just next door is Chicago Soccer, which sells cleats and other soccer gear. Imre Hidvegi is one of the owners. He led the campaign to fight Alderman Schulter's plan.

“It steamrolled so quickly we didn’t even have a chance to sit down and ask wait, why, how, what’s going on here? I equate it to a violent attack,” Hidvegi says with a laugh.

He can laugh now because they rallied enough protesters to get Alderman Schulter to drop the idea. Schulter didn't respond to calls seeking comment.

That attempted land grab was pretty brazen, but every day aldermen are asked to sign permit applications for things like awnings and sidewalk cafes. And they get notice from the city for every building permit and license application. That can have business owners feeling like they have to make nice with their alderman.

George Fink is president of the Lincoln Square Chamber of Commerce. He says he senses fear on the part of small business owners.

“That’s the general feeling in the public that oh well, we can’t do anything unless we go through the alderman to do it,” Fink said. “Is that a good feeling for free people? No, I don’t think so.”

Elizabeth Milnikel agrees. She's researched the regulatory environment in Chicago as part of her work as director of the IJ Clinic on Entrepreneurship at the University of Chicago. It’s a law clinic with a libertarian bent that works with lower-income entrepreneurs. She says Chicago's political system vests too much control in each individual alderman.

“It puts a lot of power in one person and that person can be the gatekeeper for a business that’s really trying to get started, trying to flourish in a community,” Milnikel said.

Milnikel says making things easier for small businesses is even more important right now as the city tries to pull out of the recession and create jobs. But she says some businesses can’t even get off the ground if they don’t have buy-in from the alderman. She cites the case of one of her clients who wants to open up a day care but was told by the alderman there were already enough day cares in the area.

“She has held this building and paid property taxes for over a year now, [but] she hasn’t even been allowed to start building it up as a day care,” Milnikel said. “Meanwhile this block has yet another empty building sitting there.”

Alderman Vi Daley, who’s leaving the 43rd ward, says she worked hard during her 12 years to fill empty buildings. Still, she says it’s the alderman’s job to make decisions.

“I mean an alderman certainly knows their community, knows the street and you could probably reach out to chambers and get their input if they’re active on the street, but I guess, who would then make that decision?” Daley said.

In Lincoln Square, where those small store owners pushed back, Alderman Schulter is leaving office after more than 35 years.

Small business owners say they’re excited about his replacement – a young Northwestern University staffer named Ameya Pawar, who ran as an underdog and won. Pawar says what’s needed for local businesses is more transparency.

“I think this is probably endemic in the city of Chicago where campaign contributions are linked to things actually getting done – to signs or awnings processes getting taken care of,” Pawar said. “And I think moving forward what we need to do is create a climate where businesses in the ward and all wards in the city of Chicago feel like they understand how to get a license, how to get a permit, and I don’t think we have such a climate at this point.”

Entrepreneurs say they like what they hear from Pawar, but after years of doing business in Chicago, they’ll believe it when they see it. And in 14 wards across the city tomorrow, small business owners will be watching election returns closely to see who will be their new gatekeeper.

Each week on Venture, we bring you something called our Windy Indicator – a fresh way to understand the climate of the economy.

It could be sunny. Or it could be stormy.

One person who’s banking, literally, on April showers is Jeff Hodgson, founder and president of Chicago Weather Brokerage - a brokerage for precipitation. He says the amount of rain we get can be a strong indicator for all sorts of sectors of the economy.

“A lot of people talk to me and they talk about speculating. ‘Wow, I can’t believe you can trade rain or snow. Now you’re betting on the weather,’” Hodgson said. “And the answer I always get back to people is, ‘You’re investing all this money into a marketplace where the main revenue driver is something you cannot control. You’re the one speculating here.’”

The Chicago Mercantile Exchange started selling rain contracts six months ago. The whole idea is that farmers, golf courses, outdoor music venues, and fertilizer companies could treat the rain contracts as a sort of insurance. Heavy rainfall could be an economic disaster for those businesses. But so far – it’s been a hard sell.

“Farmers understand how to trade crops – crop futures. You know, wheat, corn, soy beans, things of that nature,” Hodgson said.

But Hodgson says it’ll take some time to get customers used to the idea of putting money on the weather – something you probably don’t think about buying.

Next week – our Windy Indicator goes premium at the gas pump.