APPEAL from the Circuit Court of Cook County; the Hon. THOMAS
J. JANCZY, Judge, presiding.
MR. JUSTICE O'CONNOR DELIVERED THE OPINION OF THE COURT:
Petitioner, City of Chicago (City), brought an eminent domain action to acquire the property known as the Sherman House Hotel. Respondents, certain sublessees of stores in the building (tenants), filed a traverse, contesting the City's authority to acquire the property. The trial court denied the traverse and subsequently entered judgment for the City, setting the value of the property at $13.2 million. The tenants appeal.
This controversy concerns the Chicago Loop block bounded by La Salle, Lake, Clark and Randolph Streets, and primarily occupied by the Sherman House Hotel. On November 21, 1978, the Commercial District Development Commission (Commission) designated the subject property as a "blighted commercial area" which is defined in the Municipal Code of Chicago (1977), ch. 15.1, § 15.1-1(d), as:
"* * * any area of not less in the aggregate than two acres located within the territorial limits of the City of Chicago where 75% of the land area is devoted to a commercial use and where commercial buildings or improvements, because of age, dilapidation, obsolescence, over-crowding, lack of ventilation, light, sanitary facilities, inadequate utilities, excessive land coverage, deleterious land use or layout, inadequate and ineffective use, failure to produce a proper share of tax revenues or provide employment commensurate with the capacity of the area, or any combination of these factors, are detrimental to the public safety, health, morals, welfare, and economic stability."
The Commission relied upon a report submitted by the department of planning, city and community development, based on studies made over a five-year period. The report indicated that excluding the parking garage at the corner of Lake and La Salle, only 8% of the 960,000 square feet of commercial space is occupied. Three-quarters of the structures are in a deteriorated condition. The report concluded:
"This unutilized space creates a void in the central business district that fails to produce a proper share of tax revenues or to provide adequate employment commensurate with the capacity of the area."
On December 20, 1978, the Chicago city council approved the Commission's designation of the area as commercial blight. On February 15, 1979, the City of Chicago filed a petition to condemn, through eminent domain, the subject property. On April 16, 1979, certain tenants filed a traverse to the City's petition.
On May 15, 1979, the Commission approved a redevelopment plan for the property. The plan envisioned the transfer of the property to the Illinois Capital Development Board (Board) at a price equal to acquisition costs, for the construction of a new State of Illinois Building. It was further provided that the property "* * * should be devoted primarily to public use. Any other use must be related to and compatible to the primary use." The objectives of the plan were:
"a. Remove economically obsolescent and incompatible land use.
b. Provide parcels of land sufficient in size and configuration to permit public institutional development.
c. Provide the residents of the State of Illinois with an increased level of public institutional services.
d. Consolidate available governmental and public institutional uses through the development of a State of Illinois facility in close proximity to City Hall, the County Building, and the Richard J. Daley Center.
e. Anchor and encourage the contemplated redevelopment of the adjacent North Loop Area, as set forth in the `Redevelopment Plan for Blighted Commercial Area North Loop, March, 1979.'"
Finally, the plan noted that the Board "has agreed to work with the City of Chicago to design a facility" compatible to and harmonious with the ...