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04/15/97 STATE BANK COUNTRYSIDE v. CITY CHICAGO

April 15, 1997

STATE BANK OF COUNTRYSIDE, AS TRUSTEE UNDER TRUST AGREEMENT NUMBER 87-322, AND BLACKWATER CONSTRUCTION CORPORATION, PLAINTIFFS-APPELLANTS,
v.
THE CITY OF CHICAGO, DEFENDANT-APPELLANT.



Appeal from the Circuit Court of Cook County. 94 CH 9861. The Honorable Dorothy Kirie Kinnaird, Judge Presiding.

Released for Publication June 2, 1997.

Presiding Justice DiVITO delivered the opinion of the court. Rakowski, J., concurs. Justice Tully, dissenting.

The opinion of the court was delivered by: Divito

PRESIDING JUSTICE DiVITO delivered the opinion of the court:

Plaintiffs State Bank of Countryside and Blackwater Construction Company (Blackwater) were the legal title holder and sole beneficiary, respectively, of a piece of property in Chicago. Plaintiffs filed a petition with the Chicago city council to obtain a change in the subject property's zoning classification from M1-1, restricted manufacturing district, to R-4, general residence district. After the city council denied the petition, plaintiffs filed a complaint for declaratory judgment against the City of Chicago (the City). They asked the court to declare that the zoning ordinance containing these classifications was unconstitutional as it applied to the subject property. After a trial, the circuit court entered judgment in favor of the City.

The parties raise the following issues on appeal: (1) whether the circuit court's conclusion that the City's zoning ordinance was valid was against the manifest weight of the evidence and (2) whether, to be valid, a zoning ordinance must bear a real and substantial relation to the public health, safety, morals, comfort, and general welfare or whether a rational relationship to a legitimate governmental interest is sufficient.

In their first-amended complaint for declaratory judgment, plaintiffs alleged that the M1-1 classification of their property did not bear any substantial relation to the public health, comfort, morals, safety, or general welfare. The classification was arbitrary and capricious, it deprived plaintiffs and the public of the property's highest and best use, it was a cloud on plaintiffs' title, and it violated the municipal zoning enabling statutes. Consequently, plaintiffs asked the court to declare the zoning ordinance invalid as it applied to their property and to grant them the right to develop the property as they had proposed.

Before the trial on the first-amended complaint, the parties submitted a set of stipulated facts to the circuit court. They stipulated that the subject property was a rectangular asphalt parking lot enclosed by a chain link fence. The size of the lot was 2.6 acres, and it was bordered by West 64th Place to the north, a public alley to the east, West 65th Street to the south, and Natchez Avenue to the west. Plaintiffs purchased this property for $650,000 in April 1994.

The parties further stipulated that plaintiffs petitioned the City for a zoning reclassification because the existing zoning classification, M1-1, did not permit the development plaintiffs proposed. They wanted an R-4 zoning classification in order to build a development containing 84 condominiums with 151 off-street parking spaces. Each unit in the proposed development would have 1,200 square feet and two bedrooms, and the average sale price would be $126,000. There would be six three-story buildings, containing 12 units each, and two three-story buildings, containing six units each. There would be 67 open parking spaces, and the remaining spaces would be in 14 six-car garages.

According to the stipulations, the proposed development was consistent with the use and bulk regulations under the R-4 zoning classification. The proposed development was consistent with other multifamily housing developments in the immediate area, and the M1-1 zoning classification was consistent with other manufacturing uses in the immediate area. North and east of the subject property were three-story apartment buildings on property with the R-4 classification. South of the subject property were manufacturing buildings on property in the Village of Bedford Park. This property was zoned as H-1, heavy industrial district. West of the subject property were buildings on City property with the M1-1 classification. Following a hearing, the city council unanimously denied plaintiffs' petition.

The parties further stipulated that John Barrett was qualified to render an expert opinion as a land developer and general contractor, Terrance O'Brien was qualified to render an expert opinion as a real estate appraiser, Anthony McNamara was qualified to render an expert opinion as a registered professional engineer, and Stephen E. Roman was qualified to render an expert opinion as a registered architect and certified land planner.

At trial, John Barrett testified on behalf of plaintiffs. He testified that he was a representative of Blackwater and that Blackwater purchased the subject property in April 1994 from an industrial company. The property had been used as a parking lot for the industrial complex south of it, but it had been vacant for a number of years and was overgrown with weeds. Blackwater bought the property with the intention of building condominiums on it.

At the time Blackwater purchased the subject property, Barrett knew that it was zoned M1-1 and that this classification would not permit the proposed development. There was no zoning contingency in the contract to purchase the property.

Barrett further testified that he had developed 500 condominiums during his career as a developer. Thirteen years before the trial, he built 18 units to the east of the subject property. In 1984, he developed 12 condominium units at 63rd and Mobile, but he had developed no property in the area since that time.

Based on his experience, Barrett anticipated selling the condominiums to residents of the immediate and nearby areas. He expected that the buyers would be older residents and individuals who worked for the City. He had received no calls from individuals who were interested in purchasing a condominium in the proposed development.

Anthony McNamara also testified on behalf of plaintiffs. He stated that he was a consulting civil engineer and had been retained by Blackwater to analyze the suitability of the subject property for the proposed development. He determined that the property, including available sewer and water connections, was sufficient for the proposed development. He admitted that it would also be suitable for a manufacturing business.

Next, plaintiffs called Stephen Roman, a registered architect and urban planner, who had previously worked in the City of Chicago's Department of Planning for 32 years. During his testimony, he identified and referred to plaintiffs' exhibit 1, an aerial base map of the area surrounding the subject property. The exhibit showed the zoning classifications of the property on the map and the dates on which zoning classifications on different properties had changed.

Roman explained that, in 1957, when the City enacted the zoning ordinance, the strip between 64th Place and 65th Street, east of Oak Park Avenue, and west of Austin Boulevard was zoned M1-1. After 1957, the classification of several of the parcels in this strip was changed from M1-1 to R-4. The classifications of six properties between Austin and Narragansett changed to accommodate apartment buildings. These changes occurred in 1965, 1967, 1968, 1969, 1974, and 1976. West of Narragansett, the classifications of three pieces of property changed from M1-1 to R-4; one change occurred in 1978, one in 1982, and one in 1995. On the north side of 64th Place, the classification of four properties had changed from R-2, single-family district, to R-4. These changes occurred in 1959, 1960, 1969, and 1972. Pursuant to these zoning changes, 732 dwelling units had been built.

Despite the fact that only one of these zoning changes had occurred since 1982, and the majority occurred in the sixties and seventies, Roman believed there was a trend toward multiple-family developments. In ascertaining this trend, he did not make an extensive examination of the area west of Oak Park Avenue between 63rd and 65th Streets, but he admitted that there was only one block in this area with an R-4 designation. East of Austin Boulevard between 63rd and 65th Streets and west of Central Avenue, there was also only one property with an R-4 designation.

According to Roman, the proposed development was consistent with the existing buildings and the trend of development in the area, although the proposed development included more "green space" and parking. In addition, the development would serve as a "buffer" between the single-family homes to the north of it and the heavy industry to the south.

Roman opined that, if the property continued to be zoned M1-1, it would remain vacant because only one industrial building had been built in the M1-1 strip between Oak Park Avenue and Austin Boulevard in the past 40 years. He explained that there was no market in the area for industrial development because the area was surrounded by residential areas. Also, the subject property was not suitable for industry because new industrial standards for development called for a minimum of five acres to accommodate trucks, expansion, and employee parking.

On the other hand, Roman found that there was a strong market for condominiums in the area. The basis for his opinion was his visits to two condominiums for sale. These were north of the subject property and had been on the market for two weeks at the time he visited them. He also spoke to a realtor at an open house at a condominium somewhere east of the subject property. He did not visit a new 18-unit development at 64th and Normandy. It was also his opinion that the neighborhood was desirable because it had good access to transportation, good parks, and good schools.

On cross-examination, Roman admitted that, in addition to light industry, the M1-1 classification allows other uses, such as restaurants, business offices, professional offices, medical centers, and dental centers.

Terrance O'Brien, a professional real estate appraiser, also testified on behalf of plaintiffs. He stated that he was familiar with the value of properties in the area around the subject property because he had reviewed public records concerning the sales of homes, condominiums, and industrial properties in that area.

O'Brien testified that it was his opinion that, with its existing M1-1 zoning classification, the value of the subject property would be $2 a square foot, or approximately $250,000. He arrived at this number by considering the uses permitted under the ...


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