Despite city’s ‘rush to judgment’ on Lincoln Yards, judge says lawsuit to block tax subsidy might not fly
Organizers who oppose the city's April 10 decision to give $1.3 billion in tax subsidies to Lincoln Yards developer Sterling Bay gather outside Judge Neil Cohen's courtroom on Wednesday. [Hannah Alani/Block Club Chicago]
A Cook County judge on Wednesday indicated he didn’t like the city’s deal to give $1.3 billion in tax increment financing dollars for the Lincoln Yards project, but also said a lawsuit trying to block the deal might not pass legal muster.
Circuit Court Judge Neil Cohen spent nearly two hours on Tuesday grilling attorneys for a grassroots coalition that’s suing the city over the taxpayer-funded subsidy, setting up a decision over whether the group’s lawsuit may go to trial.
Cohen scheduled the case’s next hearing for 10:30 a.m. Oct. 18, but said he will work to issue a written opinion as early as next week.
During hours of animated back-and-forth with attorneys for the plaintiffs and the city, Cohen said he understood why Grassroots Collaborative and Raise Your Hand for Illinois Public Education had taken legal action against the city.
But he questioned whether the groups had standing to bring a lawsuit.
“A deal’s a deal, even though I don’t like it,” Cohen said. “Don’t misunderstand me. I understand what people did here. I understand there was a rush to judgment. … I personally [don’t like what happened]. … [but the law] needs to be a bright line in the sand.”
The lawsuit aims to block $1.3 billion in taxpayer subsidies for public improvements surrounding the controversial $6 billion Lincoln Yards project along the Chicago River, which would be disbursed during the course of 23 years. It alleges that the city approved the funds illegally and in a “racially and ethnically discriminatory” manner.
(Read the lawsuit here.)
Maggie Sobota, senior counsel for the city’s Law Department, asked Cohen to dismiss the case on the basis that the groups did not have legal standing and could not prove the city had violated the law.
Thomas Silverstein, an attorney with the national Lawyers’ Committee for Civil Rights, told Block Club he has seen similar TIF practices enable a “proliferation of subsidies” across the U.S.
Opponents of the development packed the courtroom on Wednesday, donning T-shirts and holding signs.
After the hearing, Jennie Biggs, a mother of three and an organizer with Raise Your Hand, said she hoped the judge would rule in the groups’ favor.
“This should be a huge scandal,” she said. “But in Chicago, it’s just business as usual.”
Bill McCaffery, the city’s spokesperson, declined to comment on the suit, citing the Law Department’s policy not to comment on ongoing litigation.
A question of legal standing
In order for the lawsuit to move forward, state law requires the plaintiff groups, Grassroots and Raise Your Hand, to show that they’ve suffered a “distinct and palpable injury” as a direct result of the city’s actions.
During the hearing, Silverstein argued that groups like Raise Your Hand were injured through the “opportunity cost” of having to divert their resources to fighting the TIF district instead of focusing directly on education issues.
But Cohen responded by citing judicial rulings dismissing lawsuits that he said had tried to establish standing on a similar basis. He said the plaintiff groups were “doing exactly what your mission is.”
“You’re not being frustrated in your purpose, you’re ongoing,” the judge told Silverstein. “I don’t see how the injury is concrete.”
Cohen added that the city was not forcing the groups to spend their resources on fighting the TIF.
“I respect everything you guys are doing, but as a matter of law, there must be something more than organizational investment” on the line, Cohen said. “There must be something more than your decision to dedicate the time and money.”
Did City Council follow the law?
The lawsuit also alleges the city knowingly created a TIF district in an area that fails to satisfy state requirements of blight.
Aneel Chablani of Chicago Committee of Civil Rights, told Cohen on Wednesday that when City Council voted on the TIF, “blight” was determined using equalized assessed values for the land for the years 2013, 2014, 2015, 2016 and 2017.
At least three of those years must show EAV trends at or less than that of the rest of the city to allow the area to be considered blighted and qualify as a tax increment financing district.
In 2016, citywide EAV rose at a rate of roughly 4 percent; EAV at Lincoln Yards rose by 9.3 percent, Chablani said. The following year, the city’s rate rose by 3.7 percent, while the Lincoln Yards’ EAV rose by 7.9 percent.
Knowing that EAV for the Lincoln Yards site had grown at a rate higher than that of the entire city for 2016 and 2017, Chablani argued that City Council should have taken into consideration the anticipated 2018 EAV would be higher than what is allowed by state law to be considered “blighted.”
Values for the 2018 year released in May would not have allowed the Lincoln Yards site to be considered blighted, an Aug. 26 Tribune analysis found.
While Chablani was able to show a “good trend,” Cohen said the Illinois statute only asks municipalities to look at five years of finalized data when determining this requirement for blight.
Cohen likened the issue to that of an election; votes cannot be re-cast the day after an election just because voters learn a fact that would have changed their minds the day before, he said.
“Maybe you’re just on the wrong side of the timeline, unfortunately,” he said.
‘A race to the bottom’
After the hearing, Silverstein said he viewed municipalities’ use of TIFs to attract private companies, such as Sterling Bay and Amazon, “disgusting.”
On the Missouri-Kansas border, for example, he said has watched companies play “hopscotch,” pitting the states and their municipalities against each other in a competition for who can provide more public subsidies.
“It’s a race to the bottom,” he said.
That’s one reason why his organization, which is based in Washington, D.C., decided to take the city of Chicago on in this case involving Lincoln Yards.
“This is a site that developers have been licking their chops at for years,” he said. “You’re gonna have that economic development either way.”
Ald. Brian Hopkins (2) has said that’s not true.
In defense of the TIF, Hopkins said Sterling Bay — the developer behind Lincoln Yards — expects to pay $300 million out-of-pocket to finance various infrastructure projects.
These include new bridges, a new Metra station and extension of the Bloomingdale Trail.
The TIF funds will reimburse the developer only for its upfront investment on the infrastructure improvements, Sterling Bay spokesperson Julie Goudie has said.
“Sterling Bay continues to believe that there is no merit to the lawsuit and that the city’s decision-making and enactment of the Cortland-Chicago River TIF district fully complied with all applicable laws,” Goudie said on Wednesday. “Lincoln Yards will benefit the entire city by creating thousands of new jobs, an estimated $4 billion in annual economic output, and hundreds of millions of dollars in new tax and other revenues for the city and other local taxing bodies, including the public schools.”
A rendering of the proposed Lincoln Yards. [Department of Planning and Development]
Meetings & Agendas