Grassroots Collaborative v. City of Chi.

2020 IL App (1st) 192099

186 N.E.3d 995

The GRASSROOTS COLLABORATIVE and Raise Your Hand for Illinois Public Education, Plaintiffs-Appellants,

v.The CITY OF CHICAGO, Defendant-Appellee.

No. 1-19-2099

Appellate Court of Illinois, First District, Second Division.

Opinion filed December 15, 2020

Aneel L. Chablani, Gavin Kearney, and Clifford Helm, of Chicago Lawyers' Committee for Civil Rights, of Chicago, and Jon Greenbaum (pro hac vice), Thomas Silverstein (pro hac vice), and Megan Reif (pro hac vice), of Lawyers' Committee for Civil Rights Under Law, of Washington, D.C., for appellants.

Mark A. Flessner, Corporation Counsel, of Chicago (Benna Ruth Solomon, Myriam Zreczny Kasper, and Elizabeth Mary Tisher, Assistant Corporation Counsel, of counsel), for appellee.

JUSTICE LAVIN delivered the judgment of the court, with opinion.

¶ 1 Plaintiffs, Grassroots Collaborative (Grassroots) and Raise Your Hand for Illinois Public Education (RYH), appeal from the circuit court's dismissal of their complaint against defendant, the City of Chicago (City), under section 2-619.1 of the Code of Civil Procedure (Code) ( 735 ILCS 5/2-619.1 (West 2018) ) based on a lack of standing. For the reasons that follow, we affirm.

¶ 2 BACKGROUND

¶ 3 Plaintiffs alleged the following in their complaint. Plaintiffs are two nonprofit organizations operating within Chicago and Illinois as a whole. Grassroots is composed of 11 organizations that work together to create equitable policy with the mission to "bring together organizations across different political movements to resist the corporate interests working against its constituents." In pursuing its goal of helping disenfranchised people, Grassroots has worked to close corporate tax loopholes and raise the minimum wage. Additionally, Grassroots has developed and implemented a training program for its organizations and community members called the "People's Academy."

¶ 4 RYH is a coalition of parents and concerned citizens whose mission is to "engage, inform, and empower parents to protect and strengthen public education for all children in Chicago and Illinois, eliminate inequities in public schools, and work at the grassroots for the public good that is public education." To this end, RYH engages in projects and programs "in areas relating to equitable school funding, special education, facilities, curriculum, privatization, standardized testing, student privacy, and democratic, accountable, and transparent school governance."

¶ 5 Plaintiffs alleged that the City, for over 30 years, has illegally administered the Tax Increment Financing (TIF) program under the Tax Increment Allocation Redevelopment Act (TIF Act) ( 65 ILCS 5/11-74.4-1 et seq. (West 2018)) in a racially and ethnically discriminatory manner. In an effort to eradicate and prevent blighted areas, municipalities can use the TIF program to fund public and private developments in designated TIF districts. To be designated a TIF district, the area must qualify as a blighted area, conservation area (an area at risk of becoming blighted), industrial park conservation area, or intermodal terminal facility area, as those terms are defined under the TIF Act. Additionally, a redevelopment plan must be created for blighted or conservation areas to be designated as TIF districts, which must include a comprehensive plan to address and eliminate the conditions that qualify them as blighted or conservation areas. Finally, a redevelopment plan cannot be adopted and a TIF district cannot be designated unless the municipality finds that the "but-for test" has been satisfied, i.e. , "the redevelopment project area on the whole has not been subject to growth and development through investment by private enterprise and would not reasonably be anticipated to be developed without the adoption of the redevelopment plan." 65 ILCS 5/11-74.4-3(n)(J)(1) (West 2018). TIF districts are designated for periods of somewhere between 23 and 35 years, depending on the type of TIF district and whether a renewal of its designation is obtained.

¶ 6 At the time that a TIF district is created, the value of all property in that district is assessed and set as the base level equalized assessed valuation (EAV). Taxes are collected on the base level EAV as usual and distributed to the taxing bodies that would normally receive those taxes. In Chicago, the taxing bodies that receive revenue from the base level EAV include the City, Chicago Public Schools, City of Chicago Library Fund, Chicago Park District, City Colleges of Chicago, Cook County, Cook County Forest Preserve, and the Metropolitan Water Reclamation District of Greater Chicago. For the duration of the TIF district, should the value of the property in the TIF district increase, any taxes collected on that increase are separated from the taxes collected on the base level EAV and placed in a separate fund. These taxes are then used by the City to fund public projects and private developments within the TIF district or immediately adjacent TIF districts. After the expiration and dissolution of a TIF district, all taxes collected within the former TIF district are collected and distributed as usual, and any surplus funds remaining in the TIF district may be returned to the taxing bodies.

¶ 7 According to plaintiffs, over the past 30 years, the City designated areas as TIF districts that were not blighted or in danger of becoming blighted and that were already experiencing or likely to experience economic growth. These illegally designated TIF districts tended to be in predominantly white areas of the City, near other thriving and affluent neighborhoods. As a result, because those illegally designated TIF districts were likely to experience growth absent their designation as TIF districts, they captured increased tax revenue that otherwise would have gone to the general revenue fund. This resulted in the predominantly white and affluent residents of the illegally designated TIF districts to exclusively benefit from the increased tax revenue that should have benefited all City residents, including Black and Hispanic residents. Moreover, citizens outside of the illegally designated TIF district were required to pay increased taxes to compensate for any shortfall created by the siphoning of the incremental taxes that would have otherwise gone to the general revenue fund. Plaintiffs also alleged that the City's discriminatory administration of the TIF program in favor of predominantly white and affluent residents deprived predominantly Black and Hispanic areas that are blighted or at risk of becoming blighted, the opportunity to be designated TIF districts. This consequently denied the Black and Hispanic communities in those areas the economic development encouraged by the TIF program. Plaintiffs alleged that in 2017, $660 million in revenue was brought in by and directed to the City's TIF districts.

¶ 8 In their complaint, plaintiffs specifically challenged the City's creation of the Cortland and Chicago River TIF district. That district, consisting of 168 acres bounded by Webster Avenue, Clybourn Avenue, North Avenue and Elston Avenue, is surrounded by the popular neighborhoods of Logan Square, Bucktown, Wicker Park and Lincoln Park. The population within a half-mile radius of the center of the Cortland and Chicago River TIF district is nearly 80% non-Hispanic white, 12% Hispanic, and 4% Black. Historically, the land in that district had been used for manufacturing and industrial purposes. Between 1990 and 2015, however, much of the manufacturing moved out of the district.

¶ 9 In 2016, the City began developing plans to modernize the land use in the Cortland and Chicago River TIF district and to create opportunities for retail and residential development. During this time, and even in the years leading up to it, real estate developer Sterling Bay began to purchase tracts of land within the district. In July 2017, the city council passed an ordinance that repealed many of the industrial zoning laws previously imposed on the area and opened the way for mixed use development. Shortly thereafter, Sterling Bay pitched the land to Amazon for development through the use of TIF funding. Amazon declined the offer, and Sterling Bay revised its plans for redevelopment of the area. Despite public opposition to the use of TIF funding for the redevelopment of the area, on April 10, 2019, the city council passed ordinances that created the Cortland and Chicago River TIF district and also approved a redevelopment agreement that named Sterling Bay's subsidiaries as the developer.

¶ 10 Plaintiffs alleged that the Cortland and Chicago River TIF district failed the "but-for test" to be designated as a TIF district under the TIF Act, because it was reasonably anticipated to develop and grow naturally without the TIF district and redevelopment plan. This is because the Cortland and Chicago River TIF district is located between the economically growing community of Logan Square and the affluent neighborhoods of Bucktown, Lincoln Park, and Wicker Park; natural economic expansion is occurring in the district and in the surrounding areas; the value of improved land is rising at a rate higher than the rest of Chicago; and Sterling Bay bought and created redevelopment plans for large portions of the land in the district prior to the area being designated a TIF district.

¶ 11 Plaintiffs also alleged that the Cortland and Chicago River TIF district failed to satisfy the requirements to be considered a "blighted area" under the TIF Act because the City failed to consider 2018 data that would have shown, in contradiction to the City's conclusion, that the EAV values in the area were not lagging.

¶ 12 The creation of the Cortland and Chicago River TIF district, plaintiffs alleged, resulted in $1.3 billion being spent on redevelopment projects in the district when that money would have otherwise gone to the general revenue fund and been allocated across the City....