Lawsuit on Northwest Hwy project dismissed after city, developer reach agreement



The City of Chicago has reached a settlement agreement with the developer of a 67,000-square-foot parcel at 5150 N. Northwest Highway, where a five-story storage warehouse and a seven-story mixed-use development are planned.

Concerns about the residential portion of the project have generated a flood of comments on social media in the past two weeks.

LSC Development filed the lawsuit against the city after the Department of Buildings voided the developer’s construction permit to retrofit a former Archdiocese of Chicago food processing plant on the site into a self-storage facility. The warehouse would have been taken up the entire site, and there were no plans for residential units.

The lawsuit states that buildings commissioner Judy Frydland voided the construction permit on April 27, 2016, at the direction of Alderman John Arena (45th), who was seeking to downzone the property to stop the project. Frydland voided the permit one day after it had been issued.

Arena has said that a warehouse by itself on the site would do little to help the economic vitality of the area.

The buildings department has released a statement acknowledging that the permit was revoked due to the pending downzoning but that Arena did not call the commissioner to discuss the issue. Downzoning is a tool which aldermen sometimes use to make sure that a site is developed in a manner which conforms to the community’s wishes, and while the rezoning is done without the owner’s permission, a court challenge is unusual.

Details of the agreement have not been released, but it presumably helps clear the way for LSC Development to proceed with new plans to build the self-storage facility on the northern half of the parcel and, at the urging of Arena, to later sell the southern half to a residential developer. Under the new plans, the former food processing plant, whose height varies from one to three stories, would be demolished.

Arena said that the revised project would generate significantly higher tax revenue than the original plan.

“The agreement will increase the property tax revenue for the space from a projected $135,000 a year from adapted reuse (of the existing building), to an estimated half a million annually from the combined storage, retail and residential. More than half will go to our schools.

“We are pleased with this outcome, which is a much better deal for the taxpayers and local residents than what was initially proposed,” Arena said.

In January, LSC Development filed a zoning application to allow for the warehouse and an unspecified residential development. Current plans call for a 100-unit apartment complex which would have a mix of affordable, low-income and market-rate units.

The lawsuit states that the developer had obtained the permit properly and in accordance with the site’s M1-1 zoning, which Arena later had changed to B1-1, which does not allow for storage warehouses. Other properties on the block also were downzoned.

In March of 2016, a spokesman for the city Department of Planning and Development said that LSC Development’s permit application would be reviewed based on the site’s existing M1-1 zoning and not on the proposed B1-1 zoning.

“Prior to plaintiffs learning of the proposed zoning change for their property and revocation of their building permit, plaintiffs, relying in good faith upon the existing zoning classification and the probability of a building permit being issued for their residential self-storage facility, spent more than $3.3 million to acquire the property, develop architectural and engineering plans for its renovation, and undertake the (interior) demolition work needed before renovation could begin,” the lawsuit states.

LSC Development claimed that it had little reason to suspect that the property would ever be rezoned given the 45th Ward zoning guidelines on Arena’s Web site. Those guidelines encourage development that “conforms to the existing zoning map” and call for zoning changes “only rarely and under extreme circumstances,” according to the lawsuit.

The company also alleged that the city never notified the company prior to the filing of the downzoning ordinance.

At a Feb. 9 community meeting hosted by Arena, a storage company official said that he was initially upset with the downzoning of the property but that he is now on board with current plans to build his facility on only half of the property.

The lawsuit was not mentioned at the meeting, but Arena said that the poor condition of the former food processing plant was one of the reasons why he opposed the initial project.

Some residents have voiced concerns that the warehouse is not needed given that there is an existing self-storage facility located about a block to the north. Arena said that LSC Development would not be seeking to invest millions of dollars into the project unless the company felt there was a demand for more storage in the area.

Cook County Circuit Court Judge Sophia Hall dismissed the lawsuit in early February after the city and LSC Development agreed to the terms of the settlement, which gives LSC up to 1 year to reinstate the case if the agreement were to be violated. In the lawsuit LSC was challenging the city’s decision to take away its construction permit and was seeking damages.