Zoning can make for unlikely allies.
The Metropolitan Planning Council, an influential civic group not known for its pro-development views, is backing a controversial proposal by developer Nicholas Gouletas for a large residential complex in Lincoln Park.
The council rarely comments on proposals outside of the central business district but is wading into a neighborhood dispute to address broader concerns about Chicago’s zoning process for major projects, which it says is marred by delay, uncertainty and conflict.
In many ways, critics say, the fight over the site of the former Columbus Hospital, which began more than a year ago, underscores the problems that the city’s tangled zoning mechanism creates as Chicago experiences its biggest housing boom since the post-World War II era.
The pattern is all too familiar: A developer agrees to buy land, proposing the largest possible project imaginable. Residents mount a counterattack, putting political pressure on the local alderman, who by City Hall tradition has unilateral control over zoning. In response, the developer scales back the proposal, or the site is downzoned, or the deal dies.
Local real estate leaders have complained that Chicago’s zoning has become unpredictable and unreliable, citing several high-profile instances in which development sites were abruptly downzoned. And developers now have found an unlikely ally in the planning council.
In a letter to Mayor Richard M. Daley that praises the Gouletas proposal, the planning council also criticizes the city’s development-approval process, saying it intensifies zoning battles rather than preventing them.
“Aldermen, community organizations and developers alike have come to view zoning as a fluid set of regulations that can be altered on a whim and without cause,” the April 23 letter states.
Referring to the downzoning of the hospital site at 2520 N. Lakeview Ave., the planning council said, “We recommend forward-looking, rather than reactive, planning as a tool that can incorporate citizens’ concerns … before a developer risks time and money on a proposal.”
Even though the city is four years into a major housing boom, the Daley administration has done little planning to accommodate residential development.
The city’s piecemeal approach has been a poor substitute for comprehensive planning, said MarySue Barrett, president of the non-profit planning council. “Development proposal by development proposal, people are caught by surprise,” she said.
Chicago’s lack of a land-use plan was cited last year by a Cook County Circuit Court judge as a factor in striking down the 1997 downzoning of an area just west of the site of Columbus Hospital.
Judge Sidney A. Jones III wrote, “Although it is not unusual for a large, developed city to lack a formal comprehensive plan, the city’s lack of such a plan renders its zoning decisions to become more subject to scrutiny.”
That case is on appeal.
Strong local opposition
Residents of the trendy neighborhood have managed to stymie the strong-willed Gouletas, who is seeking city approval of a three-building condo and townhouse complex with at least 382 units on the site of the closed Columbus Hospital. At about 900,000 square feet, the proposal is roughly a third smaller than Gouletas’ original proposal.
Vocal neighbors shot down that plan, persuading Ald. Vi Daley (43rd) to introduce a downzoning ordinance that could scale back the project by another third, to about 600,000 square feet.
However, though the Chicago City Council passed the downzoning ordinance, the revised proposal could be approved as a planned development, a special designation that would allow the larger development.
Gouletas, chairman of American Invsco Corp., referred questions about the situation to Kevork Derderian, who is handling the development for the Chicago-based real estate firm.
After an initial torrent of negative reaction, residents have begun to warm up to the revised proposal, Derderian said. “Since we’ve started having small meetings with 15 to 40 people, the reaction has been consistently favorable,” he said.
Whether the planning council’s endorsement will be enough to get the proposal passed is uncertain. Ald. Daley said it wouldn’t change her view of the project.
In July, the project likely will come up for review before the city’s Plan Commission, where the Department of Planning and Development will make a formal recommendation. A department spokesman would not comment about the project or the Metropolitan Planning Council’s letter.
The Columbus Hospital controversy is also a concrete example of how zoning affects land values.
Last year, American Invsco signed a $34 million contract to acquire the 87,000-square-foot site from Catholic Health Partners, a Chicago-based non-profit group that had operated the hospital. Ald. Daley says she warned at the time of a possible downzoning of the site, which was zoned R-7, a classification that would have allowed a residential development such as American Invsco’s initial proposal.
The sales contract contains a formula for adjusting the price based upon the size of the project eventually approved. If the current proposal were adopted, the purchase price would be reduced by less than 5 percent. But if the project were reduced to less than 600,000 square feet, the price would fall to about $26 million, sources said.
But whatever the outcome, American Invsco has put down a $10 million, non-refundable earnest money deposit, extending the closing until January, sources said.
Derderian, who is also president of Des Plaines-based Continental Offices Ltd., would not comment on the terms of the contract but did say, “There’s no turning back.”
Changes on the way
To be sure, developer versus neighborhood battles are the result of an outdated zoning ordinance, which is being rewritten for the first time since 1957. Yet even as that revision moves forward, the city must be prepared to begin another revision in five to 10 years.
“Cities evolve, and you should update your vision,” said Barrett, former chief policy adviser to Mayor Daley.
Yet a former Chicago Plan Commission chairman says the unpredictability of the zoning approval process is a necessary result of residents’ participation.
“If they don’t have a voice, then the alternative is that the developer and City Hall make final decisions,” said Reuben Hedlund, a corporate litigator who represents several neighborhood groups in zoning disputes, including the Diversey Harbor Lakeview Association, which opposes Gouletas’ proposal.
But Barrett said residents would better understand the desirability of some large-scale developments if they had a say in broader planning questions about their areas.
“Community residents have not had the chance to step back and ask, `What do we want for our neighborhood?'” she said. “Instead, they are having this debate in the context of a development down the block that’s catching them by surprise.”
