How Much Control? Municipalities and Real Property Matters

Part Two of a Two-Part Series

Part One of this series discussed the origin of the authority to make property use regulations and an increasing trend by municipalities to regulate aesthetics and use through the development of 'chronic nuisance' statutes that permit property closure and regulation of vacant properties. This second installment discusses the manner in which the Chicago Municipal Code functions.

Chicago Municipal Code

A more lucrative form of legislation regarding vacancy of properties is seen in the Chicago Municipal Code. This legislation not only serves to avoid a deleterious effect on adjacent properties, but also avoids the possible negative impact of those owners holding property in order to flip the same for redevelopment when an area becomes economically hot for sale. The Vacant Building Registration Ordinance (Chicago Municipal Code '13-12-125) provides that an owner of any building shall register the building with the city within 30 days after it becomes vacant. The registration form describes how the landlord is handling the vacant building, and gives the address of owners and/or agents who can be sent notice of building code violations and administrative process. If a report is not filed, the owner is charged a per diem, which ranges from $200 to $1,000 for each day that it is in violation of the requirement to register. In addition, if the building is not registered, the owner is deemed to have consented to notices of code violations and administrative processes being posted at the building. An owner of any vacant building ' or its agent ' maintaining, operating, or collecting rent is required to enclose and secure the building; maintain stated limits of liability insurance; and post a sign indicating the name, address and telephone number of the owner and the authorized agent for service of process. Typically, the city inspects the vacant buildings for code violations. The Unsafe Building Ordinance (Chicago Municipal Code '13-12-130) provides that the city may inform the owner in writing that the owner must put the building in a safe condition, enclose it, or demolish the building. If the owner fails to take the recommended action within 15 days after the notice, attorneys for the city file an action seeking to impose a fine of not less than $200 per day and not more than $1,000 per day, beginning on the day the summons is served. Further, the city can file an action to repair, enclose, or demolish the building as required by its notice. The fines have been upheld in the courts.

Conclusion

In short, the answer as to how far a municipality can go in legislating aesthetic control, use, vacancy, and those issues that provide municipal control over property matters is: as far as it is legally permissible by the Constitution; in other words, as far as interpretation will permit. Municipalities must understand, however, that if an action borders on unconstitutional, the defense of the action may cost more time and money than the benefit reaped from the questionable ordinance. More importantly, the legislation may negatively impact the business climate of the municipality. Any legislation that causes owners, landlords, and tenants to be unable to function in an economically viable manner may result in businesses deciding not to locate within the municipality. The municipality may gain a reputation as being unfriendly to business ' a result that is more harmful than beneficial. The question remains open as to how far a municipality will go in weighing such factors.

Carole Laude Pechi has 20 years of experience in the commercial real estate industry, with experience both as in-house counsel at commercial real estate companies and outside counsel. Pechi has been a frequent speaker at the International Council of Shopping Centers ('ICSC') meetings and sits on the editorial boards of two newsletters. She founded Laude Pechi Law in 2006 and can be reached at 630-790-9210. This article was written with research assistance from Mark Nora, of Holland & Knight LLP.

Part Two of a Two-Part Series

Part One of this series discussed the origin of the authority to make property use regulations and an increasing trend by municipalities to regulate aesthetics and use through the development of 'chronic nuisance' statutes that permit property closure and regulation of vacant properties. This second installment discusses the manner in which the Chicago Municipal Code functions.

Chicago Municipal Code

A more lucrative form of legislation regarding vacancy of properties is seen in the Chicago Municipal Code. This legislation not only serves to avoid a deleterious effect on adjacent properties, but also avoids the possible negative impact of those owners holding property in order to flip the same for redevelopment when an area becomes economically hot for sale. The Vacant Building Registration Ordinance (Chicago Municipal Code '13-12-125) provides that an owner of any building shall register the building with the city within 30 days after it becomes vacant. The registration form describes how the landlord is handling the vacant building, and gives the address of owners and/or agents who can be sent notice of building code violations and administrative process. If a report is not filed, the owner is charged a per diem, which ranges from $200 to $1,000 for each day that it is in violation of the requirement to register. In addition, if the building is not registered, the owner is deemed to have consented to notices of code violations and administrative processes being posted at the building. An owner of any vacant building ' or its agent ' maintaining, operating, or collecting rent is required to enclose and secure the building; maintain stated limits of liability insurance; and post a sign indicating the name, address and telephone number of the owner and the authorized agent for service of process. Typically, the city inspects the vacant buildings for code violations. The Unsafe Building Ordinance (Chicago Municipal Code '13-12-130) provides that the city may inform the owner in writing that the owner must put the building in a safe condition, enclose it, or demolish the building. If the owner fails to take the recommended action within 15 days after the notice, attorneys for the city file an action seeking to impose a fine of not less than $200 per day and not more than $1,000 per day, beginning on the day the summons is served. Further, the city can file an action to repair, enclose, or demolish the building as required by its notice. The fines have been upheld in the courts.

Conclusion

In short, the answer as to how far a municipality can go in legislating aesthetic control, use, vacancy, and those issues that provide municipal control over property matters is: as far as it is legally permissible by the Constitution; in other words, as far as interpretation will permit. Municipalities must understand, however, that if an action borders on unconstitutional, the defense of the action may cost more time and money than the benefit reaped from the questionable ordinance. More importantly, the legislation may negatively impact the business climate of the municipality. Any legislation that causes owners, landlords, and tenants to be unable to function in an economically viable manner may result in businesses deciding not to locate within the municipality. The municipality may gain a reputation as being unfriendly to business ' a result that is more harmful than beneficial. The question remains open as to how far a municipality will go in weighing such factors.

Carole Laude Pechi has 20 years of experience in the commercial real estate industry, with experience both as in-house counsel at commercial real estate companies and outside counsel. Pechi has been a frequent speaker at the International Council of Shopping Centers ('ICSC') meetings and sits on the editorial boards of two newsletters. She founded Laude Pechi Law in 2006 and can be reached at 630-790-9210. This article was written with research assistance from Mark Nora, of Holland & Knight LLP.