Chicago Old Main Post Office Is Up For Grabs

Nearly every Chicagoan has experienced the oddity of driving straight through the massive Old Main Post Office taking the Ike downtown. In 1996, the Postal Service moved to a new building across the street, leaving the old building vacant. For the past 20 years, not much has happened there other than the occasional fire from commuter train exhaust and Batman. The current owner, Bill Davies, bought the building from the Postal Service in 2009. Since that time, Mr. Davies has unveiled several proposals for the site (see here, here and here); however, not a single hammer has swung at the property. Last week, Rahm Emanuel announced that the City plans to light a fire under the current owner’s tuchas to get to work. How does the City light this fire… by seizing the property through something called eminent domain.

How Can The City Just Take Away Someone’s Property?

The City of Chicago has an inherent power to take private property for public use. This power is called eminent domain. When the power of eminent domain is used, the Fifth Amendment of the U.S. Constitution requires that the property owner be given “just compensation.” Just compensation is usually determined by an appraisal of the taken property. The most common use of eminent domain is when the government takes control of property for the purpose of turning it into an overtly public use. Eminent domain is used, for example, when the state or federal government wants to clear the way for a new road or highway.

In this case, however, the City’s intention is not to take the Post Office and turn it into an obvious public use. Rather, the City plans to immediately hand it over to another private developer; a use that seems rather non-public. In fact, the City will begin soliciting bids from private developers to buy and redevelop the Old Post Office as early as this Spring; well before the City would actually acquire the property. It should come as no surprise that the City’s plan does not sit well with Mr. Davies.

Can The City Really Do This?

The short answer is probably yes, as long as the City pays Mr. Davies “just compensation” for the Old Post Office property. The Eminent Domain Act (EDA) requires that the City’s acquisition of the Post Office be for the benefit, use, or enjoyment of the public and necessary for a public purpose. 735 ILCS 30/5-5-5(c)-(f). You might think that taking the Post Office from one private developer to sell it to another private developer is not a public purpose, but the law suggests otherwise.

The Court’s definition of public purpose and benefit in regard to eminent domain is expansive and malleable to suit the government’s agenda. According to the Illinois Supreme Court, “It is flexible, and is capable of expansion to meet conditions of a complex society that were not within the contemplation of the framers of our constitution.” People ex rel. Adamowski v. Chicago Railroad Terminal Authority, 14 Ill.2d 230 (1958). In fact, the U.S. Supreme Court has held on more than one occasion that the taking of property from one private owner to give to another is in fact for the benefit of the public. See Hawaii Housing Authority v. Midkiff, 467 U.S. 229 (1984) and Kelo v. City of New London, Conn., 545 U.S. 469 (2005).

Additionally, Courts give great deference to a legislative body’s determination that the taking is for the public benefit. Keystone Bituminous Coal Ass’n v. DeBenedictus, 480 U.S. 470 (1978). As a result, city council would almost certainly pass an ordinance to this effect in order to bolster the City’s position if needed. City of Chicago v. St. John’s United Church, 404 Ill.App.3d 505 (2d. Dist. 2010). In order to thwart the City’s maneuver, the current owner would have to show that there is no necessity for the use of eminent domain, or that the quantity of the property sought to be taken is grossly in excess of the amount necessary for the public use. City of Chicago v. Vaccarro, 408 Ill. 587 (1951).

Simply put, the City holds most of the cards in this situation. Mr. Davies may be able to delay things, but it will soon be put up or shut up time for him. Either way, though, I am excited to see what finally happens with the Old Post Office. Our days of driving through the Old Post Office to get downtown may soon be coming to an end.

Some History on the Building

Since its expansion in 1932, the Old Chicago Main Post Office has been the anchor of the southwest corner of the Loop. Its uniqueness presents several challenges for redevelopment. Interestingly, the vehicle tunnels going through the middle of the building were constructed 20 years before they were actually used. The City knew they wanted to build the Congress Expressway (now the Eisenhower) back in 1932, they just didn’t know when they would build it. So, they convinced the Post Office to include the tunnels in the design. A great picture of the tunnels without the road can be seen here. In addition, the building is simply massive. It rests on almost an entire city block, and it was built with floors that stretch uninterrupted for the entirety of the building. Practically speaking, there is almost no way to repurpose that design that make financial sense, which means any redevelopment would require a massive demolition. Finally, and perhaps the biggest challenge, are the train tracks that run underneath the building. They cannot be moved, and they must be worked around. Suffice to say, demolition of a massive building without disturbing the interstate highway that runs through it, or the trains that run under it, will be a rather delicate and expensive task.

Ask Geoffrey: How the ‘L’ Do You Spell That?

As a lifelong Chicagoan, I have this insatiable appetite for interesting facts about Chicago history.  Did you know that one of the predecessors of the Blue Line used to go as far west as Westchester?  Here’s a little tidbit from one of my favorite Chicago history nerds, Geoffrey Baer:

Geoffrey Baer tackles three questions about Chicago’s beloved rapid transit system, including the various spellings of the system, old downtown entrances between elevated stations and Loop stores and a mysterious tunnel a viewer spotted while riding the Blue Line.

Source: Ask Geoffrey: How the ‘L’ Do You Spell That?

What The Meaning of “As Is” Is

From time to time, I get a contract in the office where the property is being sold “as is.” Sellers rejoice when they accept an “as is” offer, because they feel secure knowing that the 18 year old roof and 15 year old furnace are not going to cost them during inspection. However, as Lee Corso is fond of saying, “Not so fast, my friend.” As simple a concept it seems to be, “as is” can be tricky. Experience suggests that, more often than not, “as is” buyers still make inspection request. Why do Buyers do it? What is the justification for it? How do we prepare our clients to handle the situation without losing their cool? Keep reading!

Why do “as is” buyers make inspection requests? Wouldn’t you know, it all begins with the inspection. Even though the buyer is buying the property “as is,” the buyer wants to make sure that the property is not a money pit. Fortunately, this is not the case with most properties. (Quite frankly, if the property is trashed, the buyer probably already knew it and is not bothered.) However, as always, the inspector will find defects in the property. The buyer begins to panic and is now concocting all sorts of narratives in her head about how the seller “hid” all of these “terrible defects” from her. She is now in full on freak out mode regarding her “as is” purchase.

Miraculously, the buyer somehow still wants to buy the property. However, in order to make up for the seller’s “deceptive” behavior, she wants the seller to make some repairs or maybe give a credit for the “hidden” “defects” that the inspector discovered. How does the buyer justify this? She threatens to walk. Most “as is” contracts allow the buyer to inspect the property. If they find something they don’t like, the buyer can terminate the contract, and get her earnest money back. She will use that as leverage by threatening to walk from the deal unless the seller addresses the defects she deems unacceptable. What is the seller to do? At this point the property has been off the market for almost 2 weeks, and other interested buyers have moved on. In some cases, the seller needs the proceeds from this transaction to buy their new home, and that purchase will fall through if this buyer walks away. If the seller was not prepared for this situation, he is extremely stressed!

The fact is that most sellers do not fully appreciate the nuance of “as is.” That is why it is critical to address this potential scenario with your seller as soon as an “as is” offer comes in. The seller will have a better understanding and can incorporate it into their negotiation strategy.  The seller will not feel as “burned” when the buyer makes requests. We all know what happens when the parties start taking things personally, and it ain’t pretty! A prepared seller keeps a level head and is far more likely to make a good, rational decision.  Good, rational decision making closes deals!

In the event the buyer in your next “as is” transaction makes inspection requests, there is no need to panic. You will have prepared your seller.  He will keep his cool and is ready to evaluate the requests with his attorney.  They will determine a good strategy to move the deal forward. The deal is going to close, and you are already working on the next one instead of talking a panicked seller off the ledge.

Have a good story about an “as is” contract? Post it in the comments! If you like my article, please share it!

As always, I welcome you to contact me at 773-632-8330 or patrick@loftus-law.com with any questions about the meaning of “as is.” I am honored by your referrals! See what my clients have to say about my responsive service and fantastic results right here.

LoftusLaw Hockey Places 7th at Pond Hockey Nationals

   Congratulations to the LoftusLaw pond hockey team for placing seventh in the Bronze 21+ Division of the 2016 Labatt Blue/USA Hockey Pond Hockey Nationals! The tournament was held this past weekend, February 5 through February 7 on Dollar Lake in Eagle River, Wisconsin. The team finished with an overall record of 3 wins and 1 loss. The team started strong with a 3-0 record in pool play before succumbing to eventual Division runners-up, Tribute Brewing Company, hailing from Eagle River.

   LoftusLaw is a massive supporter of hockey; sponsoring teams at Johnny’s Ice House and at the pond hockey nationals. You can spot a friend of LoftusLaw by their signature hockey puck bottle opener.

2014 10 13 Loftus Law Puck Opener

   I welcome you to contact me at 773-632-8330 or patrick@loftus-law.com to find out how to get one of my hockey puck openers!

   As always, I am honored by your referrals! See what my clients have to say about my responsive service and fantastic results right here.

Get Your Real Estate Tax Assessment Appeals Ready!

   You probably just received the first installment of your 2015 real estate tax bills, and once the panic over the upcoming second installment subsides, you want to know how to lower that bill. As I talked about a couple of weeks ago right here, some of the assessments went absolutely bananas for 2015, and you can expect the second installment of your tax bill to deliver a real sucker punch if you are not prepared. One way to combat the ever-increasing property tax bill is to appeal the assessment.

   Believe it or not, appealing your assessment can be relatively simple. Many people choose to use an attorney to appeal. The good news is that most attorneys who handle assessment appeals work on a contingency basis and charge a fee based upon how much they save you on your tax bill. In other words, if they don’t win, you don’t pay!

   It is crucial to know the appeal deadline for your township. Once the 30-day appeal window closes, you are stuck! The Assessor mails assessment notices throughout the year. In Cook County, you can find out when the Assessor expects to mail the notice for your township here. As of today, there are 2 townships in Cook County open for appeal, River Forest and Riverside. Importantly, those townships close for appeals on February 29, 2016. If your property is there, you have no time to waste! Other counties publish similar information on their assessor and treasurer websites. Appeals are accepted for 30 days after the date the notices are mailed.

   Owners of single-family detached homes can either contact an attorney or file an appeal themselves. Some people feel relatively comfortable with the process, and filing online is pretty easy. The link for filing an appeal online is here. Grab your comparables and have at it!

   For townhome and condominium owners, the process is a bit more complicated. You should reach out to your association board and suggest hiring an attorney to file an appeal for the whole building or community. The reason for this is that your community probably has many similar units, which are likely assessed equally. As a result, an individual appeal is likely to fail, because the law requires the assessor to assess properties uniformly. In other words, it does not make sense for you to have a lower assessment than your neighbor with an identical property, regardless of the fair market value of the units.

   This is a birds-eye view of the process, and everyone’s situation is unique. I encourage everyone to consult with an experienced assessment appeal attorney about the feasibility of an appeal.

   As always, I welcome you to contact me at 773-632-8330 or patrick@loftus-law.com with any questions about filing an assessment appeal. There is no good reason to pay more tax than absolutely necessary!

   Realtors, I am honored by your referrals! See what my clients have to say about my responsive service and fantastic results right here.