Arguments against Landmark designation and our response

A property owner should be able to do whatever he or she wants with his property – including tearing it down.

Response: Today, no property owner in Chicago can do whatever he or she wants with his or her property. There are multiple restrictions. One of the key ones is that for significant changes that one wants to make to one’s property one must apply for a permit – and pay a fee as well. Various planned work must be done by persons certified to do it – plumbing and electrical work come readily to mind. And one cannot use just any materials – they must be permitted by the building code. All these restrictions are imposed for the common as well as the individual good.

Another important restriction is zoning. One cannot expand one’s home at will, or tear it down and build whatever one wants. At one time zoning was controversial, but today most accept the concept as benefiting the community as a whole if not always the individual property owner who might want to build bigger and higher or sell to someone who would.

Landmark designation is just another restriction society has provided as an option to secure a community benefit – the preservation of significant architectural or historical structures of value to the larger community.

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Landmark designation of the homes in the proposed district would cause their non-institutional owners a reduction in the current and future value of their property – and that would be unfair.

Response: Since ancient times humans have argued over what is fair. It is partially what makes us human. The case involving the single family homes along Kenmore, Winthrop and Sheridan involves a dispute over what is fair. It is alleged that if the community supports landmark designation, it is participating in the taking of someone’s property, specifically the difference between the house value and the land value.

What is not in dispute is that in cases where the front footage is 50 feet or more, the owner of a house along Kenmore, Winthrop, or Sheridan can make more money by selling to a developer than by selling the house as a house. For one, the developer is willing to pay more, and two there are no selling expenses and no real estate commissions. (At least this has been the case since 2001 and before the current slump in the market.) What is in dispute is whether if the seller does not realize this additional amount, the seller suffers a “loss” or merely does not “gain” as much, and whether the seller is entitled to this increment – the difference between the house value and the land value.

We believe that this increment is really a “demolition bonus” that one gets if one’s house is demolished and one doesn’t get if it isn’t. We believe further that this demolition bonus is not something that the owner earned and therefore is not something that the owner is fairly entitled to.

Most homes in Chicago are appropriately zoned as homes, and most home owners do not get a demolition bonus. Neither do condominium owners. The question we pose is why these particular home owners are fairly entitled to a demolition bonus that most home owners, and all condominium owners, do not and cannot get.

The reason for the demolition bonus is the convergence of two factors – the demand for new condos and the zoning that encourages demolition of single family homes and two flats. This zoning is not something that the single family home owners had anything to do with and was not factor in the price they paid for their homes. When the current homeowners bought their homes – and in all cases it was before the current new construction condo boom – the price they paid reflected only the value of the house as a house, not the land value. The persons from whom they bought their house did not receive a demolition bonus. Why then are they fairly entitled to one?

Most in the community opposed the construction of the 4+1 in the 1960s. Sellers of homes and two flats got a demolition bonus by selling to these developers. When the zoning was changed to prohibit the construction of this type of building, those owners of single family and two flats that had not sold lost the opportunity to realize the demolition bonus. Was this unfair to them? Was this the taking of their property?

The reality is that not a single owner will lose money as a result of landmark designation, even adjusted for inflation. All will do well by selling their homes as homes, in fact very well; they just wont make a killing. And that is not a tragedy. Nor is it unfair.

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If the individually-owned homes proposed for landmark designation were designated as landmarks, they would become white elephants and wouldn’t sell.

Response: This argument is difficult to comprehend. Three houses along Kenmore and Winthrop were sold as houses as recently as 2001 and are still occupied by their owners. Others were sold earlier. If they were sold as houses when conditions were worse in the area why would one seriously believe that they would not now sell when conditions are better. In 2008, the entire housing market is in a downturn. This impacts all of Edgewater, not just along Kenmore and Winthrop. Since the 1980s the sale of homes along Kenmore and Winthrop have taken longer to sell. The size of the market of potential buyers is smaller than for the homes west of Broadway, but it still exists. It will just take longer to find that special person who will buy that special home – as it has in the past. For some of the larger brick houses, reconfiguring into several condominium units is an option.

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Landmark designation of the individually owned homes would not guarantee that they would be well-maintained and not a problem for the neighborhood.

Response: The only real guarantee in life is physical death. (Some of the world’s people pay no taxes). It is true that landmark designation cannot and will not guarantee that the homes will be well-maintained and not be a problem for the neighborhood. But that is true also for non-designation – and it is true for homes west of Broadway, where landmark designation is not an option.

While there is no guarantee, there is a strong presumption, all things being equal, that landmark designation will encourage rather than discourage owners to maintain their property. This is especially true for homes in high zoned areas. Once owners realize that sale to a developer for tear down value is not an option, that the house rather than the land alone is their asset, they will be more likely to take action to ensure that their main asset is maintained. This, of course, assumes rationality – which is not always demonstrated. It also assumes financial resources to be able to do it. But both assumptions also apply to any property.

What is clear, however, is that landmark designation would eliminate the practice of “demolition by neglect” by developers. Consider the case of the house at 5416 N. Winthrop. It was purchased by developer Fred Barder in 2003. When the block club and the 48th ward Zoning and Planning Committee turned down his new construction proposal, he let the house deteriorate. Had the house been designated as a landmark before he bought it, he would wouldn’t have purchased it – he was after all a developer who bought it to tear it down and build something else in its place. If he wouldn’t have purchased it, the house would not have been subject to “developer demolition by neglect.”

It is not logical to argue that the homes should not be given landmark designation because developers might buy them with the express purpose of allowing them to become so derelict that the community and alderman would insist that they be torn down in spite of their landmark designation so that they could build condos in their place. For one, while one can never say something will never happen, one can say that such a scenario is extremely unlikely, so much so that the chance of its happening is close to nil. Most developers of the condos that have been built in Edgewater since 2002 have been risk adverse. With so many options to build in the city where the building of condos is permitted by zoning, why would any developer deliberately purchase a landmark house, for which he knows that he cannot legally obtain a permit for its demolition? It would be extremely risky. His money and the banks money (on which he would be paying interest) would be tied up for years, with the end result uncertain.

And what about a developer purchasing a Landmark house inadvertently – not knowing that it was a Landmark that he couldn’t legally tear down. Again, such a scenario would be extremely. If the sale was handled by a real estate agent, the agent would be obligated to disclose the fact. The Edgewater Historical Society has pledged to donate a plaque for placement on each house if a landmark district is created, so there would be a physical notice of its status on the house itself. But more importantly, the Landmark designation would be recorded on the property with the Cook County Recorder of Deeds, so that it would be known at closing – if somehow, again very improbably, it was not disclosed to the developer-buyer.

Most savvy developers before they would sign a contract to purchase a property to tear down to build condos would consult the alderman’s office. They would receive notice of the landmark designation then.

An additional deterrent against “demolition by neglect by developer” is the following provision of the Municipal Code 2-120-910: …“In addition, if the owner of property designated a “Chicago Landmark” willfully or through gross negligence causes all or any part of the property to be demolished or substantially destroyed or altered without the approval of the City Council or the Commission, as the case may be, then no permit to construct a new structure or improve said structure shall be issued for said property or for the land upon which the landmark stood within five years of the date of the demolition or alteration. Thereafter for a period of 20 years, commencing at the end of the five-year period herein before stated, any application for a building permit on the subject premises, shall follow the procedure heretofore set out in Sections 2-120-740 through 2-120-800.” [the Landmark Ordinance Permit Review Process.]

One of the problems is that the current penalties for failure to properly maintain a property – any property – are so insignificant and difficult to assess that they do not have any real deterrent value. Again the house at 5416 N. Winthrop is a case in point. The total penalty assessed against its developer owner was $2,000 for years of neglect and not initially securing the property. And the city settled for payment of only $500!

One of the problems is that the current penalties for failure to properly maintain a property are so insignificant and difficult to assess that they do not have any real deterrent value. Again the house at 5416 N. Winthrop is a case in point. The total penalty assessed against its developer owner was $2,000 for years of neglect and not initially securing the property. And the city settled for payment of only $500!

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It would be better for the neighborhood, the community and the city if the individually owned homes were replaced by condos. Landmark designation would prevent such needed development. The city would benefit from additional property and sales taxes; the community from additional residents with discretionary income to spend in its stores and restaurants: and the neighborhoods would gain additional residents who would potentially be active in the neighborhoods. New condos send a signal that the neighborhood is desirable and safe.

Response: The city always benefits financially from new construction, at least initially. However, what increases the city’s coffers does not necessarily benefit the neighborhood or community. If additional revenue for the city were the only or primary criteria, then we should upzone the residential areas west of Broadway to encourage new construction of condominiums. Obviously there are other values that need to be considered.

This weighing of values also applies with respect to the impact on the community and the neighborhoods. While it is true that more residents with discretionary income are helpful for many businesses, that too is not the only criteria. In the case of the homes in question, the numbers are so small as to not make any impact. There are 9 individually-owned homes. If they are all demolished and replaced with 8-unit condos – and not all of them will be – the net gain is only 63 units.

With respect to the impact on the neighborhoods, our argument is not with condominiums. New condominiums certainly do send a positive signal that a neighborhood is desirable. However, so would the creation of a city Landmark district. Many neighborhoods boast new condominium buildings; however, very few are City of Chicago Landmark districts. We believe the creation of a landmark district would offer greater benefits to the neighborhoods. Consider too, that the North Edgewater Beach neighborhood already has four new 8 unit condo buildings with an additional one planned, in addition to the “Granville” under construction at Broadway and Granville which will add 160 condo units to the neighborhood. In addition, this neighborhood has quite a few buildings that are suitable for conversion to condo

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The following added May 16, 2008

It is too late to save the homes; we should have acted earlier.

Response: While it is certainly true that it is too late to save what has been lost, it definitely is not too late to save what few homes remain. Landmark designation, which has never before been an option for these homes, will achieve that objective. The fact that there are so few that remain makes them all the more valuable as a tangible reminder of the development of the original Edgewater and all the more important that they be saved. To argue that it’s too far gone for us to care is like saying its too late to save the Bald Eagle or the Spotted Owl or the Polar Bear or any other endangered species because there are so few that have survived. These homes are our endangered species.

It is interesting and instructive that the argument that it is important to preserve what is left from a much larger group of original buildings was one of the arguments advanced for designating as Landmarks the surviving seven house along Lake Shore Drive. This Landmark district composed of seven homes is the closest in characteristics to what is proposed in Northeast Edgewater (although it is not a perfect match).

• Most of the original homes were torn down for larger buildings – in the case of Lake Shore Drive – for high rises.
• The homes were zoned for high-rise development – R8 in the case of Lake Shore Drive, as opposed to R5 and R6 for the homes in Northeast Edgewater.
• Two of the properties were for sale at the time. (One – 6018 N Kenmore – is for sale in a possible Northeast Edgewater district.)
• The owners could make more money by selling to a developer (though in some cases in conjunction with their next door neighbor also selling, which was what happened along Kenmore and Winthrop in the 1960s for development of the 4+1 buildings.)
• The majority of the owners objected and did not consent. In one case – the International College of Surgeons – the owner sued. (It was this case that upheld the validity of the City of Chicago Landmark Ordinance.)

In this case, the Planning Department wrote in a memorandum to the Landmarks Commission (9-2-1988): “…these are the only houses left on North Lake Shore Drive that illustrate architecturally the character of the early development.” In the case of these seven homes, both of the aldermen in whose wards the houses were located were in favor of Landmark designation and the Landmarks Commission approved the staff recommendation unanimously.

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The following added May 16, 2008

We should defer to the block clubs in whose area the homes are located. Both NEBA and TAHBS have voted against Landmark Designation. Therefore we should vote in support of their decision.

Response: In most cases the tradition both at ECC and the 48th ward Zoning and Planning Committee is to defer to the decisions of the block club where the property or properties at issue are located. And in most cases, this makes sense. The matter at issue is only of local interest and the decision does not have ramifications beyond the local block club area. A request for a zoning variation or a change in zoning for a particular residential property readily comes to mind, and most issues fall into this category.

The issue here – whether to support Landmark designation of 15 houses – is not a normal case. There is interest in the issue well beyond the members of the local block clubs and the issue has ramifications well beyond the area. What is at stake is whether the remaining single family home in the original Edgewater, many of which are public works of art designed by noted Chicago architects of the time, will be preserved or continue to be demolished. This is an issue that affects all Edgewater residents and many beyond Edgewater as well. It has city-wide ramifications.

If the vote of the local block club should always prevail, then there would be no need for any other process. The alderman could just consult the local group and not any other – and that would be that.

Another factor that should be considered is how small the number of participants often is in the block club process. In the case of NEBA there were only five persons other than the owners of the properties who voted. In the case of TAHBS, there were only 11 voters, of which 3 were owners of the affected properties. There are many more residents in these two areas who support Landmark designation because they don’t want to see these homes destroyed. Unfortunately, there is no process that takes their wishes into consideration.