It’s Time to Follow the Law and Build Out the Pedway that has been part of the Planned Development #70 for nearly half a century.
The obligation to build a Pedway that runs from Michigan Avenue to Lake Michigan has been part of PD70 since PD70 was first created in 1969. Both the residents of our New Eastside and city officials agree that the Pedway provides significant benefit to everyone. Further, the lead developer of PD70 reaffirmed that the Pedway would be completed as planned and at the lead developer’s expense. The excuse for not building the Pedway sooner was that some supporting buildings did not exist. With the plans for PD70 being renegotiated – likely for the last time – this page sums up three legal reasons why Alderman Reilly, the city council, and all relevant Chicago agencies, should reject any plan from the current lead developer that does not include completion of the Pedway at the lead developer’s expense. Before getting to the three legal reasons why the lead developer should be required to complete the Pedway, it should be remembered that even if the Pedway had not been promised, the developer wants and needs city approval to build anything and the elected representatives should honor the reasonable expectations of their constituents.
The first legal reason for rejecting any plan that does not include completion of the Pedway is that covenants exist that require the completion of the Pedway at least up to 400 East Randolph, and further to buildings (155, 175, 195) with similar beneficial interests. The rights conferred by a covenant cannot be limited by a zoning amendment or other law (unless the covenant violates constitutional rights (e.g., covenants prohibiting the sale of property to racial minorities)). Further, a covenant runs with the land and is incapable of being terminated by the owner of the property without the consent of all beneficiaries. With these principles in mind, it is worth noting that the current lead developer had both constructive and actual[1] notice of the requirement to build the Pedway all the way to Lake Michigan. Finally, both 360 East Randolph and 400 East Randolph have separate covenants – including with the current lead developer[2] – that require the extension of the Blue Cross Pedway to their respective buildings. Alderman Reilly could easily prevent needless litigation by requiring the lead developer to honor those covenant agreements.
The second reason for rejecting any amendment to PD70 that does not include the Pedway – including the details of where and when it will be built – is that the Pedway not only benefits the residents of New Eastside but is a benefit to the city and aides in the city’s master plan for smooth and safe pedestrian traffic throughout the development. When the lead developer in 1993 tried to delete the Pedway obligation East of Field Drive, the residents of PD70 objected. At the 1993 hearing before the Chicago Planning Commission, the new lead developer reaffirmed to the Planning Commission Chairman that they would not change or withdraw the long-standing developer's obligation to construct the Pedway East of Field Drive [3] Further, the then Director of Urban Development for the Metropolitan Planning Council stated “We also feel that a pedestrian walkway must extend all the way to Lake Shore Drive.”[4] In 2001, the current lead developer included and the City Council approved the Pedway that connected to 360 East Randolph, 400 East Randolph, and the existing Pedway that connects 155, 175, and 195 North Harbor, and which was built in anticipation of the promised connection to the larger Pedway system.
The third reason for rejecting any amendment to PD70 that does not include an explicit obligation on the lead developer to complete the Pedway is that even if the city wanted to waive this “negotiated for” requirement, the city has acknowledged that it will not waive the other PD70 owner’s right to this private amenity.[5] The owners of the affected buildings in PD70 were not given notice of, let alone approval to, the lead developer to shift the cost of the Pedway onto the buildings east of Field Drive. Shifting this substantial burden on to those buildings is tantamount to a deletion of the Pedway. This purported shifting of the financial responsibility did not occur in the text of the amendment to the PD, but in a minute font on one map buried in the middle of the proposed amendment. Further, the suggestion that PD applications/amendments discuss requirements other than those placed on the developer/applicant is absurd. Finally, as noted earlier, after the 2004 overhaul of the zoning code, the Lead Developer could not make this change to PD70 without the approval of owners in Subareas C & D.[6] None of these buildings were consulted much less consented to shifting the cost of the Pedway completion onto their residents. Accordingly, even if Alderman Reilly admits that he was aware of this shifting of responsibility,[7] under the zoning code and even the amendment itself, the shifting of the responsibility did not occur.
In conclusion, the lead developer should voluntarily comply with its obligation to complete the Pedway by connecting all of PD70 Sub Areas C & D to the existing Pedway. However, given the lead developer’s track record, Alderman Reilly should require the lead developer to complete the Pedway, and within the next three years before giving his approval to any amendments to PD 70. At the absolute minimum, the 2018 amendment to PD 70 should include the language from the 2015 amendment which provided in relevant part that no certificate of occupancy shall issue until the public improvements have been completed. The city should also compel the lead developer to connect the buildings it plans to build in Subarea E to the Pedway that currently terminates in the Vista tower.
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[1] A letter was sent on December 30, 1999 to then Ald. Natarus and Magellan Development Group President Joel Carlins (who is also a member of Lakeshore East LLC) informing them of the fraud perpetrated on the City and residents of Lakeshore East in 1993 wherein the prior lead developer attempted to delete the lead developer’s obligation to build the Pedway all the way to the lake. The letter pointed out that no notice was given to owners in Subareas A, B, C and D despite the fact that the 1993 amendment made clear that “All necessary official reviews, approvals or permits are required to be obtained by the Applicant as to Sub Area E and by the respective owners of the property to Sub Areas A, B, C and D. (Chicago City Coun. J. 3-8-93, p. 29927).
The city as part of its overhaul of the zoning code in the 2000’s would codify the requirement imposed on the lead developer in the 1993 amendment to PD70. The zoning code now states in relevant part that:
“This Section 17-8-0400 is not intended to interfere with, abrogate or annul any zoning rights agreement, deed restriction, or other written agreement between owners or designated controlling parties of subareas, or any provision in a Planned Development where the issue of subarea control is expressly addressed. Notwithstanding the foregoing, in no instance shall the owner or designated controlling party of a subarea be permitted to unilaterally seek an amendment, change or modification that would reduce any bulk, density, parking or similar development requirement generally available or applicable to all subareas, such as any unused bulk or density rights, or which would materially adversely reduce another subarea owner’s right of access, or which would materially adversely reduce open space, walkways, or similar design requirements applicable to one or more subareas, or which would render another subarea a non- conforming use.”
Chicago Muni. Code § 17-8-0400 (emphasis added). (Added Coun. J. 5-26-04, p. 25275; Amend Coun. J. 1-11-06, p. 68321, § 1; Amend Coun. J. 4-15-15, p. 106130, § 15)
[2] In addition to the covenant secured by 360 East Randolph, the relevant city official made clear in 2004 and 2005 that if the Board of Directors at 360 East Randolph “were to request that they have a connection to the pedway, you will be required to extend the pedway under upper Randolph east to the eastern property line (extended) of your development parcel.”
[3] In response to 400 East Randolph's (ODE's) objection that the lead developer's proposed 1993 amendment to PD70 "disregard[s] of the substance to the 1979 letter agreement, Exhibit A, concerning development in the area east of field Boulevard and Outer Drive East building’s connection to the pedestrian pedway." the following exchange was had between the then chair of the Chicago Planning Commission and the attorney for the lead developer:
Chairman Hedlund: Your position is then that there, that the application that we’re being asked to approve does not change anything previously agreed to between the developer and the 400 condominium Association.
Mr. Acosta: That is correct.
Chairman Hedlund: That is your position.
Mr. Acosta: And if the 400 Condominium Association continues to be nervous, we are more than happy to retype this letter and resign it today.
Chairman Hedlund: Retype the 1979 letter?
Mr. Acosta: Yes. We can type the verbatim, except obviously for the language of changes post ’79 and we would have it executed by the partners of the Venture.
Chairman Hedlund: And I assume your willingness then, if we were to condition our approval to a republishing of that letter and signing by the developer and Condominium Association, you would consent to that?
Mr. Acosta: Yes.
Chairman Hedlund: All right. That solves that problem.
(Hearing Tr., at 159)
[4] “We also feel that a pedestrian walkway must extend all the way to Lake Shore Drive as in the 1979 amendment and we cite the illustration and page in the ’79 amendment. Rather than ending at Field Boulevard, as is proposed in the new amendment. This leaves all five residential buildings at the end of Randolph and Harbor Drive without any access to Michigan Avenue or to Illinois Center. The 1969 Planned Development had a very specific timeframe for completion of pedestrian walkways, park and other infrastructure improvements. All of this was to be completed at the end of 20 years, in 1989.” Statement of Mitchell Carden, Metropolitan Planning Council, 1993 Plan Commission Hearing Transcript, at p.198.
[5] See footnote 1 supra. It must be remembered that the lead developer never owned all of the property in PD70 and was only an agent (that owes a fiduciary duty to its principals). In 1969, the owners/principals of the lead developer/agent included: Illinois Central Railroad Company, Prudential Insurance Company of America, Illinois Center Corporation, Metropolitan Structures, Inc., Interstate Investments, Inc., Jupiter Corporation, Randolph-Outer Drive East Venture Partnership, and Standard Oil Company of Indiana.
[6] The buildings in these subareas include 360 E. Randolph, 400 East Randolph, 155 North Harbor, 175 North Harbor, and 195 North Harbor.
[7] We can appreciate how such a change was slipped by Alderman Reilly. The 2015 PD70 amendment was 140 pages. Comparing the 2001 and 2015 versions of PD70 is a herculean task. Perhaps the city should amend its PD amendment requirements to require the applicant to explicitly state the obligations the PD amendment is eliminating or modifying.
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The above legal review of the long-standing Pedway Completion Arguments were written by a very knowledgeable volunteer New Eastside resident and practicing lllinois Attorney.
At the July 10, 2017 public meeting at the Hyatt, a Lakeshore East/Magellan executive made the representation that the operator of this New Eastside neighborhood website agreed that the lead developer's obligation to build the Pedway did not extend beyond Field Drive at either the north or south sides of PD70. In the days following that meeting, the operator of this website was asked if the statements made at the meeting by the Lakeshore East/Magellan executive regarding the Pedway were accurate. The statements made at the meeting by the Lakeshore East/Magellan executive are NOT accurate. Neither the operator of this website nor the management of the affected buildings agreed to relinquish the rights provided by Planned Development documents from 1969 through 2015 or the legally stronger covenants signed in 1979, 1993, and 2001 by ALL lead developers - including Lakeshore East.
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The above arguments should be sufficient to require our current lead-developer Lakeshore East, LLC to fulfill the Pedway completion responsibilities that were required by covenant agreement to be specified in the sales transaction from the Whitman Corporation lead-developer in 2001. If additional background information or arguments are desired, click on the extensive PEDWAY INDEX for webpages going back to 1999...........................................................>>
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