When Aldermen Downzone, It Can Hurt Small Businesses

In Chicago, aldermen have the final say in the types of developments and businesses they want in their wards and can use zoning changes to facilitate development. But sometimes that power is wielded in a manner critics contend is arbitrary, and downzoning can have a negative impact on property owners and mom-and-pop businesses.

An extreme example occurred in February 2017. When Brian Strauss evicted the Double Door nightclub from its longtime Wicker Park home, he ran afoul of 1st Ward Alderman Joe Moreno. Moreno, whose ward includes Strauss’ building, confronted Strauss outside Double Door as staff was removing equipment and furnishings — an incident that was captured on video and made headlines across the city.

Moreno later introduced an ordinance proposing to downzone Strauss’ building, which was overwhelmingly approved by the Chicago City Council in October. The zoning change limits Strauss’ ability to sign tenants to his building, make improvements or sell the building. Strauss filed a federal lawsuit seeking $9.6M in damages, alleging Moreno’s actions caused a potential sale of the building to fall through.

The Moreno-Strauss kerfuffle is not an isolated incident.

A proposal by 35th Ward Alderman Carlos Ramirez-Rosa last October to downzone Milwaukee Avenue from Kimball to Central Park avenues was endorsed by a coalition of local business owners, but was lambasted by some residents as going too far and would discourage other businesses from looking at the area for a home base. Two weeks ago, GlenStar Properties sued the city, claiming a plan to build a 299-unit apartment complex near O'Hare International Airport was blocked because Alderman Anthony Napolitano (41st) does not want affordable housing in the area.

High Cost For Small Business

Downzoning allows aldermen to vet developers, property owners and businesses seeking to establish a presence in their wards, giving them control over the mix of development along a commercial strip. The intention is to see a vibrant mix of commercial, residential and planned developments.

Village of Bensenville Senior Planner Kurtis Pozsgay said downzoning, at its foundation, is about control. But how aldermen wield their ability to change zoning can hamper, and even halt, development. 

“It’s a poor way to go about it. I think it’s a disservice to small businesses that can’t afford to go through the extra steps to be approved to set up shop in a downzoned area,” Pozsgay said.

In order for a developer or property owner to change zoning on a building, the city charges a $1,025 zoning change fee, and the process has a three-month average approval time. Add legal fees to retain a lawyer to ease the change, and the impact of downzoning can negatively impact small businesses.

In South Shore, Alderman Leslie Hairston (5th) last July withdrew an ordinance to downzone a mile-long stretch of 71st Street near the Obama Presidential Center site, from commercial to residential use — a strip home to several nail salons, barbershops and dollar stores.

Hairston contended downzoning 71st Street would put a cap on the number of these businesses opening along the strip. Pozsgay said the problem with Hairston's proposal was it was when she began making exceptions to preferred building owners and businesses.

"Aldermen need to ask if downzoning will benefit only those who can afford to go through the review process. 71st Street is not State Street," Pozsgay said.

Hairston withdrew her ordinance after community groups banded together to oppose it, and brought in Skidmore, Owings & Merrill to collaborate with residents on redevelopment options.

Eric Allix Rogers, of the coalition South Shore for All, said residents were frustrated they were not consulted about the proposal. Pozsgay said drastically changing zoning, as Hairston proposed, would have had long-term consequences on small-business development.

South Shore for All could not find any successful examples of downzoning creating a community with an ideal blend of uses, but found several cautionary tales about how downzoning can lead to economic disinvestment. In Woodlawn, the development around the intersection of 63rd Street and Cottage Grove Avenue has not extended east, home to several vacant lots and two businesses east of Drexel. McKinley Park, 35th Street — once a commercial artery — was downzoned to residential in 2004 and now is home to several empty and underutilized storefronts.

Because downzoning adversely impacts mom-and-pop businesses, it by extension impacts the character of a neighborhood. Alberto Murillo, owner of Alberto's Beauty Salon in Bridgeport, told South Side Weekly these businesses have deep roots in the community, and aldermen often forget local residents are these shops' customer base.

Pozsgay said mom-and-pop businesses that cannot establish a presence in a downzoned area will simply move elsewhere.

Aldermen Know Best?

Alderman Anthony Beale (9th) considers the term “downzoning” to be a dirty word.

“I prefer to call it ‘future land plan usage’ to ensure community input. A developer can see a zoning change and think it’s bad. But it is really about working together. It can attract business, but we also have to honor the wishes of the community,” Beale said.

Beale, whose ward includes Pullman, said he uses zoning changes to find a common ground between the desires of developers and the best interests of the community. And he realizes he cannot please everyone.

“Anything you do has its pros and cons. When we were pushing to have the Pullman District designated as a national monument, there was a contingency of people who didn’t want that. There will always be contrarians. We value their input, but we have to move forward in the best interests of the community,” Beale said.

Pozsgay believes there are other tools aldermen have at their disposal besides downzoning. They can use overlay districts to supplement the regulations of a base zoning.

"Instead of changing the underlying zoning, put a layer on top of it to achieve the same goals," Pozsgay said.

But used judiciously, aldermen can use downzoning to slow the pace of development, bring developers and community groups together to work on a project and prevent overbuilding.

“You have areas of the city where aldermen and the community are more interested in controlling development because there may be density or transportation issues,” Beale said.

Aldermen can also deploy upzoning to good effect. Pozsgay said Moreno has been very good with this to get the right developments in his ward.

Bisnow reached out to multiple aldermen. Moreno canceled an interview request with Bisnow for this story. Ramirez-Rosa's office did not return an interview request.

Beale said downzoning ordinances receive strong support from City Council because aldermen know their neighborhoods the best.

"If I know what is best for my community, who are they to tell me otherwise?" Beale said.