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TO: The Mayor and City Council
FROM: Richard J. Veenstra
Corporation Counsel
DATE: August 22, 2024
SUBJECT:
The acquisition of real property, generally located at the west corner of Broadway Avenue and Pierce Street, by eminent domain or otherwise.
PURPOSE:
To acquire the real property located at 540 and 600 N Broadway Ave and 45, 55, and 59 Pierce St. by eminent domain (or other means) via bankruptcy trustee deed.
BACKGROUND:
For most of the City's existence, the Fox River played a vital role in supporting various industrial uses that were located along its banks. However, over time the City and its leadership came to view the Fox River as a unique resource and amenity whose value to the community was not fully realized - and in fact, was diminished, by its historic use as a location for polluting industries. The City's comprehensive plan has long reflected this change in philosophy and the City has been working (1) to require that the parties that are legally liable for the pollution to clean up the contaminated properties on the Fox River to residential standards and to otherwise strictly comply with federal, state and local laws, including environmental laws and (2) when appropriate, to acquire and promote the public and private redevelopment of property located along the Fox River in a manner that is consistent with the City’s comprehensive riverfront plan.
DISCUSSION:
On May 21, 2023, the City filed an action the United States District Court for the Northern District of Illinois against the owners and operators of a scrap metal operation commonly known as Get Green Recycling and its related entities.
The purpose of the City Action was to require the defendants to clean up the property and to stop discharging contaminated water into the Fox River. On September 30, 2023, several of the defendants filed for Chapter 11 Bankruptcy Protection with the intent to reorganize, maintain their businesses, and pay their creditors. On November 7, 2023, the Court ruled that the City could continue its lawsuit despite the bankruptcy.
On August 6, 2024, over the objection of the debtors, the Bankruptcy Court converted the the Chapter 11 reorganization into a liquidation under Chapter 7. This means the scrap metal operation will close and the bankruptcy trustee will sell the property.
The federal environmental laws allow local units of government to limit their liability when they acquire contaminated property in bankruptcy or through eminent domain. The purpose of this special treatment of local units of government under environmental laws is to promote the redevelopment of contaminated and blighted properties.
Because it is in the City's long-term interest to see the property redeveloped consistent with the City’s comprehensive riverfront plan, which includes but is not limited to, open space, expansion of parkland, future residential development, future mixed use commercial/residential development, or a combination of these uses, an acquisition will allow the City to determine the future of the Property along with other properties it has acquired in the area, including the former Kiddie Kar site immediately to the south.
IMPACT STATEMENT:
Adoption of this ordinance begins the City's formal legal process to acquire the site by eminent domain and conveyance by a bankruptcy trustee deed. While we remain hopeful that an acquisition can and will occur without the need to institute an eminent domain action in court, proceeding in this manner will also afford the City additional time and discretion to determine the method of remediating the environmental contamination on the property upon eventual acquisition and to negotiate with the bankruptcy trustee. As noted above, an acquisition of the Property (1) by eminent domain and (2) by a bankruptcy trustee deed, affords the City protection from liability under environmental laws.
The first step in the process will be to make a good faith offer to the trustee in bankruptcy to purchase the property. If the trustee accepts, or through negotiations, the parties agree to a price for an acquisition, and staff will prepare an ordinance for the City Council’s approval to complete the purchase. Otherwise, the Corporation Counsel will commence a condemnation action as directed by this ordinance.
RECOMMENDATIONS:
That the City Council approve this Ordinance.
CITY OF AURORA, ILLINOIS
ORDINANCE NO. _________
DATE OF PASSAGE ________________
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An Ordinance authorizing the acquisition of certain real property generally located at the west corner of Pierce St. and Broadway Ave. by eminent domain or otherwise.
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WHEREAS, the City of Aurora has a population of more than 25,000 persons and is, therefore, a home rule unit under subsection (a) of Section 6 of Article VII of the Illinois Constitution of 1970; and
WHEREAS, subject to said Section, a home rule unit may exercise any power and perform any function pertaining to its government and affairs for the protection of the public health, safety, morals, and welfare; and
WHEREAS, the City of Aurora is empowered, pursuant to its home rule powers and pursuant to the Illinois Municipal Code, 65 ILCS 5/11-61-1, to acquire by eminent domain real property useful, advantageous or desirable for municipal purposes or the public welfare; and
WHEREAS the acquisition of the property legally described in Exhibit A which is attached hereto and made a part hereof and hereinafter referred to as the “Subject Property” for redevelopment requires the exercise of powers and performance of functions pertaining to the government and affairs of the City.
NOW, THEREFORE, BE IT ORDAINED by the City Council of the City of Aurora, Illinois, as follows:
Section 1: That it is hereby determined that that acquisition of property for redevelopment by the City of Aurora is a public purpose.
Section 2: That under the authority vested in the corporate authorities of the City of Aurora through the statutes of the State of Illinois and the home rule powers and ordinances of the City, it is hereby determined that it is necessary and desirable that that the City shall acquire title to and possession of the Subject Property, and the acquisition is necessary and convenient to achieve the public purpose of redevelopment.
Section 3: That the Corporation Counsel individually, and through his assistants and special counsel, be and are hereby authorized, empowered and directed to negotiate personally or through its representatives for and on behalf of the City with the owner or owners of the Subject Property for the purchase thereof by the City.
Section 4: That in the event that the Corporation Counsel is unable to agree with the owner of the Subject Property as to the compensation to be paid therefore, then fee simple title to and possession of the Subject Property shall be acquired by the City of Aurora through condemnation and the Corporation Counsel, is hereby authorized, empowered and directed to institute proceedings in any court of competent jurisdiction to acquire fee simple title to and possession of said Subject Property for said City in accordance with the eminent domain laws of the State of Illinois and also pursuant to its home rule powers and the ordinances of City of Aurora.
Section 5: This Ordinance and each of its terms shall be the effective legislative act of a home rule municipality without regard to whether such ordinance should (a) contain terms contrary to the terms of the current or subsequent non-preemptive state law; or (b) legislate in a manner or regarding a matter not delegated to municipalities by state law. It is the intent of the corporate authorities of the City of Aurora that to the extent that the terms of this ordinance should be inconsistent with non-preemptive state law, said terms shall supersede said state law to the extent of said inconsistency.
Section 6: This ordinance shall be in full force and effect from and after its passage, approval and publication in pamphlet form as provided by law