Sky's not the limit

The southwest corner of Lake Shore Drive and Banks doesn't strike people as much. It's just a parking lot. But it's one of the last open parcels along Lake Shore Drive, and for a dozen years, wealthy warriors have wrangled over what can be built there. Will it ever have a high-rise that blocks views of the already high and mighty?

Apparently not. Last week, the Illinois Appellate Court, in its third ruling on an aspect in the case, said the property owner isn't entitled to put up a high-rise. Reuben Hedlund, attorney for a Gold Coast residents' group that fought the owner, speculated that the Illinois Supreme Court won't hear an appeal if one is requested. It already has ruled on another issue in the case. The litigation is complex enough for a Dickens novel.

The owner is a partnership run by Draper and Kramer Inc. It has long argued that the City Council acted illegally in April 1998 when it enacted restrictive zoning on the property just as Draper was laying plans to build under zoning rules that had applied to the tract since 1978. The old rules allowed for a 40-story building. The change permitted nothing more than nine stories.

The neighborhood group, the Near North Preservation Coalition, entered the case on the city's side. Hedlund said the case has cost the group around $2 million in legal fees and he estimated Draper and Kramer spent at least $3.5 million. Draper's chief executive, Forrest Bailey, and his attorney could not be reached.

Draper made a frontal assault on the city, challenging the constitutionality of the zoning change, which it asserted sliced the property's value by about two-thirds. It lost in Cook County Circuit Court and then on appeals. Draper sued the city separately on whether it had a "vested right" to rely on the 1978 zoning once it planned its project.

It lost in Circuit Court and got its biggest victory when the appellate court remanded the case in 2001. But the appellate court ordered the Circuit Court to decide if Draper had spent enough on the planning to show it earned a "vested right." That issue produced years of lawyering, with the circuit and appellate courts ruling for the city and the local group. Then the Supreme Court remanded it all, finding the lower courts should consider expenses under a broader definition.

Circuit Judge Stuart Palmer held last March that Draper could claim expenses totaling $272,000, less than one-half of 1 percent of an estimated $76 million project. He said that wasn't enough to establish rights under the older zoning. A three-judge appellate panel upheld his reasoning last week.

The case demonstrates how many dollar signs dance around zoning decisions.

BLOCKED 37: CB Richard Ellis Group Inc. is in charge of the Block 37 project downtown, but that hasn't prevented a duel breaking out over who should take credit for every inch the retail development moves forward. Joseph Freed and Associates LLC, the owner and developer, insists it negotiated the latest eight leases CB claims to have delivered for the site. Freed, which could lose the property in foreclosure, said it sent seven of the eight leases to Bank of America Corp. for approval nine months ago. The bank is attempting to gain ownership of the project and its 240,000 square feet of retail space. Freed said the bank hurt the project's value by sitting on the deals.

The eight new leases are with hair care and makeup seller Ladies and Gentlemen, iCandylicious, sandwich maker Which Wich, Alternative Shoes, Simply Thalia, Andy's Frozen Custard, fashion boutique Michelle Tan and Comic Vault. CB said the stores will open in late summer.

LET'S EAT: Will these restaurant concepts fly in these tighten-the-belt times? Deca restaurant and bar opens in early May in the Ritz-Carlton Chicago, 160 E. Pearson, positioning itself as an elegant spot for a neighborhood crowd. Menu items will include steamed mussels with french fries and mini Kobe beef sliders.

At 1578 N. Clybourn, former Levy Organization executive John McLean leased 7,000 square feet for two operations, a gourmet burger bar and a wood-fired pizza restaurant and wine bar. @properties and Cornerstone Real Estate Services were the brokers. For years, the property was the home of the Golden Ox German restaurant.

David Roeder reports on real estate at 6:22 p.m. every Thursday on Newsradio 780 WBBM. The reports are repeated at 10:22 p.m. Thursday and 7:22 a.m. Sunday.

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