Low-Ball City in the Windy City

If you think that we have been hard on condemning agencies for their low-ball offers, do read the latest on this subject from the Illinois Appellate Court: City of Chicago v. Zappani, 877 N.E.2d 17 (Ill.App. 2007). The city set out to condemn Zappani’s three parcels for redevelopment, and sent the out-of-town owner the following offers, giving him only 10 days to respond (two of the three letters took more time than that to reach the addressee):           

            First parcel    $110,000           

           Second parcel – $140,000           

           Third parcel – $68,000           

           Total – $318,000

It turned out, however, that two of these offers were below the city’s own appraisals. After the condemnation case was filed the city disclosed that its appraisals indicated values of            

          First parcel – $180,000

          Second parcel – $135,000, but  the city agreed to

          increase  that to $140,000 as indicated by the owner’s

          appraisal.

          Third parcel – $290,000, but the city agreed to increase

          that to the owner’s appraisal figure of $305,439

          Total – $625,439, or almost twice as much as the city’s

          prelitigation low-ball offers.

The city’s excuse was that there had been an increase in values between the time its appraisals were prepared and the time of filing of the condemnation action. Ri-i-i-i-ght! At this point we could wax indignant commenting on this bit of municipal jiggery-pokery, but in a tour de force of self-restraint, we will only quote what the court had to say:

“Most troubling to this court for purposes of a good-faith analysis is the discrepancy between the initial offer prices and the subsequent values reflected in both the City’s and the defendant’s appraisals. We are unpersuaded by the City’s argument that its initial offers were lower because they were based upon market values around the time the [offer] letters were sent out and property values had increased in the area. The City filed suit against defendant 83 days, 121 days and 41 days, respectively, after issuing the letters, and we find it incredible that vacant parcels in a blighted area of the city would increase so dramatically in such a short period of time. The City urges us to believe the following: the value of [one parcel] more than doubled in the span of four months; [another parcel] increased in value from $68,000 to $135,000 in approximately six weeks; and [the remaining parcel] increased in value from $110,000 to $180,000 in less than three months. We believe the only reasonable conclusion is that the City offered defendant amounts significantly below the fair market value for all three parcels which, as the court explained in City of Naperville [v. Old Second National Bank of Aurora, 763 N.E.2d 951  (2002)] does not constitute good-faith negotiation.”

At this point you may wonder why was this case up on appeal, given that the city ‘fessed up and upped its offers to the level of the owner’s valuation. Good question. The owners had moved to dismiss the case under Illinois law which requires strict compliance with the statutory requirement of good faith prelitigation offers, arguing that these prelitigation “offers” were not in good faith. But the trial court thought that the city’s offers were hunky dory and denied the motion. The Appellate Court disagreed with Her Lordship and, finding the city’s position incredible, reversed.

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