| by Michael Graham, Kelly Tarrant and Orlando Ortiz

Chicago is known for unprecedented levels of government corruption. So it should come as no surprise that an alderman has used his clout to punish a small business owner who didn’t want to rent out private space to connected tenants.

Earlier in 2017, Project Six released the story of Brian Strauss, a Chicago fireman and owner of the building at 1572 N. Milwaukee, which until recently housed the popular concert venue Double Door.

A court ordered the eviction of the Double Door venue for violating lease terms. This didn’t sit well with Alderman Proco Joe Moreno of the 1st ward, who was caught on camera threatening to “have inspectors here on a daily basis” and to re-zone Strauss’s building to a lower zoning classification unless he agreed to re-let the building to Double Door—a campaign donor to Moreno[i].

Since our initial story was published, Moreno has carried through on his threats, resulting in Strauss losing millions of dollars in lost rent, legal fees and the reduced value of Strauss’ property.

As a result, Strauss filed a federal civil rights lawsuit against the City of Chicago and Aldermen Moreno. Recently, Project Six interviewed Strauss to try and understand how this situation occurred and get a first-hand perspective of what impact a Chicago Alderman abusing his or her office’s power can have on a private business owner.

The following account reflects this conversation, and shows how aldermen in Chicago can use their unchecked power to wreak havoc on any citizens who step out of line.


Brian Strauss and 1572 N. Milwaukee

Strauss’ family became involved with the building at 1572 N. Milwaukee in 1977, when Strauss’ father bought the Double Door liquor store that then occupied the property. A few years later, Strauss’ father also bought the building.

The 1572 N. Milwaukee building sits just off the intersection of North Avenue, Damen Avenue and Milwaukee Avenue, a vibrant and thriving business district. The four-story, 20,000-square-foot building not only housed the Double Door music venue, but contains 11 apartments on the upper floors that Strauss had constructed in the early 1990s.

Strauss, a lifelong Chicagoan, is a 28-year vet of the Chicago Fire Department, having joined in 1989. He operates 1572 N. Milwaukee as a family business, with his sons heavily involved in the building’s operation and maintenance. The building, which is Strauss’ only significant real estate investment, represents financial stability not only for Strauss and his sons, but also for Strauss’ retired father, brother and sister.

In 1993, in part because of his father’s health issues, Strauss decided to sell the business, Double Door Liquors, that took up the lower floors of the building. Strauss and his family still owned the building and would continue to rent it out to business and residential clients. Sean Mulroney and Joe Shanahan purchased Double Door Liquors from the Strauss family and began renting the first floor and basement of 1572 N. Milwaukee, operating it as the music venue known as Double Door.


Alderman Moreno and the Double Door music venue

According to Strauss, prior to 2015 the relationship between him and Double Door was mostly harmonious. Strauss recalls interacting with Moreno only once before his current troubles began. In 2012, while Strauss and Double Door were negotiating a new lease, Strauss was asked by Mulroney to attend a meeting with the recently appointed alderman, Proco Joe Moreno.

While Strauss recalls the meeting being civil, Moreno made a statement that would foreshadow the abuse of aldermanic power to come. “He told me ‘There will never be another tenant in that building other than Double Door,’” says Strauss.

Strauss’ current troubles began in 2015, when Double Door failed to exercise the option to renew their lease. Strauss claims that Double Door had failed to make supplemental lease payments that were required by the lease. When Double Door’s lease expired October 31, 2015, Strauss began looking for a new tenant. However, when their lease ended, Double Door didn’t vacate the property and Strauss was forced to file a lawsuit in November 2015 to have them evicted and recoup over $100,000 in unpaid rent.

After Double Door and Strauss unsuccessfully tried to negotiate a settlement to their dispute, the case was set for trial in May of 2016.

It was at this point that Alderman Moreno began to cross the line from an involved local official to an alderman abusing the power of his office.

The first legislative action Moreno took against Strauss was when he sponsored a zoning change proposal[ii] for 1572 N. Milwaukee in April of 2016, only a handful of days before Strauss and Double Door’s trial was set to begin. That proposal, introduced to the City Council’s Committee on Zoning, Landmarks and Building Standards, would have rezoned the property from B3-2 to B3-1.

The building at 1572 N. Milwaukee has held B3-2 zoning since the Strauss family purchased it. While B3-2 zoning is for large buildings (like 1572 N. Milwaukee), B1-1 is for “small-scale retail and service uses.”[iii] A B3-1 zoning would prohibit over 30 categories of businesses and building uses, including general restaurants, medium and large entertainment venues, and hotel or motels.[iv]

In other words, lower zoning would severely limit the types of tenants Strauss could rent or sell to.

Before filing the proposal, Moreno didn’t notify Strauss, and they had never discussed any downzone possibilities for the property. Strauss says he then reached out to his real estate broker and the Department of Planning and Development, and “they told me this was a tool [aldermen] use quite often.”

Strauss, realizing that Moreno’s proposed rezoning could decimate his ability to sell or rent his building, hired a lobbying firm in the hopes they could make the potential rezoning disappear. But according to Strauss, Moreno would not agree to meet with Strauss. The proposal was not voted on but would sit dormant in the zoning committee—available to be called for a vote at any time. For nearly 17 months, the downzone proposal would sit in the zoning committee, hovering over Strauss’ building as a looming threat.


The eviction and City Hall meeting

In August of 2016, Cook County Judge Orville Hambright ruled in favor of Strauss and ordered Double Door out of the property by the end of the year. Despite the court order, however, Double Door continued to book music acts and sell tickets past their ordered eviction date. Double Door was formally evicted by the Cook County sheriff in February 2017.

After Judge Hambright’s ruling, Strauss began negotiations with multiple restaurants interested in renting space in 1572 N. Milwaukee. Strauss also began negotiations with Speedwagon Properties[v], a Chicago-based developer who was interested in potentially buying the building. Speedwagon was willing to pay $10 million for Strauss’ building.

Unfortunately for Strauss, Speedwagon pulled their offer in early 2016 because of their concerns over the pending eviction lawsuit.

In the fall of 2016, after the judge ruled against Double Door but before they vacated the property, Strauss and his broker attended a meeting with Moreno and his chief-of-staff, Raymond Valadez, to discuss the potential restaurant tenants who had expressed interest in renting the building.

Strauss was excited about the potential tenants. They were all well-established restaurants, and although Moreno had been clear in his support for Double Door, Strauss believed the quality of the potential tenants could bridge the gap between them. Strauss would be able to rent his building and Moreno could bring popular new restaurants to Wicker Park.

However, according to Strauss, Alderman Moreno still wanted Double Door in the building. Strauss and his attorney, James McKay, claim that Moreno told Strauss, “I’m tired of hearing about the sympathy of you and your family. Double Door is going to be in that building, there will never be another tenant in there, there will never be another sign on that building.”

Strauss left the meeting feeling as if his legal victory over Double Door was meaningless. After his meeting with Moreno, the restaurants that were interested in potentially renting let Strauss know that they had to walk away from the deal because of the pending zoning change. “I never really gained by winning that case,” Strauss told Project Six.

Because Moreno’s downzone proposals were preventing him from selling or renting his building to anyone else, Strauss and his attorney tried negotiating with Double Door, prior to their eviction, in the hopes of finding a short-term solution, perhaps letting Double Door stay for up to a year under a new lease while Double Door sought a different, permanent location elsewhere. But these negotiations stalled on issues ranging from the monthly rent amount to a personal guarantee from the Double Door owners that they would vacate the building at the expiration of the proposed lease.

In late January 2017, Moreno sent Strauss’ broker an email requesting Strauss attend a meeting at City Hall. The email chain connected to Moreno’s invitation revealed that Double Door had recently met with Mayor Rahm Emanuel and Alderman Moreno.

Three days later, Mulroney emailed Chavez again, noting that Strauss was pushing Double Door to be out of the building by the end of March, and imploring Chavez that “time is of the essence.” Three days later, Chavez responded to Mulroney, stating, “I’ve spoken with Commissioner Reifman [David Reifman, a mayoral appointee] for the Department of Planning and Development. He’s happy to meet with you and the Alderman to discuss this situation.”

When Strauss’ attorney, James McKay, emailed Chavez, informing her that Judge Hambright had already ruled in Strauss’ favor and the eviction proceedings were underway, and asking what the agenda was for the meeting, Chavez responded, “Alderman Moreno requested the meeting to discuss the situation. There’s no formal agenda for the meeting.”

Chavez’ answer didn’t align with the emails showing that Mulroney had pushed for the meeting, and that the meeting was at least partially organized by the Mayor’s Office. While there may have been no formal agenda, it would quickly become clear that the Mayor’s Office, Moreno and Reifman all had the goal of finding a way to get Double Door back into Strauss’ building.

On the day of the meeting, February 8, 2017, Strauss and McKay, as well as Strauss’ father and one of his sons, met in the Department of Zoning offices with:

  • Alderman Joe Moreno
  • Alderman Moreno’s chief of staff, Raymond Valdez
  • Alderman Danny Solis, Committee on Zoning, Landmarks and Building Standards
  • Commissioner of Planning and Development David Reifman
  • Assistant to Mayor Rahm Emanuel, Claudia Chavez
  • Deputy Commissioner, Bureau of Planning and Zoning Patricia Scudiero
  • Double Door partner Sean Mulroney
  • Double Door partner Joe Shanahan

Both Strauss and McKay claim that they were explicitly told that neither the downzone of 1572 N. Milwaukee nor their court case against Double Door would be up for discussion. Instead, Strauss and McKay claim that Commissioner Reifman attempted to broker a sale of Strauss’ property to Double Door for much lower than Strauss’ asking price. Strauss recalls Reifman suggesting a price in the range of $7 million, with installment payments over time.

Strauss was taken aback and says, “I said to him, ‘I didn’t know you are a broker, because I have a broker I hired, and there are rules about brokering deals.’”[vi] Strauss and McKay say that Reifman brushed aside Strauss’ concerns, noting that he, Reifman, is a licensed attorney.

Project Six asked Commissioner Reifman and Alderman Solis if they were involved in the meeting with Strauss at City Hall and if Reifman had any role in attempting to broker a sale. Commissioner Reifman responded through a representative at the Mayor’s office that he cannot comment on something that is the subject of ongoing litigation. Alderman Solis did not respond to repeated requests by phone and email for comment.

The attempt to broker a sale stalled when it became clear that the Double Door owners were not interested in paying the market value of Strauss’ building. Strauss and McKay claim that Moreno made the same threat he would make weeks later in front of Strauss’ building, in the presence of representatives of the Mayor’s Office and the chairman of the zoning committee, Alderman Solis, about what would happen if Double Door were not given a new lease for the building. “Your family is going to lose a lot of money, this zoning process can take 3-5 years, you will be out of your rental income, you will have trouble selling your building because of this zoning process. Your attorney doesn’t know anything about this, but let me tell you, Brian, that’s how this is going to go,” McKay recalls Moreno saying. When McKay asked Moreno directly, “Why are you downzoning this family?” McKay says Moreno shrugged him off, saying “You don’t want to know.” The meeting ended shortly thereafter without any resolution.

Project Six asked Alderman Moreno about the public and alleged private threats against Strauss, interactions he has had with Strauss, and what he said during the meeting at City Hall. He did not respond to repeated requests by phone and email for comment.

When Moreno began targeting Strauss’ building, it upset Strauss, but he assumed it was simply one elected official acting out, and that other aldermen and city officials would prevent Alderman Moreno from abusing his power. But the meeting in Commissioner Reifman’s office changed that. Multiple powerful city officials listened to Moreno threaten Strauss and said nothing.

After their meeting at City Hall, Mulroney sent Strauss an email responding to what was discussed in the meeting.

This was shortly followed by a similar email from Double Door’s attorney, Cary Schiff. The message was clear. Double Door had the backing of the city, and Strauss was out of options, so he might as well rent to Double Door, on their terms.

Project Six asked the Mayor’s office what was discussed in his meeting with the Double Door owners, what knowledge Mayor Emanuel had about the meeting at City Hall with city officials, Strauss and the Double Door owners, and also what role the Mayor has had in the downzone and ongoing contention between Moreno and a private business owner. A spokesman responded that they cannot comment on the subject of ongoing litigation.


 The downzone and real estate sales

The downzone proposal that Alderman Moreno introduced for 1572 N. Milwaukee is a clear example of “spot zoning.”[vii] For more on the downzone proposal and spot zoning, read the initial investigation on Alderman Moreno and his threats against Strauss.

In May 2017, Strauss received a new offer from a well-known Chicago-based developer to purchase his building for $9.6 million. Because of a confidentiality agreement between Strauss and the developer, it will be referred to as Developer A.[xi]

However, on June 5, Strauss received a new notice indicating that Alderman Moreno was introducing a modification to the rezoning proposal, to be voted on by the committee on June 22, 2017. Moreno was proposing to change the zoning on Strauss’ building form B3-2 to RS-3. RS-3 is described by Chicago’s Zoning Ordinance as “intended [to] be applied in areas where the land-use pattern is characterized predominately by detached houses on individual lots or where such a land use pattern is desired in the future.”

Strauss was dumbstruck. Even with the contentious relationship between Moreno and himself, this seemed overtly vindictive. Moreno was attempting to rezone Strauss’ 20,000-square-foot building, including its 11 upstairs apartments, as a single-family, detached home.

Developer A pulled out of the proposed sale 2 days after the new downzone proposal.

After the deal with Developer A fell through, Strauss reached out to a third Chicago-based developer who had previously expressed interest in his building. Because of a confidentiality agreement, it will be referred to as Developer B.

By July, Strauss entered into an agreement with Developer B to sell the building for $9.1 million. Unfortunately, Developer B withdrew the offer in August, telling Strauss that Moreno’s indecision and the looming downzone effectively torpedoed the deal.

Two months later, after Moreno’s downzoning proposal was passed by the Committee on Zoning, Landmarks and Building Standards, Developer B made a new offer to Strauss. But the price had changed. They now offered $6.5 million.

In the nearly two years since Strauss’ trouble began, he had seen his building’s value cut nearly in half, all because of the actions of a single Chicago alderman and the city officials who enabled him.


Constitutional rights and City Council

In July, Strauss filed a federal lawsuit[viii] against the City, Moreno and the Committee on Zoning, Landmarks and Building Standards, claiming that Moreno used his elected office to wage a campaign of harassment against Strauss in order to force Moreno’s preferred tenant, Double Door, back into Strauss’ building. Strauss and McKay believe Moreno’s behavior was so outrageous, and the city and the zoning committee so complicit, that Strauss’ constitutional rights were violated. The suit is still pending and has a court date set for November.

On September 11, the Zoning Committee passed a modified version of Moreno’s original proposal for rezoning. This proposal rezones Strauss’ building to B2-2. B2-2 would, like the B1-1 zoning, prohibit over 30 categories of businesses and building uses.

Before passing the rezoning proposal, Strauss and McKay testified before the committee. They asked the committee to vote against Moreno’s proposal and noted they would be willing to withdraw the lawsuit if Strauss’ property was simply left alone. However, Moreno responded, “This is a planning tool, I know many other aldermen, including [Chairman Solis] who have done this in other circumstances to get the best for our community and the best for the building owner.” Moreno also told Strauss during the committee meeting that his lawsuit was “the most incompetent, frivolous lawsuit” he had ever seen.

During the committee meeting, Alderman Solis called on Patti Scudiero, deputy commissioner of Planning and Zoning, to explain if the city supported Moreno’s proposal. Scudiero explained that the Department of Planning and Development did not support the original proposal by Moreno but was willing to support the B2-2 proposal. Scudiero testified in committee, “When the application was initially introduced, the [Department of Planning and Development’s] recommendation, which we do in all matters, was ‘not recommended.’ Since that time [Moreno] has worked with the Law Department and the Department of Planning and Development to amend the application to B2-2 . . . for that reason[ix] the Department supports the application.”

Despite Moreno having no valid reason to rezone the property, Department of Planning and Development worked with him to find a defensible downzone. Even though Moreno’s public threats to Strauss had been widely reported, multiple city departments and aldermen[x] chose to turn the other way and allow Alderman Moreno to punish a private business owner for not obeying the alderman’s will.

Strauss said, “The city says, ‘Oh we don’t condone B1-1 or RS-3, but we came up with B2-2,’ what’s to stop him in 6 months from doing this to me again? It’s crooked. This isn’t about the numbers, it’s about aldermanic abuse of powers. You are just messing with people.”

 


 

[i] The owners of Double Door have donated more than $7,500 to Moreno’s political committees since 2013. http://www.elections.il.gov/CampaignDisclosure/CommitteeDetail.aspx?id=o5fb5ayGIM%2fAO60YeWi2ww%3d%3d

[ii] https://chicago.legistar.com/LegislationDetail.aspx?ID=2688239&GUID=23AB0BF1-98A6-483B-8EAC-D69055C12500&Options=Advanced&Search=

[iii] Chicago Zoning Ordinance, 17-3-0102

[iv] The “-1” in B1-1 indicates, among other things, the minimum square footage of the upper floor apartments in Strauss’s building. Under his original zoning, Strauss was allowed to construct efficiency units with a minimum of 700 square feet. Under the proposed B1-1 zoning, each apartment would have to have a minimum of 2,500 square feet.

[v] https://www.dnainfo.com/chicago/20160105/wicker-park/double-door-building-sale-downtown-investors-underway-records-show

[vi] Illinois requires brokers to be licensed by the Illinois Department of Financial and Professional Regulations.

[vii] Illegal Spot Zoning is a change to zoning applied to a small area that violates a homogenous, compact and uniform zoning pattern.

[viii] http://www.chicagotribune.com/news/local/politics/ct-double-door-lawsuit-20170721-htmlstory.html

[ix] Scudiero specifically stated that the Department supported Moreno’s new proposal because it would not change the Maximum Floor Area Ratio, which is essentially a measure of how tall a building can be. Scudiero did not discuss how the zoning change would affect the allowable business/commercial uses of the building.

[x] Alderman James Cappleman (46th Ward) was the only City Council member to speak against or vote against the downzone proposal for 1572 N. Milwaukee during the zoning committee meeting. Alderman James Cappleman (46th Ward), Alderman Pat O’Connor (40th Ward) voted No and Alderman Nick Sposato (38th Ward) and Alderman Anthony Napolitano (41st Ward) abstained from the full City Council vote.

[xi] Project Six verified the selling price and withdrawal of sales of each real estate deal discussed 1572 N. Milwaukee.

 


 

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Evidence

Email packet

Emails between Double Door owners and city officials setting up meeting at City Hall