On Sept. 14, 2005,the Chicago City Council
unanimously approved (47-0) a
landmark ordinance
that severely limits the ability of supermarkets and drug stores to use
restrictive covenants in an anti-competitive manner. Although restrictive covenants are not
uniformly harmful to communities, the type of restrictive land use covenant
employed by these industries prevents competitors from making use of former
grocery and drug store sites in order to gain control of the market and foil the
competition. This practice has resulted in two neighborhood redevelopment
challenges: dangerously limited access to fresh food and vegetables not
typically offered at the “corner store;” and blight caused by stubbornly vacant
retail parcels that were designed and best-suited for grocery and
drugstores.
The ordinance,
believed to be the first of its kind, is expected to serve
as an international policy model. It was introduced by Aldermen
Manny Flores (1st ) and Marge Laurino (39th ), who
both have encountered deleterious restrictive covenants in their wards.
Residents in the 39th Ward became frustrated with the limited access to fresh
groceries due to a restrictive covenant Dominick’s placed on its former store at
Lawrence Ave. and Pulaski Rd.. Ald. Flores, aware of the retailer’s practice,
deferred his support for a proposed infill Dominick’s until the retailer agreed
to not use restrictive covenants on the site. Citywide, aldermen shared similar
experiences with restrictive covenants during testimony at the ordinance’s
initial hearing before a joint committee on zoning and economic development.
Backed by the widespread
support of aldermen and residents, the original draft of the ordinance banned
grocery and drug stores from using restrictive covenants
completely. However, in response to
contentious opposition from the Chicagoland Chamber of Commerce and Illinois Retail
Merchants Association, the ordinance was altered to allow grocery and drug
stores the ability to place temporary restrictive covenants on stores if they
are relocating within the same community.
In its adopted form, the ordinance allows retailers to limit direct
competition, but not all future land use.
Some of the ordinance’s
highlights include:
- covenants predating May 11, 2005, are exempt from the
ordinance;
- grocery and drug stores less than 7,500 square feet
are exempt from the ordinance;
- a three-year covenant is permitted if a
retailer rebuilds within a half-mile radius of the former site and commences operations
on a new site within a two-year period;
- hardships preventing a grocery or drug store from
rebuilding within the prescribed time period are grounds for an appeal to
extend the commencement date for an additional year;
- Zoning Administrator and Alderman(en) must be given
evidence of the retailer’s hardship and notice of the store’s move; and
-
Zoning Administrator has the power to extend the half-mile limit to one mile.
Other cities,in the U.S.and
abroad, have struggled with the same redevelopment issues resulting from the use
of restrictive covenants by the grocery and drug store industries. Consequently,
the ordinance has won the attention of city officials from Vancouver, British
Columbia, to Milwaukee, Wis., making Chicago an exemplary model for
cutting-edge planning policy.
MPC is one of Chicago’s longtime planning advocates and was a natural ally for
Aldermen Laurino and Flores in their battle against restrictive covenants.
MPC is pleased to be a part of this
monumental policy initiative and believes that grocers’ and pharmacies’ use of
restrictive covenants to foil competition is against the public good, which far
outweighs private property rights.
To read MPC's Issue Brief on Restrictive Covenants/Deed
Restrictions, please click here.
