Chicago City Council Adopts Landmark Restrictive Covenant Ordinance - Metropolitan Planning Council

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Chicago City Council Adopts Landmark Restrictive Covenant Ordinance

On September 14th 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 competitve manner.

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.

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