An Illinois appellate court recently struck down the Chicago Landmarks Ordinance as being unconstitutionally vague, in violation of due process rights under the Illinois Constitution. This surprising decision, known as Hanna v. City of Chicago, has sent shock waves throughout the historic preservation community, both locally and nationally, as many historic preservation ordinances throughout the country have much in common with Chicago's Landmarks Ordinance. Officials in other cities are concerned about the influence this decision may have as to possible challenges to their own historic preservation ordinances.

The City of Chicago has stated its intention to appeal the decision to the Illinois Supreme Court, where most observers and experts predict a reversal of the appellate court ruling and the upholding of the Landmarks Ordinance, based on longstanding precedents and controlling constitutional law principles, including those that have been applied to uphold zoning ordinances historically. In the meantime, the Landmarks Ordinance remains in effect pending the ultimate outcome of this case, which was remanded to the trial court for further proceedings.

The case involves a challenge to the Landmarks Ordinance brought by two landowners, Albert Hanna and Carol Mrowka. Hanna owns property in the Arlington Deming neighborhood of Chicago, and Mrowka owns property in the East Village neighborhood of Chicago—both areas containing a significant percentage of distinctive, older residential and commercial structures. Based on the recommendations of the Commission on Chicago Landmarks, the Chicago City Council designated both neighborhoods as Landmark Districts, and as a result the properties of both landowners came to be located within a Landmark District. Thereafter, any building permit (such as for alternation, construction, or demolition) sought by a landowner in the Landmark District would be subject to the approval of the Landmarks Commission, and to its restrictive criteria and conditions. The landowners opposed the Landmarks Ordinance and brought a lawsuit against the City claiming that the ordinance violated their constitutional due process rights because its provisions were vague and arbitrary.

The Landmarks Ordinance establishes the Chicago Landmarks Commission to protect and promote the continued utilization of areas, districts, buildings and structures in Chicago eligible for designation as an historic landmark by the Landmarks Ordinance. The Landmarks Ordinance lists seven criteria for use in considering a designation, including: critical part of city heritage, important architecture, distinctive theme as a district, and unique visual feature. The Landmarks Ordinance further provides that the Landmarks Commission, in making a recommendation, must use at least two of the seven criteria, and also consider whether there is a significant historic, community, architectural, or aesthetic interest or value.

Although the trial court dismissed the landowners' case for failure to state a claim, granting the City's motion to dismiss, the appellate court reversed the trial court and held that the Landmarks Ordinance was unconstitutionally vague and ambiguous. The appellate court pointed to the Landmarks Ordinance's use of words such as "value," "important," "significant," and "unique" as vague, ambiguous and overly broad—such that they do not adequately provide "intelligible standards by which to guide the Commission" to make its landmark eligibility decision. The court also found the standards for qualifications of a Commission member to be vague, and concluded that the Landmarks Ordinance's delegation of decision-making to the Commission constituted an unlawful delegation of authority and legislative power, in violation of the Illinois Constitution.

Pending the ultimate resolution of this case, the appellate court decision in Hanna v. City of Chicago may raise some concerns as to the acquisition, financing, and use of historic properties in the City of Chicago. Among other things, a designation as a City of Chicago Landmark provides property owners with certain special benefits, including the ability to utilize tax incentives in connection with the rehabilitation/reuse of historic properties; therefore, casting any doubt on the Landmarks Ordinance may have a chilling affect on such activities. On the other hand, absent a landmark designation, a real estate developer has a freer hand to redevelop properties than would be the case with the restrictions imposed by a local historic preservation commission, which could lead to different and more flexible development strategies as to these types of properties.