• How Pols Wring Money From Businessmen: Chicago Example

    The other day, I posted an extraordinary story of abusive political power.

    ZipDialog Post: Your property? Yeah, right, pal. I got friends who want it

    First, the story in a nutshell. Then, the larger meaning.

    Alderman Bullies Property Owner to Help a Friend

    Chicago Alderman Proco Joe Moreno wanted to help a business [Double Door Music Hall] that had contributed to his campaign coffers. So he told Brian Strauss, a firefighter and property owner, to rent his building to the business or suffer the consequences. When Strauss refused to comply, Moreno made good on his threats, downzoning Strauss’s building and scuttling multiple attempts to sell the property.

    Strauss is now suing, arguing that Moreno’s abuses of his aldermanic powers violate Strauss’ rights under the Fifth and Fourteenth Amendments. –Reason blog (Link here)

    Fortunately, some of the strong-arm tactics were caught on cellphone video.

    It has also been investigated and reported by CBS2 Chicago, but largely missed by the local media.

    Chicago politicians acting badly is a “dog bites man” story in Chicago, just as it is in New Orleans or New Jersey–but not Minneapolis. Some jurisdictions are actually pretty honest; the voters demand it and toss out the miscreants.

     

    The Larger Meaning, Beyond the Usual Chicago Political Stench

    The larger meaning of the Moreno story is that politicians who can impose costly rules and regulations (or waive them), who can violate property rights and contractual rights with ease (or respect them) can use that discretion to extract benefits for themselves or their campaigns.
    If I, as an alderman, can prevent Chick-Fil-A or Walmart from erecting a store in my ward, as Alderman Moreno also did, then I can either
    • Extract donations from Chick-Fil-A or Walmart
    • Extract donations from their potential competitors or others who don’t like them, such as grocery owners and their unionized workers in Walmart’s case.

    Those political uses of weak property rights illustrates something significant–well beyond Chicago.

    When most people think of strong property rights, they think (correctly) that they are essential for economic growth. Why invest if the state can come and steal your profits?

    What they miss is a second implication: strong property- and contractual-rights constrain overreach by the state.

    That’s why FDR had to knock them down in 1937. They were blocking his New Deal programs, which had been ruled unconstitutional because they violated citizens’ economic rights.

    FDR told the Supreme Court Justices that, if they didn’t rule his way in the future, he would pack the court with more judges who favored him. This threat went beyond traditional appointments; there were no Constitutional limits on how many judges sit on the Supreme Courts, just as, at the time, there was only a norm (not a law) saying Presidents could not run for a third term. Faced with FDR’s threat, the judges caved in and began ruling New Deal programs were just fine with them.

    Aldermen use the same logic in a slightly different way: they say, I already have the power to crush you. So, give to me or I will.

    Bottom Line

    Whether the rights are free speech, free association, property, or contract, the message is the same. The state will overreach unless its limits are well-specified and institutionalized.

    That’s a Core Western Value. It ought to extend even to Chicago aldermen.

  • Your property? Yeah, right, pal. I got friends who want it

    The headline: “Chicago Alderman Who Told Businessman to ‘Come Back To Me On Your Knees’ Sued for Abuse of Power (Reason’s Hit and Run blog)

    Chicago Alderman Proco Joe Moreno wanted to help a business [Double Door Music Hall] that had contributed to his campaign coffers. So he told Brian Strauss, a firefighter and property owner, to rent his building to the business or suffer the consequences. When Strauss refused to comply, Moreno made good on his threats, downzoning Strauss’s building and scuttling multiple attempts to sell the property.

    Strauss is now suing, arguing that Moreno’s abuses of his aldermanic powers violate Strauss’ rights under the Fifth and Fourteenth Amendments. –Reason blog

    The story Reason reports is grotesque.

    The key for outsiders to understand: Chicago alderman hold tremendous power to zone buildings within their ward. That power to zone translates, naturally, into campaign donations from people with zoning needs.

    ♦♦♦♦♦♦

    Strauss’ family has owned the building housing Double Door since the 1960s. It’s in a now-popular area. According to Strauss, Double Door had violated their lease and he wanted to evict them.

    That’s when Alderman Moreno, the recipient of campaign donations from Double Door, stepped in–with rage and power:

    “I’m tired of hearing about the sympathy of you and your family,” the alderman reportedly told Strauss and his attorney at one meeting. “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.”

    Over the coming months, Moreno—in meetings brokered and attended by staffers for Chicago Mayor Rahm Emanuel—tried to get Strauss to sell his building to Double Door for $7 million, despite its market value of nearly $10 million.

    When that failed, the alderman started introducing downzoning proposals for Strauss’s property that would have made it off limits for most business uses. In June 2017, Moreno even tried to reclassify the building as a residential unit, which would prohibit practically all commercial uses.

    That failed, but in September the city council did pass a downzoning ordinance, which prevents Strauss from converting his property to a general restaurant, a bar, or even, ironically, its previous use as concert venue.

    In a very public, and very disturbing, encounter with Strauss, Moreno made clear his zoning changes were all about extracting concessions.

    “You can come back to me on your knees, which is going to happen,” he raged. “It’s gonna be an empty building with no income for you or your family.” –Reason blog

    In fact, Strauss has tried to sell but he says three sales have fallen through because of the zoning changes.

    Now, he’s suing, saying that Moreno’s “extreme and outrageous” conduct amounts to a taking of his property without due process.

    ♦♦♦♦♦♦

    CBS2 Chicago investigated. Their findings confirm Moreno’s bullying behavior, some of it caught on cell phone video.

    Their headline: [CBS] 2 Investigators: Alderman Threatens To Ruin Landlord’s Business

    In the video, Moreno says he’s upset over the “tragedy” of the club’s closing.

    “It’s a part of life,” Strauss says.

    “Right,” Moreno says. “And part of life is also that you’re not going to have a tenant in here for three years.”

    The fight reportedly stems from Moreno wanting to keep the Double Door, a campaign donor, in the building. –CBS2 Chicago

    ♦♦♦♦♦♦

    Another news investigation, this one by a former Inspector General for the city, has reached the same basic conclusions (Project Six investigations)

    ♦♦♦♦♦♦

    Comment: If the story reported by Reason and CBS2 is true, then the alderman’s conduct was “extreme and outrageous”–and utterly true to form for Chicago city government.

    Alderman have extensive control over zoning in their wards. Fellow aldermen defer to each other, enjoying the benefits of reciprocity and fearing anything that would undermine it.

    Their power to zone translates into the power to raise donations from anybody with real estate interests.

    It’s the circle of life in politics.

    My question: Why is this only a civil case? The actions alleged ought to be investigated as possible felonies by federal attorneys. (Expecting state attorneys to do such investigations of fellow pols is crazy talk.)

    Thanks to Tom Elia for this story.