You need to be careful about spending money to develop signs until you have your permit in hand. That’s the lesson of Image Media v City of Chicago.
- Chicago used to have an unusual regulatory process for approving large billboards. A billboard company which wanted a permit for a billboard in excess of 100 square feet or 24 feet in height was required to (1) get approval from the district alderman , (2) get a city council ordinance approving the billboard and directing the the building commissioner to issue a permit, and (3) get the permit.
- In 2016 Image Media received approval from the Alderman and Chicago City Council for four billboards. Image Media spent $10,000 on a billboard lease prepayment and $2 million to buy property on which to erect the billboards after receiving City Council approval but prior to receiving the permit.
- In late 2016 the city’s zoning administrator denied the application for a building permit and the building commissioner did not issue the permit.
- In April 2017 the City Council changed its rules to eliminate the ability for the City council to approve out of code billboards. The amendment also repealed the previous ordinances which approved Image Media’s billboards.
- Image Media sued the city alleging that this was an unjust taking and that due process and contract rights were violated.
- On December 7, 2017 US District Court dismissed most of the claims stating: “The court is aware of no decision holding that a plaintiff has a protected property interest for takings purposes in a permit or license that has not yet issued…Image Media never received its permits and thus had no protected property in them for takings purposes…”
Insider’s take: Insider thinks the City of Chicago was arbitrary and unfair in its treatment of Image Media, but the lesson is that you shouldn’t start spending money until you have your permit in hand. Image Media would have had a slam dunk regulatory takings claim if it had waited until after the permit was in hand to spend money.
You can the decision here and Rocky Mountain sign Law’s take on the case here.
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