Kathrein v. City of Evanston
2011 U.S. App. LEXIS 4761
7th Cir.2011Background
- Evanston enacted a Demolition Tax of $10,000 per building or $3,000 per unit to fund Affordable Housing.
- Two exemptions exist: an owner who replaces with affordable housing or will live in replacement for three years, and demolitions ordered by the city.
- Proceeds go to Evanston's Affordable Housing Fund, not the general fund.
- Kathreins own 1925 Jackson Ave., Evanston; they attempted to sell to Ouzan but the sale faltered after learning of the tax.
- District court dismissed claims as to standing and TIA; Kathreins appealed, amicus was appointed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| TIA applicability to the Demolition Tax | Kathreins contend TIA does not bar review of the tax's constitutionality. | Evanston argues TIA divests federal court of jurisdiction over tax challenges. | TIA does not bar challenges to the Demolition Tax; remand for merits on Counts II-VII. |
| Standing to challenge the Demolition Tax | Kathreins have injury in fact from reduced property value due to the tax. | Kathreins lack injury or redressable harm from the tax itself. | Kathreins have standing to challenge the Demolition Tax. |
| Standing to challenge the TIA itself | TIA's constitutionality is argued by Kathreins. | No injury arises from the TIA itself. | Kathreins lack standing to challenge the TIA; Count I affirmed dismissal. |
| Tax vs. regulatory device classification | Demolition Tax is a tax to fund housing program, not a regulation. | Tax raises specific costs to deter demolitions, functioning as regulatory device. | Demolition Tax sits between tax and regulatory device; purpose and proceeds indicate regulatory intent. |
| Ripeness | Claims are ripe for federal review. | Ripeness concerns may apply; not fully briefed. | Ripeness left for remand; not resolved on appeal. |
Key Cases Cited
- Hager v. City of West Peoria, 84 F.3d 865 (7th Cir.1996) (TIA and jurisdiction considerations in tax challenges)
- Scott Air Force Base Props., LLC v. County of St. Clair, Ill., 548 F.3d 516 (7th Cir.2008) (TIA applicability to state taxes limits court authority)
- Trailer Marine Transp. Corp. v. Riveria Vazquez, 977 F.2d 1 (1st Cir.1992) (compensation charges vs taxes; use of proceeds matters)
- Daimler-Chrysler Corp. v. Cuno, 547 U.S. 332 (U.S. Supreme Court, 2006) (taxpayer injury standing limitations)
- Marusic Liquors, Inc. v. Daley, 55 F.3d 258 (7th Cir.1995) (injury-in-fact from regulatory restrictions on sale)
- Lujan v. Defenders of Wildlife, 504 U.S. 555 (U.S. Supreme Court, 1992) (standing requirements, injury-in-fact, causation, redressability)
- MainStreet Org. of Realtors v. Calumet City, Ill., 505 F.3d 742 (7th Cir.2007) (property value and market effects as standing concerns)
- Choose Life Ill., Inc. v. White, 547 F.3d 853 (7th Cir.2008) (regulatory vs. tax analysis in fee-like charges)
- Am. Civil Liberties Union of Tenn. v. Bredesen, 441 F.3d 370 (6th Cir.2006) (non-tax payments and regulatory considerations)
- RTC Commercial Assets Tr. v. Phoenix Bond & Indem. Co., 169 F.3d 448 (7th Cir.1999) (incentives and regulatory device framework for charges)