As the River Forest village board considers whether to revoke or amend what many are saying is an illegal and possibly unconstitutional ordinance restricting residential development, Village President John Rigas has been asked to consider paying between $30,000 and $60,000 apiece for 14 residential units taken “off market” under that ordinance.

In a Sept. 11 letter to Rigas local developer and River Forest resident Rob Palley asked the village of River Forest to pay his company, Granite Realty Partners, between $420,000 and $820,000 to compensate him for the loss of value on the 14 rental units the firm took “off market.”

Palley’s company, which has developed several luxury condominium buildings in the village, indicated over a year ago that it wanted to preserve the assumed value of the density credits. In a May 2008 letter to Village Administrator Steve Gutierrez, Palley wrote, “Granite Realty Partners may transfer these density rights to others.”

At a village board committee of the whole meeting Monday a critic of the density law, first passed in 2001, called Palley’s demand extortion.

Daniel Lauber, an attorney and veteran city planner ripped what he called “an illegal freeze on the number of residential units” in the village. With the author of the ordinance, former village president Frank Paris, sitting next to him, Lauber called the ordinance “a violation of the nation’s Fair Housing Act.

“There has never been a need for this ordinance,” said Lauber, who argued the expressed goals of maintaining “village character” can be better accomplished through existing zoning laws.

Village President John Rigas said Tuesday that the issue is likely to be sent to the Zoning Board for a thorough review. “I think the board was unanimous to send the density swap to the Zoning Board for review with the notice that the board was skeptical about maintaining it and the need for it.”

Addressing the board Monday, Paris said the intent of the ordinance was to “preserve village character” and to assure an adequate supply of luxury condo housing for village residents wishing to sell larger single family homes. Many of the smaller existing apartments, some less than 1,000 square feet, did not meet those needs.

“Most are not suitable for single family residents who want to retire and remain in the village,” he said.

Addressing Palley’s letter, Lauber said he did not believe Palley had any legal entitlements, particularly under the takings clause of the U.S. Constitution. He said Palley’s company speculated and lost.

“He’s been land banking, density banking,” said Lauber. “He just got speculative.”

Lauber said that’s not grounds to receive compensation from the village for any perceived losses. “Tough luck if the village repeals the law. I really think he’s trying to extort the village.”

Palley was present before Monday’s board meeting, but left during an extended executive session.

Michael Madock, a local resident developed the condominium project at Madison Street and Park in 2005. He ran headlong into the complexities of the village’s density swap ordinance and wound up paying Palley for so-called “density credits” in order to build his project. Reached Tuesday morning Madock said, “At the present time, I have no comment.”

However, Madock’s wife, Katie Madock, an unsuccessful candidate for village board this year, spoke both to the village board and reporters Monday night and also ripped into the density ordinance.

One defense of the ordinance has been that developers are able to go before the development review board for variances on the density requirements. Katie Madock said flatly that was not true, that her husband could not get his projects on any village agenda prior to purchasing existing density credits.

“The Village of River Forest made a market for density,” she told trustees. “This was made clear by village staff that he was not allowed to go before the boards.”

He was, she insisted, “sent to Granite Realty,” whom he paid $250,000 for five density units. She added that at least one other major redevelopment on Madison was rejected due to the same lack of density credits.

Trustee Steve Hoke, an ardent opponent of the density ordinance, and who invited Madock and Lauber to speak, said a decision needs to be made sooner rather than later.

“The reason I brought that up was because of development,” Hoke said Tuesday. “It’s critical we bring (the density ordinance) up before we make any decisions about what might happen to Lake and Lathrop.”

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