Posted by: Patricia Salkin | February 6, 2021

Seventh Circuit Court of Appeals Rejects Developer’s Claims of Retaliation Against City Manager Following Termination of Preliminary Development Incentive Agreement

This post first appeared on Ancel Glink’s Municipal Minute Blog and is reposted with permission. See: Seventh Circuit Rejects Developer’s Claims Against City Manager ~ Municipal Minute (ancelglink.com)

In 2018, the City of DeKalb approved a Preliminary Development Incentive Agreement (PDA) with a developer regarding potential financing for the redevelopment of property in the City. The PDA provided that if the developer met certain contingencies specified in the PDA, the City would provide an approximate $2,500,000 Development Incentive in Tax Increment Financing (TIF) funding. The PDA imposed certain conditions and obligations on both parties before the agreement was final and prior to funds being distributed to the developer. 

After conducting due diligence into the developer, the City Manager recommended that the City terminate the PDA, and the City Council unanimously voted to terminate the PDA. The developer then filed a lawsuit claiming, among other things, that the City Manager violated the developer’s First and Fourteenth Amendment rights. After the district court dismissed Fisk’s federal claims for failure to state a claim with prejudice, the developer appealed to the Seventh Circuit Court of Appeals. 

The Seventh Circuit rejected the developer’s First Amendment retaliation claim against the City Manager. The developer had claimed that the City Manager blocked a development incentive and retaliated against it because the company’s attorney member exposed unflattering information about the City Manager and named him in discovery in an earlier, unrelated lawsuit. The Seventh Circuit found that this claim had been properly dismissed by the district court because the developer did not engage in protected activity. The Seventh Circuit also found that the developer had waived any retaliation claim based on the exercise of free speech rights because it had not raised that claim with the district court. The Seventh Circuit also rejected the developer’s procedural due process claim since the developer had no constitutionally protected property interest because the PDA only provided “a right to acquire property” and not a right in the property itself. Lastly, the Seventh Circuit rejected the developer’s equal protection claim, finding that the City Manager had a rational basis for recommending that the developer not receive financing under the PDA.

145 Fisk, LLC v Nicklas, 2021 WL 24881 (7th Cir CA 1/26/2021)


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