City Hall wrongly OKed Pilsen tavern The Giant Penny Whistle’s liquor license, inspector general finds

City Hall’s inspector general says in a new report that the Lightfoot administration had no legal authority to issue a liquor license to The Giant Penny Whistle tavern. | Mark Brown / Sun-Times file

A new city inspector general’s report has reignited a debate over the Lightfoot administration’s decision to issue a tavern license in Pilsen for a location where a liquor moratorium prohibits such establishments.

The IG’s office says City Hall lawyers had no legal authority to settle a lawsuit with owners of The Giant Penny Whistle, 1854 S. Blue Island Ave., by granting it a liquor license — without passing an ordinance to lift the tavern moratorium, which still remains in place.

Buoyed by the inspector general’s finding, Ald. Byron Sigcho-Lopez (25th) says he expects community groups with whom he is allied to soon sue the city to revoke the The Giant Penny Whistle’s license and shut it down.

The Lightfoot administration rejects the inspector general’s stance and defends its handling of the matter. The tavern’s owners couldn’t be reached.

As I reported last year, this unusual dispute grew out of the mess left behind when former Ald. Danny Solis (25th) dropped out of public sight for the final four months of his term in 2019 after the Chicago Sun-Times revealed he had secretly recorded Ald. Edward M. Burke as part of the federal investigation that led to Burke’s indictment.

On Jan. 23, 2019 — the day the newspaper broke the story of Solis’ undercover work — Solis was expected to advance an ordinance through the Chicago City Council that would have lifted the city moratorium that bans the issuance of tavern licenses on Blue Island Avenue from 16th Street to 19th Street.

Former Ald. Danny Solis (25th) supported lifting the tavern moratorium on the stretch of Blue Island Avenue where The Giant Penny Whistle later opened. But Solis never got that done before dropping out of sight when his role as an undercover FBI mole became public.

But the alderman didn’t show up that day. And no ordinance to lift the tavern moratorium was presented. Instead, an ordinance was approved that allowed for liquor stores by lifting a separate moratorium on packaged-goods sales along the same three-block stretch.

By the time the omission was discovered, Sigcho-Lopez had been elected to replace Solis, and he declined to support the tavern project. Sigcho-Lopez sided with community groups, some which had fought to establish the liquor moratoriums in 1995 to reduce crime and related problems in the neighborhood.

With Sigcho-Lopez blocking them, the owners of The Giant Penny Whistle took the city to court, saying they invested nearly $800,000 in the property based on Solis’ assurances he would lift the moratorium.

Ald. Byron Sigcho Lopez (25th) expects community groups with whom he is allied to sue the city to rescind The Giant Penny Whistle’s liquor license.

The Lightfoot administration — and then-Corporation Counsel Mark Flessner — agreed to settle the case in December 2020 and allow the tavern to open, saying the controversy was the “result of an administrative error.” It later told the IG’s office the error involved the failure of the city council to lift the tavern moratorium, as Solis’ former staff say he had intended.

The inspector general found that the city mishandled the case by ignoring the moratorium, which remains a part of the municipal code.

“Lifting the tavern moratorium required city council to pass an ordinance to that effect,” the in-house City Hall watchdog agency wrote, its findings summarized in its latest quarterly report. “No such ordinance was introduced and passed. Therefore, the city lacked the authority to enter into the settlement agreement … and …i ssuance of the tavern license was legally impermissible.”

The city Law Department disagrees, citing the “unique facts and circumstances” and arguing that “resolution of the matter [fell] squarely within [the department’s] sole mandate and authority to legally represent and protect the interest of the city.”

It’s kind of eye-opening when you realize how blithely the city’s lawyers chose to ignore one of the city’s own laws in the name of pragmatism.

Of course, the city council could just go back and pass an ordinance to lift the tavern moratorium. But Lightfoot doesn’t want to do that because it either would require the cooperation of Sigcho-Lopez, a mayoral antagonist, or help from other council members to further dismantle aldermanic prerogative, also unlikely.

So the easiest course was to allow a business to operate in clear violation of the law.

The mayor’s people might have thought they were making a problem go away.

But Sigcho-Lopez says: “It didn’t go away. If anything, it created a much bigger problem.”