Winnetka Lakefront Homeowners say Bluff Rules Wiped out $16M

Winnetka’s ongoing fight over its fragile lakefront is back in federal court, with a group of homeowners alleging the village’s 2024 bluff protection ordinance has already erased $16 million in property value across four high-end estates — and could ultimately cost hundreds of millions if applied across all 112 affected parcels.

The amended complaint, filed Monday in U.S. District Court, includes more than two dozen plaintiffs, among them investors Andrew Bluhm, Michael Hara and Terry McKay, plus former executives from Abbott, United Airlines and other Chicago-area firms, Crain’s reported. The filing revives a suit dismissed in October for lack of evidence of actual loss. This time, owners say they have the receipts: appraisals from Cohn Reznick showing steep value drops tied to the restrictions imposed by the ordinance.

The ordinance sharply limits how much blufftop land can be developed, a response to years of public outcry over shoreline construction — a controversy amplified by billionaire Justin Ishbia’s $77 million compound and its high-profile bluff reshaping. Homeowners insist the village has gone too far. Plaintiff organizer Bill Jackson, a retired Johnson Controls executive, told the outlet that the group doesn’t want compensation, but rather to have the ordinance repealed.

Among the examples cited, Hara’s Sheridan Road property allegedly lost nearly $4 million in value after roughly 10,000 square feet of buildable blufftop was eliminated, dropping the appraisal from $11.12 million to $7.31 million. The steepest hit — 64 percent — was recorded at Barbara Irwin’s estate on Taylorsport Lane, which fell from $7.54 million to $2.69 million after 17,700 square feet of land became off-limits.

Owners argue the damage compounds over time: As Winnetka land prices rise, square footage removed from the buildable zone won’t benefit from the appreciating market. They frame this as an unconstitutional taking under both the U.S. and Illinois constitutions, asserting the village has stripped land value without offering compensation.

Winnetka’s attorneys declined comment, citing the judge’s order for plaintiffs to provide a black-lined comparison of the revised complaint. Village officials have defended the ordinance as necessary for safety and shoreline preservation, but plaintiffs say past permitting rules worked and that the new regime is driven by aesthetics, not geotechnical risk.

— Eric Weilbacher