General Iron owner says ‘smoking gun’ from Ald. Garza shows permit was wrongly denied

The owner of a metal shredding business barred from operating on the Southeast Side says it has “smoking gun” evidence it hopes will help overturn a city decision made last year to deny the company a permit based on pollution and health concerns.

Ald. Susan Sadlowski Garza provided previously unreleased internal city communications to the business owner that show the city was preparing to issue a draft permit to Southside Recycling in April 2021, lawyers for the scrap metal operation said this week.

Southside Recycling is the relocated, rebranded and rebuilt General Iron car and metal-shredding business that was denied a city approval last February to open at East 116th Street along the Calumet River.

The operation’s owner, Reserve Management Group, is challenging the decision in a city administrative court.

Chicago Public Health Commissioner Dr. Allison Arwady, who is appointed by Mayor Lori Lightfoot, denied the permit last February. But a document provided by Garza titled “Arwady remarks at press conference – draft” suggests the city was preparing to conditionally approve the facility, company lawyers say. 

There’s no date on the document other than a handwritten “4/22/2021,” which is about two weeks before Lightfoot, at the urging of President Joe Biden’s administration, halted the permit process and ordered a community health impact assessment to analyze the impact of additional pollution to the heavily industrial Southeast Side.

Terrence Sheahan, a lawyer for Reserve Management, said at a Wednesday hearing that the memo and other internal communications were a “smoking gun” that proves the company’s argument that the permit denial was unwarranted.

City lawyer Bradley Wilson responded at the hearing by saying the documents showed nothing more than discussion prior to a final decision. He said they weren’t relevant and called them a “distraction.”

Administrative law judge Mitchell Ex denied a request by Reserve Management to enter the documents as exhibits showing evidence in the case.

Lawyers for the business say the documents will inform their questions to witnesses called in future hearings. 

Reserve Management argues that Arwady didn’t follow the city’s own rules related to the permit application. The health assessment performed to determine the impact on residents from additional pollution was improper and outside those rules, according to company lawyers.

The Southeast Side suffers from poor air quality. When plans to move the scrap metal operation from Lincoln Park to the Southeast Side were made public in 2018, community groups organized a years-long opposition campaign that included a hunger strike. 

“Many advocates and community members want us to deny the permit outright,” the Arwady draft document said. “But Southside Recycling has sought a permit under the current law, which requires that a permit be granted if legal standards are met.”

Arwady and other city officials declined to comment. 

After the permit denial last year, Garza, the outgoing 10th Ward alderperson, lashed out at Lightfoot, Arwady and others, saying that the permit decision was political and not objective.

Asked about providing documents to Reserve Management, Garza told the Sun-Times, “I have no comment at all.” 

Reserve Management is also building a case for a state court lawsuit that is temporarily on hold.

The company has said it had a contract to follow a city timeline for dismantling its North Side location and moving to the East 116th Street site.

Reserve Management built its new operation and expected to begin operations in early 2021. It has said it spent $80 million to build the facility and continues to lose tens of millions of dollars in lost business.  

Lightfoot’s administration is also in talks with federal housing authorities who found that the city’s role in the planned move of General Iron from white, wealthy Lincoln Park to a low-income community of color on the Southeast Side was discriminatory.   

Brett Chase’s reporting on the environment and public health is made possible by a grant from The Chicago Community Trust.