Sept. 16 update: A judge has dismissed the lawsuit, the Daily Line reports.

Earlier:

Lawyers for a pair of local activist groups told a judge today that city of Chicago officials flouted the spirit of state rules earlier this year when they approved up to $1.3 billion in subsidies to help pave the way for developer Sterling Bay's Lincoln Yards megaproject. But the judge suggested the groups may not be able to block the $6 billion plan.

The 168-acre North Side tax-increment financing district the city created in April to help fund infrastructure for Lincoln Yards may have been rushed through by then-Mayor Rahm Emanuel's administration but that it appears to have been approved within the law, Cook County Circuit Court Associate Judge Neil Cohen said.

That refuted a key argument in the activist groups' push for a court order blocking the designation of the Cortland/Chicago River TIF district, which would surround Sterling Bay's 55-acre Lincoln Yards site along the North Branch of the Chicago River between Lincoln Park and Bucktown.

The plaintiffs, Grassroots Collaborative and Illinois Raise Your Hand Public Education, which filed their complaint in April shortly after the City Council designated the TIF, said the approval was fast-tracked so that the land in the TIF could be classified as blighted by the state's definition. One of five factors the city was relying on to clear that bar was that the growth in value of the TIF land had lagged that of the rest of the city in three of the past five years as of the 2017 data—the most recently finalized numbers when the City Council voted. But weeks later, the 2018 figures were finalized and likely would have disqualified the TIF.

Grassroots Collaborative attorney Aneel Chablani said that was not the way the state's TIF law was meant to be used.

"It could not be the intent of the legislature to suggest that on April 10 you have a blighted area and just because you wait 30 days to get numbers certified, it's suddenly not blighted," he said during oral arguments before a standing-room-only crowd in a courtroom at the Richard J. Daley Center. "That doesn't reflect how this statute should be viewed."

Cohen acknowledged there was a "rush to judgment" by the City Council because the 2018 figures might have canceled the deal, "and I'm not trying to cover for it. I'm assuming it, and I feel the same way you do, personally," he told Chablani. "But there seems to me, as a matter of law, there has to be a bright line in the sand where a legislative body is told you should consider this but you can't (look) over here because it's not yet finalized. There's got to be a date of closure.”

The timing of the vote may have been a bad break for opponents of the TIF, but “a deal is a deal,” Cohen said.

Cohen said he could issue an opinion on the city's motion to dismiss the complaint as early as next week or by Oct. 18 at the latest.

Sterling Bay won city approval earlier this year to move forward with Lincoln Yards, which could take a decade or more to complete and include skyscrapers as tall as 595 feet in a neighborhood where five stories is considered tall today. Future property tax increases generated within the TIF district would be used to reimburse Sterling Bay for bridges, roads and other infrastructure projects that would make the historically industrial land more accessible. City officials have approved the first $488 million of those projects.

Sterling Bay said in a statement today that it "continues to believe that there is no merit to the lawsuit and that the City’s decision-making and enactment of the Cortland-Chicago River TIF district fully complied with all applicable laws." The statement said "Lincoln Yards will benefit the entire city by creating thousands of new jobs, an estimated $4 billion in annual economic output, and hundreds of millions of dollars in new tax and other revenues for the City and other local taxing bodies, including the public schools."

The project and the public subsidy have been polarizing among area residents and city aldermen. Supporters argue the 14.5 million-square-foot project is a rare opportunity to create thousands of construction and permanent jobs and wide-ranging economic development to the city. Some opponents have blasted the scale of the project, while others contend Sterling Bay could develop the site without the TIF and the hundreds of millions of dollars it stands to be reimbursed from property tax gains there if the development comes to fruition.