## Facts

- Two appeals were consolidated: (1) World Outreach Conference Center’s challenge to Chicago’s zoning/licensing treatment of its community center and SRO units; (2) Trinity Evangelical Lutheran Church’s challenge to Peoria’s landmark designation preventing demolition of its church building.
- World Outreach bought a former YMCA property in Chicago that had long operated 168 SRO units as a lawful nonconforming use in a manufacturing zone; under the ordinance, the nonconforming use ran with the land and did not require a special use permit.
- After the purchase, Chicago refused to issue SRO licenses and insisted World Outreach obtain a special use permit, despite World Outreach’s allegation that the ordinance did not require one for the continuing nonconforming use.
- World Outreach alleged that the refusal obstructed its religious mission to house the homeless and needy, including a claimed FEMA-related plan to house Hurricane Katrina evacuees that fell through due to the lack of licenses.
- Chicago filed an enforcement action for operating without a special use permit, then voluntarily dismissed it; Chicago later rezoned the area more restrictively, which World Outreach alleged foreclosed any special use permit and entrenched the denial.
- About a year later, Chicago issued the SRO licenses without explanation, after World Outreach alleged it had incurred legal costs and lost religiously motivated housing opportunities.
- Trinity sought to demolish its existing sanctuary and build a “family life center” on that site; Peoria designated the building a landmark, barring demolition.
- Trinity owned another lot on its campus suitable for the new center; at oral argument, Peoria agreed it would issue a permit to build on that alternative site.

## Issues

1. Whether RLUIPA could be applied to Chicago’s conduct consistent with Congress’s constitutional powers, including the Commerce Clause.
2. Whether World Outreach plausibly alleged that Chicago imposed a “substantial burden” on religious exercise under RLUIPA (and the materially similar Illinois RFRA), making dismissal on the pleadings improper.
3. Whether the district court improperly treated local permit processes and appeals as a de facto exhaustion requirement for a RLUIPA claim.
4. Whether Peoria’s landmark designation imposed a “substantial burden” under RLUIPA when Trinity could construct the desired facility on an alternative parcel.

## Decision

- The Seventh Circuit rejected Chicago’s effort to defeat the case at the pleadings stage on the ground that RLUIPA exceeded Congress’s enforcement power under the Fourteenth Amendment, because the allegations were sufficient to proceed under RLUIPA’s Commerce Clause hook.
- The court reversed the dismissal of World Outreach’s complaint and remanded, holding the alleged facts plausibly stated a substantial-burden claim and related statutory/constitutional theories warranting factual development.
- The court held that RLUIPA does not impose an administrative-exhaustion prerequisite; availability of local administrative routes did not justify dismissal at the pleading stage.
- The court affirmed summary judgment for Peoria against Trinity, concluding the landmark restriction did not substantially burden religious exercise given the available alternative building site and the City’s willingness to permit construction there.

## Legal Principles

- RLUIPA’s land-use provision bars regulations that impose a substantial burden on religious exercise unless the government satisfies strict scrutiny.
- RLUIPA may be applied where the challenged land-use regulation affects, or removal of the burden would affect, interstate commerce; sufficient commerce-related allegations can defeat a constitutional challenge at the pleading stage.
- A “substantial burden” requires more than ordinary permitting friction, added expense, or inconvenience; it involves significant inhibition of religious exercise or coercive pressure to alter religious conduct.
- RLUIPA does not require exhaustion of local administrative remedies before suit; the substantial-burden inquiry is substantive and often fact-dependent.
- Where a religious institution can carry out the relevant religious land use through a feasible alternative on its property, limits on a preferred location or design generally do not amount to a substantial burden.

## Conclusion

The Seventh Circuit allowed World Outreach to proceed because it plausibly alleged that Chicago’s licensing and zoning actions effectively blocked a core housing ministry and caused concrete losses, while Trinity’s claim failed because the landmark designation left a practical, permitted alternative for building its planned facility, making the restriction insufficiently burdensome under RLUIPA as a matter of law.


World Outreach Conference Ctr. v. City of Chicago, 591 F.3d 531 (7th Cir. 2009)