The city will usually only knock a building down as a last resort, that said they are within their rights to do pretty much whatever they want.
Demo court is the way the city forces a building to comply with code - this usually means full plans and permits. You will be dealing with a Conservation Inspector. These inspectors do not have the normal boundaries tied to typical building permits and can make your life hard (new lists every time they show up, etc.) Best way to take them out of the equation is full plans and permits - that allows other building department inspectors to sign off on the work. Once the conservation inspector assigned to the case sees that other departments have OK'd work per plans and permits that have been issued by the building department, things go smoothly.
You will need an attorney that is extremely familiar with the Daley Center demo court inner workings. If they personally know the city's counsel even better.
Unless you are a seasoned investor there are easier ways to buy real estate and make money in this market. Let me know if I can help further, I have handled quite a few projects like this for myself and investors.
RpV Realty and Development