South Side projects at risk
REAL ESTATE | Two developments hang on whether feds take over FBOP Corp.
A possible federal takeover of Oak Park-based FBOP Corp., a bank holding company, raises doubts about the future of two South Side development projects.
FBOP, controlled by billionaire Michael Kelly, is under orders from federal regulators to raise capital to bolster the eight-bank holding company. The Wall Street Journal said that U.S. Bancorp has been examining FBOP's books for a possible sale.
(Brian Jackson/Sun-Times)
David Roeder reports on real estate at 6:22 p.m. every Thursday on Newsradio 780 WBBM. The reports are repeated at 10:22 p.m. Thursday and 7:22 a.m. Sunday.
One of FBOP's operations is Chicago-based Park National Bank, which has taken an active role in community development through a nonprofit division, Park Bank Initiatives. With St. Bernard Hospital, the division has invested in new homes near 63rd and Yale, completing more than half of a projected 120 houses. It's also taken the first steps on a thousand-mile journey to build 1,200 homes, a retail center and a hotel on the old Ryerson Steel property near 103rd Street and the Bishop Ford Freeway.
David Doig, president of Park Bank Initiatives, said he has no idea how a change of control at the bank might affect the developments. If the Federal Deposit Insurance Corp. calls the shots, Kelly will have no more South Side dreams to bank on.
BLOCKED 37: Things are going from bad to worse in the Block 37 foreclosure saga. Developer Joseph Freed and Associates LLC essentially has accused the lender, Bank of America Corp., of attempted theft in trying take over a project a month from opening. The bank has said it's merely protecting its rights. But a Freed court filing contained another bombshell: word that Muvico Entertainment LLC backed out of a deal to open a seven-screen theater on the site at 108 N. State. Freed said it renegotiated with Muvico but couldn't get the bank to approve new terms.
Mayor Daley, concerned about the $65 million in subsidies riding on the project, has asked for both sides to settle. That is doubtful and Freed's continued involvement in the project looks iffy at best.
REESE'S PIECES: Here's another situation that needs a meeting of the minds. The Daley administration has said it will go ahead with the wrecking of all but two of 29 building on the old Michael Reese Hospital site. One of the buildings to be saved is credited to modernist architect Walter Gropius.
Preservationists say the city's plan ignores thoughtful proposals to reuse the buildings that several groups have presented. Also, and this is big, they note that the destruction would prevent a future developer from using historic tax credits to cover 20 percent of redevelopment costs. The property has a pending listing on the National Register of Historic Places.
Daley needs to call off the bulldozers. His Community Development Department said a "mixed-use community" is under way at the site. But after the snub for the city's Olympics bid, no one really knows what's going there.
CLOUT AUCTION: State Treasurer Alexi Giannoulias will put up for auction the Springfield hotel that he called "a monument to the greed and cronyism of state government for far too long." Giannoulias has hired Sheldon Good & Co. to conduct the Dec. 14 auction at the 316-room President Abraham Lincoln Hotel and Conference Center. It operated for years as the Springfield Renaissance.
The place has cost taxpayers nearly $30 million since it was built in 1982. The former owners, including political fundraiser William Cellini, got a state-backed mortgage and didn't make the payments. One loan restructuring allowed the owners to skip the payments if the hotel lost money. An audit commissioned by the treasurer's office showed the ex-owners siphoned $2 million from the hotel for personal expenses rather than book a profit. The state took over the hotel in March 2008.
Giannoulias said that a top bid will be accepted only if it hits an unspecified minimum amount. The winner also has to pass a background check, something the U.S. Postal Service might have considered in its deliberations for the old Chicago post office. He noted that since the state took control of the hotel, it has made a $1.3 million profit, and the treasurer's office has recovered a $5.65 million surety bond on the property.
DOING THE DEALS: Chicago's Heitman LLC said it closed the fourth in a series of European property investment funds after raising $750 million. . . . The auction firm Tranzon LLC has expanded into Chicago, a market it calls "underserved," by signing up auction veteran Edward Kusztelak to run an office in Deerfield. It'll be called Tranzon-Edwards Inc. Kusztelak is a Sheldon Good alumnus. . . . The Missner Group is supervising construction of an auto parts recycling facility on nearly nine acres at 1300 N. Kostner. The Again Auto Parts operation is due to open next spring. . . . Reed Construction handled a 20,000-square-foot office build-out for Children's Home & Aid at 100 N. Western. ... Paine/Wetzel Oncor International brokered a lease of 45,000 square feet for Crownhill Packaging Ltd. at 1696 S. Lakeside Drive, Waukegan.