Bank foreclosing on school suing River Forest

Lender filed suit two weeks after Keystone Montessori acted against village

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By Nona Tepper

A nonprofit private school that is suing the village of River Forest did so because the bank was planning to foreclose on the school's North Avenue property, said John Mauck, attorney at the Chicago-based Mauck & Baker, who is representing Keystone Montessori School. 

The school originally filed its lawsuit on March 6 in Cook County Circuit Court. Two weeks later, Busey Bank filed to foreclosure on the school's more than $2 million mortgage, according to records from the Cook County Recorder of Deeds. 

"They filed for foreclosure and that's just the beginning of the process with the bank," Mauck said. 

The lawsuit and foreclosure are "connected in that the main default on the mortgage is they haven't paid the real estate taxes, because they can't afford them," said Mauck. "If we can get property-tax exempt, the school will be solvent and able to pay its mortgage and other obligations."

The school pays about $100,000 annually in real estate taxes, and has not paid their 2017 taxes yet, Mauck said. He said the school had been relying on private donors to help pay the taxes, but this past year donors stopped giving. 

Keystone signed an agreement with the village of River Forest in 1998 promising to pay property taxes in exchange for allowing the school to operate at 7415 North Ave., which is zoned for commercial use. 

In its lawsuit, Keystone argues that it is the only private school in the village to pay real estate taxes, and that, as a nonprofit, it should be exempt. The village has countered that the school signed away its tax rights, and that their agreement stands. 

The case has been transferred to federal court. Mauck said he hopes it will be decided in the next 60 days. 

Court records show Mauck met with village officials in April about settling the suit. He said that during the meeting village officials asked him to drop the complaint, telling him they would help Keystone find another location and attract a larger development at 7415 W. North Ave. The village is working to create a tax increment financing district along North Avenue. The village declined to comment. 

"I think the foreclosure has a good chance of going away once we get a ruling that we don't have to pay taxes, or the municipality decides to forego this unfair contract," Mauck said. "The school's financial statement would actually be in the black if they didn't have to pay the real estate taxes." 

Keystone seeks $1.1 million in reimbursement for property taxes they paid over two decades, an end to its agreement with the village and reimbursement for attorneys' fees. 

"The parents of the kids pay real estate taxes to River Forest and then they help everybody's school district. Then they pay tuition to put their kids in this private school and the private school is then unfairly paying taxes," Mauck said. "It's a highly unfair system and its puzzling why the River Forest trustees would pursue a policy that's probably going to end up costing the taxpayers even more if they put this school out of business."

CONTACT: ntepper@wjinc.com 

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