A River Forest developer who has an agreement with the village to cultivate a block on Lake Street at Lathrop Avenue is one of a three-partner team being sued for their personal assets by a bank last month for failing to pay off an $11 million construction loan.
Timothy Hague, Seymour “Sy” Taxman, and Timothy Anderson built Forest Park’s 193-unit Residences at The Grove in 2007. They signed personal guarantees backing construction loans for the project just as the real estate market tanked.
Hague, president of Keystone Ventures LLC, had submitted ideas to demolish much of the 7600 block of Lake Street and build a structure with retail on the bottom floor and condos above. He’s been trying to buy the parcels on the site but has had disagreements with the owner of a dry-cleaning business there who is involved in a contamination lawsuit. A phone call to Hague for comment was not returned.
Village President John Rigas and Village Administrator Eric Palm said last week they hadn’t heard about the lawsuit. Rigas said nothing formal had been submitted to the village regarding the site, and the next step for the development would be to put plans together to submit to the Development Review Board.
Both Rigas and Palm did not want to speculate on how the lawsuit would affect Hague’s potential plans.
The village has $1.9 million from a closed TIF district that they can use toward the Lake and Lathrop development until the end of 2013. At that time, the money will be sent back to the county and distributed among local taxing bodies.
Taxman is head of Skokie’s Taxman Corp., a development firm with a history of projects in River Forest, Oak Park and Forest Park. Anderson is CEO of Focus Development Inc., based in Northfield, which built the complex and still owns 25 percent of the units.
Glenn Taxman, lawyer at Much Shelist in Chicago, said Sy Taxman would have no comment on the lawsuit. Timothy Anderson was not available and did not return an email seeking comment.
The partnership originally borrowed $25 million in 2005 from the now-defunct Midwest Bank, according to a complaint filed Oct. 24 in federal court. Midwest failed, and the assets were acquired by FirstMerit bank in Akron, Ohio, which is why the suit was filed in U.S. District Court in Chicago.
According to court documents, the loan was renegotiated seven times, with the bank writing down the loan to a final $11 million, including interest and attorneys’ fees. A final deadline of Oct. 5 was set for a partial payment. According to documents, the three partners were to come up with a “guarantors paydown” of $500,000. They were then to refinance the amount of $7,500,000.
The three were also required to come up with $1,800,000 to be applied to the principal balance of the loan in the form of 10-year promissory notes. Taxman was to pay $659,963.47 and Hague’s share was $144,870.03. Anderson was asked for a promissory note of $804,833.50. The group was also required to put aside an interest reserve of $76,218.22.
But the deadline came and went, and the bank claimed that the partners’ failure to pay “constitutes an event of default.”
The Grove covers 6.3 acres at 7757 Van Buren St. near the Forest Park Blue Line. At the time it was built, condos were priced from $181,990 to $258,990 for a one-bedroom and between $288,990 and $442,990 for two- and three-bedroom units. Between 2007 and 2011, six condo units and one townhouse were foreclosed, said Tim Davis, of M&M Property Management.
Focus Development still owns 39 condominiums in the Grove, as well as four townhomes. Timothy Anderson told Crain’s Chicago Business that Focus-owned units are rentals because the company believed they’d hold their value after the mortgage crash.
But if Focus is forced to liquidate the 39 units at The Grove, local condo owners fear they’ll take another hit on property values.
“That would be terrible for us,” said condo owner Leah Shapiro. “Because of the market, a lot of people are underwater and have been selling their units for less than they’re worth,” she said.
As an owner, Shapiro said the tenants in the rental units were good neighbors. “Right now, Focus is doing the right thing by us,” she said. “And our management company, M&M is great, and that means a lot.” The president of the Grove condominium board declined to comment.