In January 2006 it seemed like the real estate boom would never end. Developers were building new condos at a furious pace and banks were lending money to practically any project that came through their doors. It was in this environment that Centrum Properties purchased the LaSalle Bank building at 3201 N. Ashland Ave. for $18.7 million and announced their plans for a $100 million mixed-used development, the Lakeview Collection, with 130 new condos and 90,000 square feet of commercial space that would include a David Barton Gym and a Bank of America branch.
Although it took some negotiation with neighborhood groups before the proposed development was approved by the City Council in March 2007, the project was hailed as a new cornerstone to one of Lakeview’s most visible and underdeveloped corners.
Today the existing space is not quite vacant, but the original LaSalle Bank branch (now Bank of America) has moved out and tenant Chicago Title & Trust is moving out soon. The project was first scaled back from condos to apartments, then threatened with foreclosure by Centrum’s chief lender, Wachovia Bank. Recent court records show it has been slapped with at least one mechanic’s lien.
The property’s debt, the depressed real estate market and the legally-binding promises Centrum made as part of its development plans have created a Gordian knot, making it difficult for Centrum to move forward with the property.
“Any time you have a cloud on a title like that it’ll be really hard to get a loan because the property is encumbered,” said Hope Whitfield, a land use attorney at Stahl Cowen. “This is a existing loan that’s in default. Nobody’s going lend money to this property.”
“You’d have to be out of your mind to buy a piece of property that’s encumbered like this,” said David Abrahamson, pastor of neighboring St. Luke’s Evangelical Lutheran Church.
In February 2010, when the property was first threatened with foreclosure, Centrum Properties CEO John McLinden told Crain’s Chicago Business that he thought the property was still “finance-able”. But local leaders have not heard from Centrum since then.
“We met with John McLinden from Centrum a year ago, who had some revisions taking the residential component out, doing just two story retail with parking, maybe larger stores, a bank, CVS, gym. The renderings looked very suburban,” said 44th Ward Deputy Alderman, Bennett Lawson.
“My understanding is there’s no money, no plan, no financing to do anything.”
Centrum Properties did not respond to Roscoe View Journal’s request for comment.
The property’s key location, while a great selling point, also puts a great deal of pressure on the community to develop it soon. An empty building at the corner also puts a crimp into the recently completed Lakeview Area Master Plan, which calls for significant changes to the Lincoln-Ashland-Belmont intersection.
“It clearly looks like a big vacant piece of property and as the days roll on, it looks more and more abandoned,” said Heather Way, Executive Director of the Lakeview Chamber of Commerce. “That’s a shame, because it’s going to be like that for a long time.”
Because of the project’s size and complexity, Centrum submitted the plans to the city as a planned development (PD), which allows a developer to consolidate a series of zoning and licensing requests into a single document. (A copy of the approved PD is at the end of this article)
As part of Centrum’s negotiations with Ald. Tom Tunney (44th), neighbor groups and next-door neighbor, St. Luke’s Church, Centrum agreed to add a number of covenants to the PD, which includes creating a new playground on Melrose Street, providing 60 parking spaces for St. Luke’s and helping to pay the cost of moving utilities under Belmont Avenue as part of St. Luke’s senior housing development, Rennaissance St. Luke’s, at 1501 W. Belmont Ave.
St. Luke’s Pastor Abrahamson says those covenants have yet to be honored.
“We have attorneys watching [the development] to protect our rights. Deal with the church and make some accommodation,” he says.
“Centrum would be well advised to just cut their losses on their property and give it to the church.” Abrahamson said with a laugh. “I am serious about this. People laugh, but they’re going to run into very few alternatives.”
It would seem that St. Luke’s could find the resources to pull off such a move. Besides the church, which is currently conducting a $5 million capital campaign for building renovations, St. Luke’s operates two senior housing facilities, an elementary school and a northwest side cemetery.
Abrahamson, who sits on the board of the Lake View YMCA, would like to move the Y to the Centrum property. His vision includes a health care center and a series of other social service programs.
“If they want to do something commercial with it, the church isn’t going to be too fond of that,” said Abrahamson. “And they’ll be forever in a fight with the community about it.”
“The Pastor has great vision for that entire parcel,” said Lakeview Chamber’s Heather Way. “There’s been a long ongoing conversation about redoing the Lakeview YMCA there and some other multipurpose development.”
But Way is not optimistic for things going Abrahamson’s direction. “It’ll probably sit there five or 10 more years with the way things move around here. It’s already been three.”
“We’re going to end up with a Walmart there. That’s my greatest fear. Something like that.”
“That [hasn’t] come across our radar at all. From Walmart or the developer,” said Deputy Ald. Lawson (44th) “From a commercial perspective, it would be less attractive than in East Lakeview. Nobody has talked to us about it at all.”