Panoptic Group sells unfinished building to nonprofit health center, refuses to complete project: lawsuit

Panoptic Group sold an unfinished building to a non-profit health center — only to stop work on the project once the building sold, according to a lawsuit.

The Howard Brown Health Center in 2017 was looking to expand in Lakeview when it turned to a neighboring parcel, 1023 West Irving Park Road, that was being developed by Panoptic Group.

Howard Brown entered into a purchase-and-sale agreement with Panoptic Group’s founder, Bogdan Popovych, in June 2017, when the four-story building was still under construction. The health center agreed to pay Popovych $3.2 million for the building, and the agreement stipulated Popovych would complete the exterior work while Howard Brown would handle the needed interior work, according to a recently filed lawsuit.

But Popovych never finished the building, the lawsuit claims.

Popovych did not complete the needed exterior work by the closing date in late June 2017, according to the lawsuit. The deal still closed, with the parties signing an “owner’s construction obligation” agreement that laid out a checklist of tasks Popovych was to complete within about a month.

That deadline came and went. In August 2017, Popovych told Howard Brown executives that other projects would cause his work at 1023 West Irving Park to “slip,” the lawsuit claims.

Around that time, Howard Brown hired an engineering firm that determined some of the completed work on the building was faulty, including problems with the roof and masonry walls, according to the lawsuit. Executives with the health center also learned work on the building was inactive for six months prior to the closing, and that Panoptic didn’t have money to complete the project.

Howard Brown offered to take over construction of the exterior of the building if Popovych reimbursed it for the work, an offer Popovych refused, according to the lawsuit.

After further efforts to get Popovych to complete the work, Howard Brown sent the developer a notice of default. In response, Popovych countered with an offer to buy back the building for $2.9 million, the lawsuit alleges.

In May 2018, Howard Brown accepted Popovych’s offer to buy back the building. But when it came time to close, lawyers for Popovych said he didn’t have the money to complete the purchase because “the high end condo market has slowed,” lawyers for Popovych are quoted as saying in the suit.

On Dec. 7, Howard Brown filed suit against Popovych, asking a judge to award the health center $1.9 million, plus attorney’s fees.

Popovych’s Panoptic Group builds energy-efficient multifamily buildings on Chicago’s North Side. The company emerged with a new focus on green housing after the recession, hoping homeowners would be enticed by utility savings of as much as $2,500 a year, Popovych told Crain’s in 2015. (Popovych told Howard Brown the development in question would be LEED certified, according to the lawsuit).

Popovych did not immediately respond to a request for comment.

Howard Brown Health was founded in 1974 and provides health and social services to Chicago’s LGBT community.