Marty Paris is dealing with another headache after experiencing nearly everything that could go wrong with his firm’s River Forest condo development.
It has been seven years since the suburb west of Chicago approved Sedgwick Development’s $20-plus-million project, which was meant to bring 22 condos across four stories and 14,000 square feet of commercial space to 7601 Lake Street.
Paris’s Sedgwick was expecting to capitalize on endless demand from empty-nesters looking to downsize outside the city, according to Cory Robertson, the developer’s broker with Jameson Sotheby’s. To some measures, the company has. Sixteen units were pre-sold by the time the firm held its groundbreaking ceremony last year.
But Sedgwick’s lender, the Wintrust-affiliated Beverly Bank & Trust, isn’t thrilled with how things are shaping up. Through a lawsuit filed late last month in Cook County court, it is looking to claw back $4.2 million from the $20 million line of credit it issued in 2022.
The dispute emerged even though nearly all of the units have been pre-sold, and re-sold again at higher prices after many initial buyers backed out due to the delays, said Robertson. The units initially ranged in price from $699,900 to $1.45 million.
The lawsuit, however, is just the latest ailment Paris is struggling with on the project.
The village government has issued about $30,000 in local code violations as the construction site has been unkempt, with issues like deteriorated fencing and dormant construction vehicles sitting on the site for months, which has drawn flack from residents.
Like Sedgwick’s lenders, owners of downtown River Forest housing nearby the site have also complained about the lack of progress. Vertical construction has not begun. And the project’s sluggish pace has become the subject of satirical humor columns in the Wednesday Journal, a local newspaper. The design has already been scaled back from an earlier version that would have brought 30 units across five floors.
River Forest set a completion deadline of August 2023, a target that Sedgwick is sure to miss. Although the village may be willing to extend the deadline again if a portion of the code violation charges are paid; Sedgwick contends the amount is excessive, a person familiar with the village’s plans said. Sedgwick also didn’t return requests for comment, while attorneys for Beverly declined to comment.
Sedgwick has already been granted multiple extensions by the village.
The lender, on the other hand, has cited several provisions in its loan agreement with Sedgwick affiliates that were violated in its lawsuit, and the contract required the borrower to stay in compliance with local regulations and stick to a tighter construction timeline.
Back in 2019, the developer got an extension after an eviction fight with the owners of a cigar shop that had been a commercial tenant of a building that had to be demolished for the project. Then the pandemic delayed the project further, as did the labor negotiations of concrete workers as the developer was beginning work on the site, according to Robertson. Plus, Sedgwick had to perform environmental remediation due to the possibility that a former dry cleaning tenant could have left residual chemical toxins on the property.
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But the project remains viable due to the extremely limited inventory of comparable units, and equally limited number slated for the market. Sedgwick’s project will offer larger two-, three- and four-bedroom layouts, with direct elevator access.
“The amount of unmet market demand in the suburbs for top-of-the-line condos is bottomless,” Robertson said. “You have more 50-, 60- and 70-something sellers with zero product to buy in their town. The funny thing is that literally every time we hit some sort of delay, we had buyers that just couldn’t wait anymore and needed to back out and their unit would resell for $100,000 more.”