Knighthead Funding sues Goodman, Hollis over migrant shelter

Developer Scott Goodman and investor A.G. Hollis are facing a lawsuit from their lender for allowing one of their buildings to be used as a migrant shelter.

Lender Knighthead Funding filed an $11.5 million foreclosure lawsuit over a loan issued to the business partners for 344 North Ogden Avenue. The lawsuit alleges they missed $1.2 million in interest payments and did not properly inform the lender of their intent to use the loft office building for “residential purposes.” 

The lawsuit alleges that Goodman and Hollis “embarked on a secret plan to remove commercial tenants from the building and convert it to residential use.”

Goodman and Hollis did not respond to requests for comment. Goodman is the founder of Farpoint Development. Knighthead Funding is an affiliate of New York-based Knighthead Capital Management, led by Tom Wagner.

The lawsuit never mentions the property’s use as a migrant shelter but notes that the foreclosure was triggered by its conversion to “residential use” in August of last year. It also notes that the developers signed a contract without permission from the lender with ReloShare, the shelter operator. 

Republican Texas Gov. Greg Abbott sent thousands of migrants to several cities since 2022 including Chicago, New York and Denver. Mayors in each city rushed to set up temporary shelters at public and private properties with agreements from building owners. 

Selecting sites for migrant shelters has proven a fraught process for the city, as neighborhood groups and building owners protested the use of certain spaces for the purpose. In November, Pebblebrook Hotel Trust CFO Ray Martz said the firm had no idea that the city was contemplating using its downtown hotel as a potential migrant housing facility. The city later backed off the plans.

Goodman is part of a public-private partnership with the city to develop the Bronzeville lakefront mega site for a variety of uses including life sciences and medical buildings . He was recently the subject of a separate lawsuit regarding the partnership. Nearby lakefront land owners alleged the city squashed a potential $30 million development in hopes of securing the land for the city’s project instead. 

A federal judge ruled in favor of the city and Goodman.

Editor’s note: this article has been updated to correct A.G. Hollis’ professional title.

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