A Fulton Market property owner is taking Chicago development firm LG Group to court after dropping its $24 million deal and stalling out on a redevelopment plan.
The Respiratory Health Association entered a sale agreement in 2022 for its office building at 1440 West Washington Boulevard, which LG Group signed on to buy for $24 million, Cook County court records show.
LG Group, headed by CEO Brian Goldberg, agreed to buy the property with plans to tear down the existing office building and redevelop the site, but the sale was contingent on the firm’s ability to rezone the parcel.
It’s unclear from the lawsuit what kind of project LG planned to build, had it gained the zoning approval contemplated by the deal. The current zoning is a commercial district designation known as C2-3, and the sale agreement required a change to the downtown mixed use designation of DX–7, which allows residential and office high-rise construction, in order to close the deal. The purchase also required the property be granted a bonus floor area ratio of 2.5, court documents show.
In the event that LG Group didn’t secure the required zoning change for the property, the sale agreement stated the developer would make the agreed-upon $500,000 in earnest money payments to the Respiratory Health Association, the suit, filed late last month, claims.
The earnest money would “recover some of [The Respiratory Associations] losses in the event that LG Group tied up the property for a period of time but did not go through with the purchase,” the lawsuit said.
The association also alleges LG Group did not pursue the necessary zoning change “in good faith,” and canceled an August 2023 community meeting meant to move the zoning process along. It added that Goldberg, the LG head, blamed the stalled progress on high interest rates and construction costs.
“The agreement contained no contingencies regarding the purchaser’s ability to find investors to participate in the development after the closing,” the lawsuit states.
Representatives of LG Group and The Respiratory Association did not respond to requests for comment.
LG Group paid the first half of the earnest money, which is being held in escrow, and still owes the association $250,000 for failing to follow through with the zoning request and sale, according to the lawsuit.
The agreement also states that $50,000 of the earnest money would be deemed non-refundable after a certain date. When the Respiratory Health Association attempted to withdraw $50,000 from the escrow account after that date, LG Group blocked it from doing so, the lawsuit states.
The proposed redevelopment isn’t LG Group’s only proposal in the area. The firm also plans to build a 25-story town and a 38-story tower at 170 North May Street and 175 North Racine Avenue. The properties were rezoned in 2021 and will allow for 667 residential units after the project was updated from a previous plan in order to add more units.
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