Back in July of this year, I received an email and a phone call from a reader of 60646 Blog who owns a single family residence in Sauganash. This gentleman was contemplating selling his house to purchase a condo at Sauganash Place, the newly constructed 61-unit condo building on the northwest corner of Peterson and Cicero Avenues, with Whole Foods as the tenant on the ground floor commercial space. The reader was asking about my professional opinion about this development. Although I had not seen this product from the inside, I remembered what one of my immediate neighbors in Edgebrook whose son was a member of one of the subcontractor crews, had told me about this project: Shoddy workmanship by other subcontractors to the point where his son was wondering in earnest how this building had ever passed the city and occupancy inspection. And I shared this tidbit of info, albeit hearsay, with my blog reader.

How bad it really was, I had no idea. A couple of days after our email and phone exchange, Lakeside Bank, the construction lender, foreclosed on Sauganash Place. The builder, Brooke-Ridge Development, out of Dundee, IL, had defaulted on payments of a nearly $14 Million construction loan.

Fast-forward 5 months. In today’s edition of Reporter & Journal Nadig Newspapers (Vol. 43, Number 48), Brian Nadig reports on the front page about the plight of the condo owners at Sauganash Place who purchased their units in Phase 1, and are now struggling with building defects that are costing them potentially hundreds of thousands of dollars to repair, because many of the subcontractors are not honoring their 1-year warranties. Typically, a newly formed condominium homeowners association does not possess the wherewithal to fund expensive repairs to common areas because their financial reserves are not built up yet. Add to that a developer who hasn’t paid his share of monthly assessments for unsold units
(about 6 at the time of this writing, the control of which has been taken over by Lakeside Bank as well), and you have an association that is starting out from a deep hole, financially speaking. Besides hefty special assessments, they probably have no other choice but to apply for a bank loan to fund the necessary repairs in the building. But this is just the beginning of the nightmares Sauganash Place residents have to endure: Costly and time-consuming lawsuits against the developer are almost certainly being contemplated. Lakeside Bank will in all likelihood have to heavily discount the asking prices of the remaining unsold units which in turn will devalue the units that are currently owned by other owners. Couple that with the current buyers market that we’re in and no one who currently lives in that building will be moving any time soon.

I know, this is a depressing outlook, and I truly feel for the residents at Sauganash Place. This wasn’t supposed to happen. Especially after the big fanfare and the bold and jovial announcements that were made, before one piece of earth-moving equipment had even broken ground on this project. One way or the other, the broken pieces have to be picked up now. Ald. Laurino could certainly be of big help here, by offering all the resources the 39th Ward can offer. Lakeside Bank, as the owner of the unsold units, and the parcel that was meant to be the home of Phase 2, should also dig deep to see how they can offer the unit owners in Phase 1 their assistance, although they are the ones who are holding the biggest bag with almost $14 Million in bad loans.

This is an ugly problem. Feel free to chime in (heck, even vent if you must) in our comments section, if you’re a Sauganash Place resident, Sauganash neighbor, or someone who had a similar bad experience with a builder somewhere else. We’d like to read about your take on this situation.

Image courtesy: Google StreetView

Update 12/20/07: Laurino aims to help solve some condo issues (disappeared behind a pay-wall, unfortunately)

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