Block 37 faces legal battle

October 26, 2009 (CHICAGO) Lenders have filed a foreclosure lawsuit against the property and want a receiver appointed for the project.

Block 37 is quite often defined as being star-crossed. For such a valuable piece of property, it has been a money-eater and a dream buster.

Less than a month from the hoped-for opening of some of Block 37's new merchants, the bank says the developer is so far behind in his payments, the court should name a receiver to take over.

The developer is contesting that. A spokesperson for developer Freed and Associates says the developer is not behind in his payments and that the foreclosure action is based on technical issues in the loan which it strongly disputes.

The judge says she needs a little time, which is something Block 37 has had plenty of.

The old buildings that once stood there came down 20 years ago. There was much excitement. There were big dreams -- all unrealized. Block 37 would become a part-time skating rink and art gallery. Then there were more big dreams: a huge hotel was coming, restaurants and condos.

"This project is expected to generate over $400 million in direct taxes over the next twenty years," Mayor Daley said in 2000.

Four years ago, the CTA enthusiastically embarked on a transit super-station in the bowels of Block 37.

"The thing that excites us, of course, is the new transit station that will be part of this project, Block 37" said former CTA Chairman Frank Kreusi in 2005.

It didn't happen. Over $200 million was spent on the project that's now been mothballed.

Above ground, however, the new Block 37 has been slowly moving to completion. Some tenants have moved out. Those remaining are hoping to open beginning around the middle of next month.

However, the project's chief lender, Bank of America, has moved to foreclose on the retail and transit portion of Block 37. It says cost overruns keep rising, the developer owes nearly $130 million on a construction loan and it wants a court-appointed receiver to take over.

Were that to happen, it may not change the planned opening of businesses there, but it is Block 37.

"The city's main objective right now is to see the pedway opened in November as was scheduled, and see the project leased up and made a success as always planned," said Steve Holler Chief Asst. Corp. Counsel.

Apart from dreams deferred, the city has committed roughly 65 million tax dollars to Block 37 and building a transit superstation that few have been able to even see, let alone use.

The pedway entrance still wears plywood, and the hope is even if the legal entanglements remain unsettled, at least people will be able to walk where they once did, and maybe even do some shopping.

All the parties go back before the judge a week from Monday.

The developer says the retail project is 70 percent leased, and that the bank's demand for a receiver is without merit.

In the meantime, construction crews are still on the job, and the first of the retail openings are still on for next month.

Copyright © 2023 WLS-TV. All Rights Reserved.