ALGONQUIN – The new owner of a prominent apartment building in downtown Algonquin is hoping to keep the building as apartments instead of condos – a provision set by the Algonquin Village Board five years ago.
Instead of foreclosing on the 63-unit residential building at Routes 31 and 62, the lender that financed the completion of the Riverside Plaza project accepted ownership, Community Development Director Russ Farnum said.
The new owner, UCF Riverside Fee Owner LLC, has hired new management, evicted problematic tenants, re-rented the units and is marketing the street-level retail spaces. Occupancy of the apartments is at 98 percent, said Kellie DeVilbiss, regional vice president of Pinnacle Property Management Services.
The village selected Bruce Hawkins, former owner of Aspen Homebuilders, to construct 54 luxury condos in 2006, according to past Northwest Herald reports. Aspen Homebuilders went bankrupt two years later, effectively stopping construction after the bank cut off funding.
The building sat partially built and wrapped in Tyvek for two to three years, earning the nickname “Tyvek Tower.”
John Bruegelmans of Riverside Plaza Developers LLC took over the project in 2011, and the village approved his idea to convert the condos into apartments in 2012. Residents began moving in in 2015. However, Bruegelmans filed for bankruptcy in 2016.
The new ownership is looking to amend the planned unit development agreement made in 2012 to eliminate the provision that rental units be converted to condominiums within a specific time frame and that leases would not extend beyond August 2018.
The village hoped the housing market would be in better shape by 2018 and the apartments could be converted to condos by then, Farnum said.
Owners also are looking to eliminate the clause calling for an owners’ association be formed and restrictive covenants be adopted for the building.
“Any type of sophisticated buyer is not going to want these provisions under their head,” Village Manager Tim Schloneger said.
The terms are problematic for potential buyers of the building who cannot get underwriting approval on a commercial mortgage with the requirement that the building will be converted to condos at a certain date that would partially change through the 20-year commercial mortgage, Farnum said.
“The quality of the building is good and I don’t anticipate with the rental this is going to change, so I see this as a win-win,” Village President John Schmitt said. “It would be nice to have condos, but I’d rather have it rented at this rate and have quality ownership than have an empty building for sale.”
Trustee Debby Sosine said she still would rather have condos and worried that the owners want the village to change a lot of agreements made so they can sell the building to someone else.
“[The owners] are doing a superbly better job than the person that previously ran it, which wouldn’t take much because he didn’t do a lot,” Sosine said. “It’s good to know it’s going well, but I’m still very leery on extending the time frame for the condition to go to condos.
Farnum said village staff feels the request is reasonable because the housing market will really dictate when the property values justify converting to condos. He said while there is a demand for condos in Chicago or the West Loop, that demand has not reached the suburbs yet.
Additionally, the plaza has struggled to bring in retailers to the 9,000-square-feet of empty space on the first floor, Farnum said. DeVilbiss said they are looking for both local and national clients and have hired a marketing firm to help them find a tenant.
The biggest problem, Farnum said, is the lack of designated parking for retail. Customers would not be able to park in the secure parking lot for tenants and owners have failed to secure another area for parking.
A public hearing will be held at 7:30 p.m. Dec. 11 at the Planning and Zoning Commission meeting, 2200 Harnish Drive, to discuss the changes to the planned unit development agreement.
The item will then be returned for Village Board vote in the future.
“This was a very complex PUD in order to uphold the vision and intent the village had for this cornerstone property while still providing flexibility to the property owner,” Farnum said. “The marketplace has not evolved enough to the point where it’s practical to convert to condos.”