Block 37's Problems Emerge
Bank loses confidence
By STEVE RHODES
Updated 12:21 PM CST, Tue, Nov 3, 2009
Now the story behind the latest sad incident at Block 37 is starting to emerge.
In court filings cited by Crain's, Bank of America states that it has lost confidence in developer Joseph Freed & Associates and doubts that Freed can bring the project to completion.
The filings shed light on the bank's surprising (at the time) decision to seek foreclosure just weeks before some of its retail shops were set to open.
Freed said at the time that it would be "near-impossible to re-start" the project should it be shut down.
Now the bank has told a court considering putting the project into receivership that it will cost $42.6 million more than Freed's loan to finish the development. Total cost would be $341 million.
The bank is essentially giving up on Freed and wants to bring in a new developer.
Freed, however, is fighting back, saying the bank has no right to foreclose, and that it "improperly" blocked a revised lease with Muvico, a critical tenant which had planned an upscale, seven-screen movie theater for the complex. Muvico had walked away from the deal in June.
Mayor Daley is trying to broker a settlement, but as Sun-Times business columnist David Roeder wrote last week: "That is doubtful and Freed's continued involvement in the project looks iffy at best."
Steve Rhodes is the proprietor of The Beachwood Reporter,
Copyright NBC Local Media
First Published: Nov 2, 2009 7:55 AM CST
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