Since the financial backers of Dartmoor Homes went belly up in 2009, residents of Coventry Creek Estates have been living in a state of limbo.
But with the passage of an amendment at the Sept. 7 Lake Zurich Village Board meeting, progress doesn't seem so far away.
Coventry Creek Estates is located just south of Route 22 on Quentin Road. Thirty-seven properties have already been sold, leaving 27 residential properties with estimated values at $500,000 a piece left to build on in the subdivision.
The remaining three lots are currently flooded and have been deemed unusable.
Problems with the 67-lot subdivision started when sales began to slump in late 2007. Dartmoor Homes was still the developer at the time, and work ceased when Dartmoor's financial backers went bankrupt in 2009.
Work left unfinished consisted of incomplete sidewalks, streets, concrete driverways and sewer work. First American Bank foreclosed on the property and took possession of it in January.
The bank weighed the options of selling the property outright or trying to recoup at least some of the money they had lost on it.
First American Bank Executive Vice President John Olsen said "the choice was a logical one—Lake Zurich is a good community, the schools are good, and it made financial sense to finish what was started rather then to sell it off."
First American chose to see the project through and act as the owner/developer and partnered with Red Seal Development Corp who acts as project manager handling sales and marketing of the property.
Olsen says the bank "chose Red Seal to be the one conduit so residents would have one contact to call with any questions." In addition to providing residents with information on how the project is developing, there is also the task of completing infrastructure and bringing in new buyers to purchase the remaining 27 properties.
Todd Fishbein, Red Seal president, said "we began by working with First American Bank to form strategies and develop a business plan to identify a viable approach to completion (of the project) that made sense both for the bank and for the Village of Lake Zurich."
First American Bank and Red Seal asked the village for an amendment to the previous annexation agreement they had made with Dartmoor Homes in 2004 when the project began and the property was annexed into the village.
There were many issues that needed clarification, and a number of fees that needed negotiating to make the agreement practical for both parties. All three have been working to come to various agreements since the beginning of the year.
The village made its own concessions, in hopes of providing incentives for both the bank and Red Seal to move forward and ultimately complete the dogged project. Among those concessions was relief from the 'Footbridge Fee.'
The footbridge was originally planned to join the adjacent property to the north with Coventry Creek Estates as a secondary development. Since there are currently no plans to develop that property, the footbridge fee became irrelevant. The bank also received some relief from the Village regarding the Park Donation Fee.
Previously, Dartmoor Homes did pay the village $181,200 in 2006, which was half of the agreed amount of $362,400 fee to be paid closer toward completion. Since the project wasn't finished, the Village negotiated with First American Bank and reduced the fee to $100,000 to be paid within 45 days, or when the first building permit is issued-depending on which happens first.
A supplementary issue has to do with lots 7, 8 and 9 in the subdivision. The three lots are located on the south side at the entrance of the subdivision, and all of them are flooded and currently being utilized as a retention pond.
Public Works Director David Heyden said the lots were originally created for temporary flood compensatory storage, and per the previous annexation agreement, the water would be relocated to the parcels north when development there began.
Now that there are no plans to develop that property, there is no place for the water to be moved to. If in the future, developers identify an alternate location to move the water from the three lots and make them buildable, the developers would owe the village $6400 per lot ($19200 total) prior to the issuance of building permits.
First American Bank and Red Seal made compromises as well to demonstrate they are vested in following through on the development. They took immediate action on issues raised by the village by taking on the cost of their own consultants as well as village consultants, after taking write-offs in excess of $5 million. Dartmoor had needed to come up with half a million at the time they bowed out of the project for infrastructure, but improvements were never made.
Fishbein cited these examples as additional evidence of how both his company and First American Bank are willing to take on risk to successfully complete the project. Director of Public Works David Heyden said "the bank and Red Seal agreed to complete a 'punch list' or a list of issues that Village Engineers identified and required such as unfinished concrete driveways, streets, sidewalks and sewer work that remain a cause of frustration for current residents."
Fishbein said all of these improvements will likely cost between $500,000 and $600,000, while the letter of credit from the Village is for $290,000. Fishbein said this is another example of how committed First American Bank is to seeing the project through. In addition, the developer has agreed to abide by the Village's standards for accepting improvements. First American Bank also will retain ownership of lots 7, 8 and 9 for the time being.
First American Bank did ask the village to take ownership of the three properties, but the Village was advised against it by the legal department and chose not to. If there is ever a time in the future where the lots become buildable, the bank, Red Seal and the Village will have to work together to determine how it will be handled in regards to engineering, legal issues and property ownership at that time.
Finally, the Lake Zurich Special Service Area (SSA) will remain intact. The SSA's bring revenue to the village based on a flat fee for each individual plot or property. Whether there is a $500,000 home or a retention pond on any plot of land there, all of them are taxed the same. In this instance, each property is taxed approximately $550 per year.
That means lots 7, 8 and 9 will bring in more than $1,600 in revenue for the village per year even if they are never deemed buildable. This is in part because though they are home to the retention pond they continue to be zoned as residential properties. Heyden said the three properties could be incorporated into the natural resources protection easement covered by the SSA, but that remains to be seen.
A separate issue that came up in the meeting was the short-term goal of the Bank and Red Seal for the three unusable lots. Fishbein said his firm would diligently move toward transferring the deeds of lots 7, 8 and 9 to the homeowner's association, which is currently owned by the bank, but will ultimately be owned by the homeowners when the subdivision is complete.
This type of move would shift the financial burden of upkeep of the retention pond onto homeowners, distributing the cost evenly among each of the remaining 64 lots in the subdivision (subtracting lots 7, 8 and 9).
Village Attorney Ruth Schlossberg said that this type of action is traditionally taken in other subdivisions when it comes to common spaces such as these. In response to concerns raised, Fishbein promised that village input would be strongly considered and no decisions about future moves regarding the three properties would made without strong communication with all concerned parties.
On the progress side, Fishbein said his company is on the verge of signing two contracts for properties in the subdivision, and more are expected. He said that though there are no 'sticks in the air' at the moment, there is a tremendous amount of work being done behind the scenes to plan infrastructure improvements and market the properties.
In addition, the bank is committed to funding additional construction once additional lots are sold.