One Winnetka Development Agreement Repealed In Unanimous Vote

WINNETKA, IL — The Winnetka Village Council voted unanimously Tuesday to terminate the One Winnetka development agreement after the developer defaulted on the deal. The decision rescinds zoning approval for the $100 million mixed-use development planned for the southeast corner of Elm Street and Lincoln Avenue. Trustees were not swayed by warnings from the representatives of the developer and some of its lenders of lengthy litigation if the village

The repealed development agreement required that the developer provide a financial guarantee from a third party by Nov. 18, 2018, assuring that the project would be completed. That never happened. It also required the developer to close on the Conney's Pharmacy property by end of June. That didn't happen either, although representatives of the developer at the Aug. 6 village council said the building at 736 Elm St. was under contract and could be expected to close within several months.

Last month, the village filed a lawsuit in Cook County Circuit Court asking a judge to order the owners of the vacant properties, which the developer had hoped to demolish, to correct a series of code violations that left the site in violation the state's unsafe property law. Village Attorney Peter Friedman said the property owner had made some progress in bringing the vacant properties into compliance with code, although there were still ongoing concerns about trespassing, mold and water penetration.

Developer David Trandel said he was not as focused on acquiring a financial guarantee as he was on securing a deal to buy out Conney's ownership, who he said "made a massive change to our deal mid-stream" that meant the subdivision of the property, which is required by the development agreement, could not take place until after a new space for the pharmacy was complete.

"We're not bullies. I'm a small business. I understand [Conney's owner] Marc [Jacobs] has got to look out for his best interests. Was I happy that it took 9 months? No. Did I verbally abuse or threaten him? No. He didn't sign it on time," Trandel told trustees on Aug. 6, asking the village to "let bygones be bygones."

In a July 29 letter to the village's attorney, Trandel said he planned to apologize to the community for the condition of the buildings and the delay in starting the project. He did not do so.

"I mean, yeah, it's a nuisance. It's not sightly. We're not happy about it. I didn't grow up to become a slumlord in Winnetka. It's not my goal," Trandel said. "There are certain things that are out of our control."

Trandel, the manager of the Delaware-based entities that control the site and CEO of the private real estate investment companies Springbank Capital Advisers and Stonestreet Partners, said he did not believe Winnetka was a "knee-jerk" type of town. He said he has $30 million at risk in the project.

"To take seven years and toss it out the window because we can't bully a pharmacist into selling a property at the time we want them to — I don't think that was the intention of the document," he said before the vote.

Property records show several liens against the developer involving hundreds of thousands of dollars in unpaid bills, including one alleging that architect Lucien Lagrange Studios had not been paid nearly $150,000 it was owed. There are also unpaid taxes on the properties.

Sean Spellman, chief development officer at CA Ventures, said his firm had agreed to be the project's financial backer. He said the company owns and manages 135 properties worth $10 billion, including student, senior and luxury housing.

"Know that we're committed to the development." Spellman said. "We have an entire division of our company who does developments like this, really phenomenally well-located suburban, urban markets, that really redefine downtowns. We've done it all over the country."

Attorney Jason DeJonker, who represents lender Romspen Investment, said his client had already lent the developer more than $11.5 million and was ready to put in another $2.6 million. DeJonker said he hoped to avoid a lengthy legal process.

"I'm not sure that benefits anyone in this particular room today," DeJonker said, asking trustees to give the development a longer leash to allow it to come to fruition.

"I can understand when a group like this has been dealing with someone that there's been ebbs and flows in the relationship, I am hopeful that — with this group being here supporting Mr. Trandel — that you realize that it's not just Mr. Trandel that's trying to get this done, so perhaps you'll put a little more faith in us."

Glenn Udell, an attorney for the developer, told trustees that getting the property developed was in everyone's best interest.

"It's your duty to think about what will happen, what are the consequences of simply taking this knee-jerk reaction at one board meeting and revoking what was in excess of a five-year process to get entitled," Udell said. "There are consequences to doing that, and I don't think the consequences are good."

Trustee Robert Dearborn disagreed, suggesting the One Winnetka development had been one of the most-discussed and debated issued among councilmembers and the public.

"The thought that this is something that had 20 minutes of deliberation a couple weeks ago is not the case. Not close to being knee-jerk, in any sense," Dearborn said. "It's not personal in any way, shape or form. This is a business transaction and these events of default are serious, and so I reject the notion that this is knee-jerk and not well-deliberated, because it has been."

Village staff said in a statement Wednesday they would continue to conduct inspections and monitor the property for health, building code and safety issues. Any issues relating to the maintenance or sale of the privately held properties are matters for their respective property owners, it said.

"The One Winnetka site continues to offer the opportunity for a great development project," Village Manager Rob Bahan said. "Winnetka remains open for business and welcomes conversations about future site opportunities."

Read more: One Winnetka Developer Offers Apology, Warning, Expansion Request