CHICAGO — It seems that Chicago's notorious Block 37 project is poised to foil yet another developer, as Bank of America filed to foreclose on the property early last week. The lender claims that the project's developer, Chicago-based Joseph Freed & Associates, has been in default on its construction loan since March 2008 and currently has $128.5 million in outstanding debt. In a statement, Bank of America said, “We always work with our clients to help them resolve their financial issues and have done so in this case. We have been working with the developer for over a year to help them resolved their financial issues.” The lender goes on to suggest that a court-appointed receiver be put into place to manage the property and complete its construction.
Joseph Freed & Associates counters that the suit lacks merit and that it intends to fight it. The developer insists that the retail portion of the project on track and has tenants lined up. In a written statement, the company calls the suit “a misguided action that could halt the project” and goes on to claim that “once shuttered, this project will be near-impossible to restart.”
Bounded by State, Dearborn, Washington and Randolph streets, Block 37 was to be a transit-oriented mixed-use development on a grand scale. The office component of the project was developed separately by Golub & Co. and has already opened. In addition to the 278,000-square-foot retail component that Freed was developing, plans called for a transit station and a residential component.
Freed & Associates took over the retail and transit portions of the project in April 2007 from struggling developer Mills Corp., which later went out of business. The project has been in some stage of development since the 1970s but no developer could ever get the block completed. It looked like Freed would be able to break the curse but the retail component of the project hit some speed bumps when the credit markets froze and retailers started pulling out. However, the company claims that more than 70 percent of the project was leased prior to Bank of America's filing and that the grand opening was slated for next month.
— Coleman Wood