Courtesy of Oak Park and River Forest Journal
Oak Park gets in line to sue developer
Village’s complaint is the third filed against Lake Street development in the past two months
Extra! Download .pdfs of the complaints
Brandenburg Family Associates complaint
Response to Brandenburg Family Associates’ complaint from RSC
Condo association complaint
The Village of Oak Park is suing a company that built a prominent building in its downtown. But the village may have to wait its turn, as three other parties are already taking the Chicago-based developer to court, all together seeking more than $5 million.
With the building improperly built, the village wants to fine RSC & Associates $5,000 a day dating back to 2007, along with paying the $75,000 in staff time Oak Park has spent in addressing the building.
Oak Park filed the complaint in the Cook County Circuit Court on June 5. The company constructed a seven-story building in Oak Park in 2007. Located at 1120 Lake, it features 44 condominiums and retailers including Lane Bryant, Bar Louie and Fitness Formula Club.
Part of the project was built on village-owned land, so Oak Park entered into a legally binding redevelopment agreement in March of 2004, requiring RSC to meet certain guidelines.
Oak Park gave the property to RSC, and reimbursed the developer for demolition and remediation costs at the site.
When construction was complete, RSC was required to get a “certificate of completion” from the village, requiring inspections to make sure the building was constructed properly.
“Many” inspections have been done on the building, but the village has yet to issue the certificate, said Village Attorney Ray Heise.
As a result, Oak Park wants to fine RSC $5,000 a day, all the way back to September 2007, when the developer was to have completed the project. As of yesterday, fines would total around $3.15 million, not to mention the $75,000 in staff time Oak Park claims it has spent in dealing with RSC.
The village also wants RSC to pay for its attorney’s fees, at a cost of about $190 an hour, rising from the developer’s “failure to perform its obligations under the redevelopment agreement,” according to the lawsuit.
“We’ve spent an incredible amount of staff time, associated with seeking compliance with the agreement,” Heise said.
While some construction issues remain, Heise says RSC has corrected a number of problems, such as removing and re-engineering the grease duct running from Bar Louie and reconstructing the basketball court at the fitness club.
But the developer still needs to do work, such as fixing improperly built walls on the seventh floor of the building.
According to the lawsuit, RSC violated the agreement by selling the commercial aspect of the building before receiving a certificate of completion from the village. A California investor bought the retail portion of the 1120 Club in August of 2008 for $15.8 million.
RSC also failed to provide a $250,000 “financial instrument” to the village, guaranteeing the completion of the project, according to the complaint.
Other complaints filed
Three other lawsuits have been filed against RSC over the past two years, related to the 1120 Club.
In August 2007, Brandenburg Family Associates filed a complaint in Cook County circuit court in the amount of $1.5 million. The San Jose-based company backed out of a $16.2 million purchase of the commercial space in 2006. The company is suing to get back $1.5 million in earnest money it put down for the purchase.
Stein Ray & Harris filed an $18,145 complaint against RSC on April 1, but that suit has since been dismissed, according to court records.
The 1120 Club’s condo association has also sued RSC and 1120 Retail LLC, the limited liability corporation that bought the commercial portion of the property. The complaint, filed May 4, is seeking $750,000.
According to the suit, cement siding was installed around the exterior of the building’s seventh floor and on the balconies of the building. Multiple sections of the concrete have “warped or failed and have allowed water to penetrate in the building, causing extensive damage to the common elements and numerous residential units,” according to the suit.
The condo association provided written notice to the developer of the problem, and RSC has yet to correct the defects, the suit alleges. Multiple other issues remain with the building, including mold and mildew infiltration in individual condominiums.
As a result of the unresolved work, the association claims that condo owners have suffered more than $750,000 in damages.
“These guys are looking for the cheapest way of doing it, and as a result we felt we had no choice but to file a lawsuit to get this done,” said Mike Salvati, treasurer for the condo association. “Any new construction has problems. The key is you’d expect the developer to show the integrity to fix them when they come up. … These guys have really been avoiding doing the right thing for a long time now.”
Reached Tuesday morning, RSC Chief Executive Officer Rich Curto said the majority of issues raised in the lawsuits are related to inferior work done by the company’s contractor, Trapani Construction Co. As such, RSC filed a complaint against the company in March, demanding that they complete the unresolved work on the seventh floor.
“We understand everyone’s frustration,” Curto said. “However, due to the failure of the contractor to complete the work, it has caused all of us involved here significant aggravation, and we believe that the appropriate way to resolve this is not through expensive, time-consuming litigation, but through our offers to resolve warranty work by sitting down to negotiate the process to do that.”
The company has $300,000 in an escrow account to address the work, and Curto claims that is enough to complete it, despite claims from the association that it is well short. The association has declined to settle the issue in writing because of the alleged shortage, and worries that the work would be completed in a substandard fashion.
“Based upon the bids that we have obtained, we would suggest that numbers like that are not appropriate in today’s construction market where contractors are extremely hungry for work,” Curto said, disputing the association’s claim that the work would cost more than $600,000.
As for the certificate of completion, Curto believes the village should have released that already, and he claims Oak Park is “arbitrarily” tying it to the warranty work issues on the seventh floor.
Village Trustee Ray Johnson, on the board when the redevelopment agreement was approved, said the developer appeared to have the skills to execute the building. He pointed to the health club and stores as one positive aspect of the development.
“Certainly that’s been a big driver in bringing more people to town,” Johnson said. “On the other end of that continuum, I will say at the time I believed the developer had the construction and financial expertise to bring a development online with little problems, but it hasn’t played out that way.”