Block 37 Sold To Bank Of America For $100M
CHICAGO (CBS) -- The troubled Block 37 shopping complex has been auctioned off to Bank of America for $100 million.
Last year, Cook County Judge Margaret Ann Brennan issue a foreclosure ruling against Block 37 developer Joseph Freed and Associates, ordering the company to surrender control of the shopping center after it defaulted on a $205 million loan from Bank of America.
As WBBM Newsradio 780 Political Editor Craig Dellimore reports, the bank was the sole bidder on Wednesday at a court-ordered auction, bidding $100 million for the unfinished shopping mall, which opened in November 2009.
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Bank of America filed a foreclosure lawsuit against Freed shortly before the mall opened, claiming the developer had been in default since March 2008 or earlier, and that the project had exceeded planned costs by $34 million.
Freed had fought against the lenders, arguing that the banks had reneged on a promise to restructure the loan and refused to approve a reworked lease with a movie theater that never ended up moving in. Freed also tried to argue that the recession had made it impossible for the developer to move ahead.
The sparsely populated shopping center is now anchored by an assortment of fashionable retailers including Puma, Steve Madden, Anthropologie, Sephora and a Disney Store.
But critics have bemoaned the amount of empty space in the mall, as well as a planned Chicago Transit Authority "superstation" with express train service to O'Hare and Midway international airport that has never been built.
The 22 W. Washington St. building, which houses CBS 2 and Morningstar, is also on Block 37, but is not part of the Freed development.
The site has a long history of development problems, including sitting vacant for nearly two decades.
Bounded by Washington Street, State Street, Randolph Street and Dearborn Street, Block 37 once sported a hodgepodge of vintage buildings housing theaters, arcades and wig shops, among other businesses. Among its most prominent buildings were the landmark 1872 McCarthy Building, the Hillman's Building with the Stop & Shop gourmet grocery store, and the United Artists Theatre.
In 1988, under Acting Mayor Eugene Sawyer, the City Council gave developer FJV Venture a $24 million subsidy to redevelop the site, the Chicago Tribune recalled. To facilitate demolition, the city landmark status for the McCarthy Building was revoked.
In October 1989, shortly after Mayor Richard M. Daley was elected, all the buildings except a ComEd substation were demolished.
The original plan to develop Block 37 called for a five-story shopping center, and two towers designed by celebrity architect Helmut Jahn and standing 30 and 50 stories tall, the blog ArchitectureChicago Plus recalls. But that project collapsed, and for more than a decade years afterward, Block 37 remained nearly empty and was used mostly for the Gallery 37 youth artists' programs and the "Skate on State" ice rink.
The city ended up buying Block 37 back from FJV Venture, in 2001, and sold it to another developer, Mills Corp., two years later. But in October 2006, Mills fell into financial trouble and handed over part of the project to Golub & Co., which now manages the 22 W. Washington St. building, and the mall portion to Freed.
