Failed promises at City Parking Lot #47

Questions linger about a floundering North Side development

July 27, 2012

Get the flash player here: http://www.adobe.com/flashplayer

It’s been nine years since the city invited developers’ proposals to transform City Parking Lot #47, at the corner of Devon Avenue and Rockwell Street, into a mixed-use structure. It was part of a plan to revitalize a larger area, known as the Devon and Western Redevelopment Project Area — a tax increment finance district in Chicago’s West Ridge neighborhood on the far North Side. Among the plan’s goals was to “Create an environment within the Redevelopment Project Area that will contribute to the health, safety and general welfare of the City, and preserve or enhance the value of properties in the area,” according to the Devon and Western Redevelopment Plan and Project.

In normal-people speak, the area needed a facelift. Most nearby businesses and residents agree on that. Under the previous alderman of the 50th Ward, Bernard Stone, Devon Avenue hadn’t seen a streetscape in decades. The West Ridge Chamber of Commerce had launched a Special Service Area to collect sidewalk litter and do some minor landscaping. But the infrastructure of the retail strip was aging. Neighbors grumbled about the parking lots in question, complaining that the city had allowed them to fall into disrepair. And while there are corner benches along portions of Devon Avenue, they overlook a noisy, asphalt stretch of cars and large trucks whizzing by. The TIF was one hope to make Devon Avenue a more beautiful and pleasant thoroughfare for strollers and shoppers.

When it came to the parking lot at Rockwell and Devon, the city was asking for proposals to increase parking for store customers, expand retail space, and provide housing (including affordable units). It also invited designs for a “plaza” with amenities that might be inviting to pedestrians, like fountains and outdoor seating.

“The change in ownership appears to be a fraud."
- Greg Brewer, project critic and former aldermanic candidate

Nearly a decade later, the parking garage is open (after some complications), but the residential units are unfinished and there is no plaza. The entire project was supposed to be completed in 2009. Neighbors may reasonably have grown numb to the building’s seemingly-perpetual state of incompleteness, but the question looms: Will the structure ever be finished according to design, especially now that it has a new owner?

That’s right. It was easy to miss the latest twist in the ongoing saga of this building, but developer Mohammad Tariq Siddiqui no longer owns this property. To recap: In 2007 Siddiqui’s company, ASAT Inc., purchased the lot’s two parcels for $1. At that time, they were appraised at $915,000. Last October, Siddiqui short sold the troubled property for $2.1 million to a buyer called Morgah LLC. Less than two months later, Siddiqui filed for Chapter 7 bankruptcy in federal court.

Old ties with the new owner?  

The sale raises a few questions.

First, was Siddiqui even allowed to do that? The terms of the redevelopment agreement say that  Siddiqui’s supposed to keep the title to the property unless he’s gotten the city’s permission to do otherwise. In an email, Housing and Economic Development spokesperson Peter Strazzabosco says that the city never authorized Siddiqui to sell, which means Siddiqui defaulted on the agreement. Add that to a list of his defaults dating back to at least 2009. The city last year notified Siddiqui by letter of numerous alleged defaults on the agreement.

Second, why would anyone buy this property? Records indicate that the buyer, Morgah LLC, is located in south suburban Riverside, Ill. The president of Morgah LLC is Matthew J. Leuck, who did not return phone calls. Looking at Leuck’s history of property records in Cook County yields only more questions. For starters, with the exception of only a couple of properties, all of Leuck’s real estate dealings have been in the suburbs. Second, nearly all of them have been single-family homes; from what I could find, this will be Leuck’s first mixed-use project. The city doesn’t know much about him either. According to Strazzabosco, Chicago’s never worked with Leuck before on any development.

Leuck aside, the company Morgah LLC has an even more puzzling record of real estate transactions in Cook County. The company’s purpose, as stated on documents filed with the Illinois Secretary of State, is vague: “The transaction of any or all lawful business for which Limited Liability Companies may be organized under this Act.” A search at the Cook County Recorder of Deeds’ website yields records on only two properties: this one at Rockwell and Devon, and another property that Morgah LLC bought just down the street, at 2150 W. Devon Ave. Interestingly, that’s another of Siddiqui’s troubled multi-use projects. Morgah LLC purchased one of that building’s condo units from a Mahmood Mughal.

It’s mystifying that the company would purchase a single condo unit. It’s also striking that the company’s only real estate deals in Cook County have involved Siddiqui properties. But the whole thing is less bizarre when you look at who headed Morgah LLC at the time that the condo unit was purchased: a medical doctor based in Oak Brook, named Dr. Mohammed T K Ghani.

Ghani has partnered numerous times with Siddiqui on real estate deals, many of which have been foreclosed. To look at just a couple of recent ones, in 2009, Republic Bank brought several court claims against Ghani and Siddiqui for a development at 2115 W Roscoe St. In 2010, State Bank of Countryside brought a foreclosure case against the two for a property at 3343 W. Argyle St. It’s not clear what the exact nature of Ghani’s involvement is with Siddiqui’s projects, and messages to Ghani’s home and clinic in Palos Heights have not yet been returned. But Ghani and his wife were the managers on record for Morgah LLC until October 25, 2011, which means that they were at least nominally in charge of the company when it bought the Rockwell-Devon property from Siddiqui just thirteen days earlier.

So to recap the timeline, Morgah LLC, headed by Siddiqui’s business associate, Mohammed T K Ghani, purchased the Devon-Rockwell development on October 12 in a short sale. On October 25, Ghani amended Morgah LLC’s filings with the Secretary of State’s office to withdraw his and his wife’s names as managers, and to name Matthew J Leuck as the new manager. Then Siddiqui, with this asset no longer on his books, filed for Chapter 7 bankruptcy on December 7.  

“The change in ownership appears to be a fraud,” said Greg Brewer, perhaps the most vocal critic of the Rockwell-Devon project. “I doubt any money actually changed hands. Just some change of names that lets Siddiqui get rid of the loan and keep the property.” Brewer and some neighbors sued to stop the development in 2007, which halted the work for some time, but they ultimately lost their bid to quash the project. He also ran twice, unsuccessfully, for 50th Ward alderman.

The city's interest in a former city lot 

The potential issue of Morgah LLC’s ownership was clearly on the radar for city officials, too. Steven Holler, from the city’s Law Department, wrote about it in an email to Siddiqui’s attorney shortly after the sale. “I understand from the meeting that Mr. Leuck is the sole owner and manager of Morgah LLC,” writes Holler, “and that, notwithstanding the Secretary of State’s records, which I believe Mr. Leuck indicated had recently been corrected, neither of the Ghanis hold any ownership or controlling interest.” But the fact remains that at the time that the short sale actually took place, Ghani and his wife were the managers on record for Morgah LLC.

Calls to Siddiqui’s phone don’t ring — instead they go to an automated message that says his voicemail is full. But another sign of his continued interest in the property — even after he sold it — is that his car has been spotted numerous times at the Devon-Rockwell site since October, as several frequenters of the street can attest.

When it comes to TIF funding for the Devon-Rockwell building, Siddiqui never received any. City officials told me, and Siddiqui’s lawyer states in emails to the city, that Siddiqui had to finance much of the development himself, at great personal loss.

Still, according to his agreement with the city, Siddiqui was obligated to hew to the design outlined in the RDA. And now, “the RDA remains in full force,” according to Strazzabosco, who adds that the city’s departments of Housing and Economic Development, Law, and Buildings, as well as the office of 50th Ward Alderman Debra Silverstein “continue to work with the property owner on an acceptable plan for the project's completion.” But how closely will that resemble the design that was hammered out in the RDA? Will it be what the city promised the surrounding community when it sold the public property to Siddiqui for $1?

Speaking of that $1, I’ve been curious to know whether the write-down that Siddiqui received on the property as a form of non-TIF, city assistance needs to be paid back. In other words, since Siddiqui defaulted on the agreement and then sold the property, does his company, ASAT Inc., have to refund the city $914,999 in assistance that it received for the project?

A spokesperson from Chicago’s Law Department said he cannot comment on the record about what the city might do. Looking at the RDA, the city does reserve all rights of recovery in event of a default. But in Siddiqui’s case, that may be a moot point, since he has filed for bankruptcy. The court appears still to be determining what assets Siddiqui has, and his creditors will likely have first dibs on whatever it finds.

In the meantime, the parking garage is in use, finally delivering on part of the city’s promise, and a clothing retailer occupies the street-level space. We’ll be taking occasional looks at how this deal came together, and how it develops. Throughout, we’ll be asking how the project stacks up against what the city had promised to residents and retailers, and whether trading in city-owned property was a net benefit — or a net loss — to the neighborhood and to Chicago.