Hi-Way slobbery: how many bureaucrats and lawyers does it take to screw up a neighborhood development deal? | Neighborhood News | Chicago Reader

Hi-Way slobbery: how many bureaucrats and lawyers does it take to screw up a neighborhood development deal? 

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It's hard to imagine a good idea getting more royally screwed up than the plan to redevelop the Hi-Way Theater, a project that should have been finished in 1992. The whole comedy of errors--the explanation for the latest blunder defies logic--reveals gross ineptitude on the part of city officials and their lawyers, suggesting that the Daley administration is incapable of completing a relatively straightforward neighborhood development project.

"It's frustrating," says Harry Meyer, assistant director of the Greater Southwest Development Corporation, one of the project's not-for-profit developers. "The city says, you'll be able to start on such and such a date. Then that date comes and they say, oops, you won't believe what's happened now. Our funders don't know what to believe."

The story begins in late 1989, when the development corporation and the Boulevard Arts Center, another local not-for-profit, proposed converting the Hi-Way--a boarded-up, run-down old porn movie theater at 63rd and Western--into a new home for the neighborhood arts center. The project was hailed by city officials from Mayor Daley on down as a can't-lose proposition that would revitalize 63rd Street.

The Hi-Way was being offered at a Cook County scavenger sale because its owner, whose identity is concealed by a trust fund, owed several years' worth of property taxes, about $380,000. The plan was for the county to turn the Hi-Way over to the city, which would then give it to the community groups. In July 1991 the City Council authorized the Department of Economic Development to offer a "no-cash" bid on the Hi-Way, which meant the city would get the property for nothing (under county rules, a no-cash bid from the city supersedes almost all other bids).

But for reasons that have never been explained, the city never told the county it planned to bid on the property. That October the county sold the Hi-Way at a scavenger sale for $19,500 to a developer named Romel Koktapeh.

"We had lined up roughly $1 million worth of loans and grants in expectation of getting the building in October 1991," says Meyer. "But after Koktapeh's bid we had to go to our funders and say, 'Sorry, but everything's off.'"

Sixteen months of litigation followed as the city tried to block the sale on the grounds that it should never have been allowed in the first place. A circuit court judge and the Illinois appellate court ruled in favor of the city. The case finally ended last February, when the Illinois Supreme Court refused to hear Koktapeh's request for an appeal. "When the litigation ended we thought the Hi-Way was ours," says Meyer.

But it wasn't. The transfer of tax delinquent property is governed by a brier patch of rules and requirements designed to protect the interests of the property owner, no matter how negligent he is. From the time a piece of tax-delinquent property is sold at a scavenger sale the owner has six months to pay his back taxes and redeem his property. At the end of the six months a court hearing is held to determine whether the title should be transferred. All interested parties--including the building's tenants, manager, and owner--must be notified of that hearing. And it's not enough to simply phone them. Notices have to be hand delivered by the sheriffs office, and certified letters have to be mailed by the clerk of the circuit court.

The Hi-Way notices had to be sent within a 60-day period that started in May if the theater was to be transferred to the community groups by the fall. Overseeing the process was Thomas McNulty, a lawyer with the firm of Keck, Mahin & Cate, which collects at least $1,000 from the city every time it handles the paperwork for a property sold at a scavenger sale. It was McNulty's obligation to see to it that the sheriff and the clerk delivered their notices on time. And it was the city planning department's obligation to make sure the community groups were kept informed of how the process was going.

On March 19 the planning department wrote Meyer a letter telling him the owner's redemption period would expire June 12, that a court hearing would be held in July or August, and that the closing would be scheduled for September. "We called McNulty's office all the time, and he never gave us any indications that there would be delays," says Patricia Devine-Reed, executive director of the Boulevard Arts Center. "We planned to have a celebration in October because we were led to believe that's when the paperwork would be completed and the building would be ours."

What Devine-Reed, Meyer, and the planning department didn't know--apparently because McNulty didn't tell them--was that the paperwork wasn't complete. "We can't send those notices until we get a title report from Chicago Title and Trust," says McNulty. "We didn't get that title report until sometime in April or May."

It takes two months to get one title report?

"Yes. Unfortunately that's standard."

That summer and fall Meyer and Devine-Reed received assurances from McNulty and the city that the process of obtaining title to the HiWay was moving along. In September the city told them the sheriff had delivered the notices to all the interested parties and the circuit court clerk had sent the certified letters. On November 3, a planning department official wrote Meyer that a "closing . . . before March 15, 1994, is an achievable goal." On January 31 McNulty wrote Meyer to notify him of a February 17 court hearing on the title transfer.

The bad news came on February 3. McNulty wrote Meyer that the February 17 court date had been canceled--and it was the circuit court clerk's fault. "We have discovered that [the clerk's office] did not mail the notices . . . within the time frame prescribed by law," McNulty wrote. "We delivered these notices to the clerk with as much as one week to go in the notice-service period. For some reason the clerk did not get around to mailing the notices until after the deadline had expired . . . . Although we certainly have no control over the Clerk of the Circuit Court, I apologize to you for any inconvenience that this may cause."

Again the redemption period was extended, and the owner had another six months to pay off his delinquent tax bill, which now came to roughly $580,000. But, McNulty explained, if all went well a court hearing on the Hi-Way would be held June 1.

Meyer and Devine-Reed bought McNulty's explanation. And they were outraged by what they thought was the clerk's ineptitude.

But deputy clerk Steve Kranz indignantly denied McNulty's version of events. "First of all the law, as McNulty should know, states you have to allow us ten days to send those notices. Even if McNulty got them to us within one week, as he says, he was too late. Second, no notices regarding the Hi-Way were left here in September."

I pointed out that McNulty said they were.

"We have no record of them," Kranz said. "And we time stamp every notice that comes into this office, and we give a receipt for every notice that goes out."

When I told McNulty what Kranz had told me, he too was indignant. "I know those notices were delivered because I saw them," he said.

You saw the time-stamped notices and the receipts?

"Yes," he said, promising to send copies to me once he found them in his files.

Planning department officials said they stood by McNulty, though they directed questions to Duncan Harris, a lawyer from the corporation counsel's office. "I spoke to McNulty about the evidence of delivery, and he's looking for it," said Harris. "He said he's sure that those notices went out. I have no reason to doubt him."

Then last Friday McNulty called me. "I made a mistake," he confessed. "The clerk was right."

He explained that going through his files searching for the stamped notices had refreshed his memory. He now remembered that he'd never sent the notices to the clerk in the first place. He also remembered that over the summer he'd asked Meyer to inspect the Hi-Way, interview its tenants, and determine, among other things, the identity of its manager.

"However, Harry had not been able to positively identify the building manager, and I realized we couldn't proceed with the court hearing until we knew who the manager was--so we could be sure he was notified," McNulty said. "I decided not to mail the notices. Instead I wanted to extend the redemption period, which would give us enough time to find out who the manager was."

But yesterday you told me you'd seen copies of the notices the clerk belatedly mailed out.

"You have to understand the Hi-Way case is one of about 80 scavenger-sale cases we were handling. I saw 79 other cases, but not that one."

So why in your February 3 letter to Meyer did you blame the delay on the clerk?

"What happened is that the 79 other cases were delayed because the clerk didn't get the letters out in time. A form letter must have gone out to Harry [Meyer] by mistake. "

But why did you tell Duncan Harris and me you'd seen the stamped notices if you knew you hadn't even sent them?

"I forgot."

You forgot?

"Yes, I forgot that in September I had wanted this notice pulled. Listen, this whole thing was my mistake. But I can assure you notices for a new hearing have been dropped off with the clerk. I have copies in my file, along with the receipts. I think were going to have a happy ending come June 1."

Meyer isn't sure of what to make of McNulty's latest explanation. But he doesn't believe it. "So it's my fault. That's interesting. You'd think McNulty wouldn't have to depend on me to find out who manages that building. I'm no lawyer. I have no legal authority over the people in the Hi-Way. They don't have to tell me who manages that building. You'd think the city would have lawyers who could find these things out. Just imagine if this were the new White Sox stadium project. Do you think it would take two months to get a title report for that? Do you think they'd say to Jerry Reinsdorf, 'Sorry, Jerry, but we can't build your stadium until you find out who manages that building across the street'? Do you think they'd let it drag on for three years? I think what happened is that McNulty and the city weren't paying any attention, and they let the whole thing slip through the cracks."

Art accompanying story in printed newspaper (not available in this archive): photo/Jon Randolph.

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