Pols Gone Wild!!!

[Boris]

Bellwood digs $40 million hole for taxpayers, has no new Metra station to show for it

All-in plans for a redefining Metra station leave Bellwood in a lurch

By Joseph Ryan, Tribune reporter
9:46 PM CDT, April 4, 2011

West suburban politicians beamed as they dug shovels into scruffy industrial land two years ago to herald a new Metra station meant to redefine the blue-collar town of Bellwood with tony condos and shops.

But the station was not built, and the dream was largely abandoned.

All Bellwood taxpayers got was a staggering bill. The west suburb is approaching a financial cliff thanks to the $40 million-plus development gamble that a Tribune investigation finds involved questionable players, lacked detailed financial or market analysis, and faced major roadblocks from the start.

Loans totaling $24 million hang over taxpayers, and $22 million of that is coming due in full by year's end — close to what the suburb of 19,000 collects in taxes and other revenue in an entire year. Another $15.5 million is owed for buildings the suburb pursued in court.

Bellwood officials say they are victims of the recession, but along the way the suburb paid millions of dollars above appraisals for properties, sold one at a major loss to a mob-linked company and employed a project manager whom prosecutors later described as "a dishonest person with no moral compass."

Bellwood also did not gain permission from freight carrier Union Pacific — whose operations could have been affected and which had the power to kill the project — before launching a costly, all-in land grab.

Still the development advanced as far as landing congressional earmarks for millions of dollars.

Mayor Frank Pasquale declined to talk about the project. He issued a statement saying the "carefully developed" plan fell apart because of the real estate market collapse.

"They took a chance, and it backfired," said chief of staff Peter Tsiolis.

The town is working to renegotiate the loans and appealing to get out of the $15.5 million settlement. In court records, Bellwood said even having to pay that settlement would lead to "financial ruin" and leave the town unable to provide basic services.

The proposal surfaced in 2004 and centered on shuttering tiny Metra stations in Bellwood and Melrose Park and replacing them with a massive station flanked by parking garages in an industrial area off Lake Street. The station would attract condos and shops, even a satellite college campus, revamping 77 acres that straddle the border of both suburbs.

But the vision had a blind spot: The station would sit at the mouth of Union Pacific's massive Proviso rail yards, one of the area's busiest, complicating rail expansion and raising safety concerns, with scores of freight trains chugging back and forth daily.

Pasquale said the town was working first with suburban developer Ron Scarlato. He owned land at the center of the project area, but Pasquale said those talks "ceased" in 2006.

Scarlato sued the suburb in 2009, accusing village officials of going after him with harassing code enforcement over the train project and because the mayor's son lost a job the developer said he landed for him. Scarlato won a large settlement, though the village admitted no wrongdoing.

Scarlato called the train station project unfeasible in the suit. He declined to answer Tribune questions.

Around the time Pasquale says the Scarlato talks ended, the village unveiled its station development proposal at a public meeting. The plan was authored by a joint venture that included Anthony Bruno, whose small firm was also contracted as the town's project management department.

The report didn't detail potential problems with Union Pacific's rail yards or the critical need to get the company on board. It didn't provide an extensive market study on whether the housing could sell, or a detailed feasibility study on how to pay for it all.

Tucked in the back of the report, a letter from then-Metra Director Phil Pagano raised logistical concerns, writing to Bellwood's mayor in 2004 that the site "could prove to be somewhat problematic and costly to develop."

All in

Still, Bellwood officials set out on a buying spree, even while lacking a developer to bring the project to reality. Here's how they spent millions on properties:

•Bellwood paid $22 million for a set of 1970s warehouses on 16.5 acres. An appraisal pegged their market value at $18.4 million. The earnest money check was cut the same month in 2006 that the initial report came out.

•About six months later the village went to court to acquire a series of industrial properties on 19 acres via eminent domain, leading to the $15.5 million settlement.

•Then in mid-2007, the village struck a deal to buy a 4.6-acre landfill for $2.1 million. The appraisal pegged market value at $1.2 million. Companies connected to the landfill owners gave Pasquale's political campaigns more than $35,000 in the last decade.

Three years later, Bellwood sold the landfill for $875,000 — a $1.2 million loss.

The buyer was a company linked to D&P Construction in Melrose Park, a firm with alleged ties to Chicago's reputed organized crime boss John "No Nose" DiFronzo. Bellwood officials said it was the only offer received after advertising and seeking bidders.

Bellwood officials give two reasons for the land grab. They wanted to acquire the entire site to later turn over to a still-unknown developer. Plus, it provided leverage over Scarlato, giving the town enough Melrose Park land to annex the site and surround his property.

As Bellwood was acquiring properties, Union Pacific still wasn't backing the plan, saying in a 2008 letter to town officials, "if we could have made it work, we would have done so."

Within a matter of weeks, though, the railroad met with Bellwood officials and U.S. Rep. Danny Davis in Washington. A deal was struck: The town could build the station if it paid an estimated $13 million to change two impacted rail projects.

Davis, D-Ill., said he sang the praises of the project until Union Pacific came around. Railroad spokesman Mark Davis said the about-face was normal, the result of negotiations with "high-level" engineers.

With an election around the corner, Bellwood's mayor declared victory, held a groundbreaking and then lobbied for federal funding.

Davis put in an earmark for $15 million, but the money never came. Davis blames growing public opposition to earmarks for stifling his efforts at federal funding.

Fold 'em

Within months of the just-for-show groundbreaking in December 2008, the vision began evaporating.

A March 2009 real estate analysis for an outside developer said the market would only support low-income apartments around the station.

Asked repeatedly, Bellwood officials have not produced any other extensive study on whether the project could sell the hundreds of homes it proposed, sustain the businesses it counted on, generate the Metra riders it purported or justify its growing price tag.

"I don't know if one exists," said Tsiolis, who took over in 2010.

Edward Feser, head of the University of Illinois' urban planning department, said buying up so much property without extensive studies, and without Union Pacific on board, seems "very speculative."

"In planning, we don't usually do the studies after the fact," he said.

Bruno, the project manager, couldn't be reached for comment. He pleaded guilty in early 2009 to one count of tax fraud and was sentenced to 16 months in federal prison.

In their sentencing recommendation, federal prosecutors called Bruno a "dishonest person with no moral compass" and accused him of playing a quarter-century game of "catch me if you can" with the IRS.

Bruno said he always intended to pay his taxes and didn't mean to file false returns.

In all, Bellwood paid Bruno's firm at least $4 million over six years to run the village's development plans. The firm gave more than $100,000 to various Illinois politicians, including those in and around Bellwood, between late 2002 and 2009.

Bruno has had other controversies. When he worked in Melrose Park, federal prosecutors alleged, he conspired with the police chief to extort a movie theater into hiring a security firm tied to the chief. Bruno was never charged and denied wrongdoing.

Bruno's law license was revoked in the early 1990s for allegedly forging court documents while making clients think he was working their cases.

None of that fazed Bellwood officials. The mayor and trustees even penned a letter on village stationery to the federal judge deciding Bruno's sentence. Attached was a list of 41 Bellwood projects they said Bruno worked on, with the Metra station at the top.

"Despite his plea of guilty, we find Mr. Bruno, at all times, to be of good character, trustworthy, hardworking and honest," the letter said.

Village Comptroller Roy McCampbell ran the town during the station push, signing off on the land purchases. He retired last year and declined to comment, other than to say he took direction from the mayor and trustees.

The Tribune reported last year that McCampbell was paid nearly half a million dollars in 2009, claiming 10 job titles in the village. Bellwood officials said in that report that they didn't know he was making that much.

Now it is up to Tsiolis to find a way out of the mess. In an uncommon arrangement, his six-person firm has a $900,000-a-year contract to run the village. He used to work as an attorney for Bruno's firm but said his role in the Metra station proposal was limited.

Tsiolis said the village is open to building a train station if federal money shows up but is now looking into other ideas, such as industrial or large-scale retail developments.

Yet, the village continues to tell residents the station is on the horizon. It is touted on the town website, and two large wooden signs on the property boast the "future site" of a Metra station.

Tribune reporters Jared Hopkins and Ray Gibson contributed.

jbryan@tribune.com

Copyright © 2011, Chicago Tribune

[scungili]

damn ... I was hoping this was a pictorial from Club Jedynka.