OOT and BDC

[Ted]

   I decided to start a new thread on this.  Here were the comments in the original thread:

Did anyone read that comment by rfisher ?  What's that all about ?
I've quoted it below.

View/Add Comments Most Recent Comment
rfischer wrote on January 3, 2014 7:13 p.m. ...
It is amazing what is going on in this town. Crime on the street and also in the politics. How bout that illegal $92,000 loan that the Berwyn Development Corp gave to the owners of OOT back in Oct. so the owners can pay off their back property taxes on the building. The rules for the commercial loan program specifically state that loans cannot be used to pay off business debt or back property taxes but somehow they received the loan anyways. And somehow they used the Seneca restaurant property as collateral for the loan. I didn't even know that the owners of OOT had interest in Seneca also.

Sounds like some Berwyn-grade shit stirring. How would somebody would know how the loaned money was used? If OOT got a loan and then paid off some back property taxes, that doesn't mean the OOT wasn't still using $92,000 for its appropriate use. Another whiff of Ye Olde Bullshite: The poster can't say what the money was used for exactly. Was it business debt or back taxes, big guy?

BDC is a public entity and the city council approves the commercial loans, so presumably details of the loan aren't hard to find. Not sure why using another property as collateral is suspect.

[Ted]

The PIN # for OOT is 16-31-125-007-0000.  The Cook County Portal has the following information, but the records from the Recorder of Deeds in the portal are out of date.  There were a lot of transactions in August and October of this year involving OOT and the BDC:

http://www.cookcountypropertyinfo.com/Pages/PIN-Results.aspx?PIN=16311250070000

  The PIN # for Seneca is 16-19-428-023-0000.  There also appear to be a lot of transactions involving the BDC and Seneca restaurant on the Cook County Recorder of Deeds site:

http://www.cookcountypropertyinfo.com/Pages/PIN-Results.aspx?PIN=16194280230000


  The Cook County Treasurer site indicates that OOT was 3 years behind in taxes which were recently paid by a tax buyer.  According to the Cook County Treasurer site, to get information about the tax buyer and the payments he/she made, one must go down to the Cook County Treasurer's office and request the information.  It is not available online

Here are the recent transactions for OOT.  There were a lot of transactions involving the BDC and OOT in August and a modification in October regarding an original $385,000 mortgage transaction and an additional modification of $92,062.52.

  Recorded Date PIN Type Desc. Doc. # 1st Grantor 1st Grantee 1st Prior Doc#
10/22/2013 16-31-125-007-0000 MODIFICATION 1329516029 GAY KIM BERWYN DEV CORP 1322416036
8/21/2013 16-31-125-007-0000 RELEASE 1323315075 NORTH COMM BK CITIZENS COMM BK IL 0504549037
8/12/2013 16-31-125-007-0000 ASSIGNMENT 1322416037 WINDSOR PS BERWYN DEV CORP 1329516029
8/12/2013 16-31-125-007-0000 FINANCING STATEMENT 1322416038 WINDSOR PS BERWYN DEV CORP 
8/12/2013 16-31-125-007-0000 MORTGAGE 1322416036 WINDSOR PS BERWYN DEV CORP 1329516029 (this is the $385,000 mortgage transaction where the BDC is the GRANTEE)

[Ted]

  Here is the text of the document from the Cook County Recorder of Deeds office that is being referred to. It involves an amount for $92,062.52 recorded against the OOT property. A lien involving Seneca restaurant (6544 W. Cermak) is in the document.

  One odd thing is the Recorder of Deeds lists Kim Gay as Grantor but she is not a signer of the document.

  The BOLD text are things I highlighted:

FIRST MODIFICATION TO REAL ESTATE MORTGAGE AND ASSIGNMENT OF LEASES AND RENTS

  THIS FIRST MODIFICATION TO REAL ESTATE MORTGATE AND ASSIGNMENT OF LEASES AND RENTS (hereafter referred to as the "First Modification") is executed as of this 18 day of October, 2013, by and between WINDSOR PARTNERSHIP, an Illinois partnership (hereinafter referred to as "Mortgagor"), Jim Gay (hereinafter referred to as "Gay"), and MARTIN MENDICINO (hereinafter referred to as "Mendicino") (Mortgagor, Gay and Mendicino are hereinafter collectively referred to as "Borrower") and THE BERWYN DEVELOPMENT CORPORATION (hereinafter referred to as "Mortgagee")

    WITNESSTH:

WHEREAS, Borrower is indebted to Mortgagee as of the date of this Modification as evidenced by that certain Promissory Note dated Jul 16, 2010 in the principal amount of Three Eighty Five Thousand Dollars and No/100 Dollars ($385,000) (hereinafter referred to as the "Original Note"); and

WHEREAS, the Original Note is secured, inter alia, by that certain Real Estate Mortgage dated July 26, 2010 and recorded with the Cook County, Illinois Recorder's Office on August 12, 2013 as document no. 1322416036 (hereinafter referred to as "Mortgage") and encumbering the real property comonly known as 6906-08 W. Windsor Avenue, Berwyn, Illinois 60402 (hereinafter referred to as "Premises"): and

WHEREAS, the Original Note is also secured, inter alia, by that certain Assignment of Leases and Rents dated July 16, 2012 and recorded with the Cook County, Illinois Recorder's Office on August 12, 2013 as document no. 1322416037 (hereinafter referred to as "Assignment of Rents") and encumbering the Premises and

WHEREAS, The City of Berwyn (the "City") wishes to extend to Borrower a loan in the amount of Ninety Two Thousand Sixty Two and 52/100 Dollars ($92, 062.52) (the "Additional Loan") which along with the Original Note will be secured by the Mortgage and the Assignment of Rents, as modified by this Modification; and

WHEREAS, as evidence of the Additional Loan, Borrower has contemporaneously herewith executed that certain Secured Promisary Note of even date herewith in the principal amount of Ninety Two Thousand Sixty Two and 52/100 Dollars ($92,062.52) payable to the City (the "Additional Note"); and

WHEREAS, Borrower and Mortgagee recognize and confirm that the lien of the aforesaid Mortgage held by Mortgagee is a valid and subsisting first lien on the real property located at 6544 W. Cermak Road, Berwyn Illinois 60402 as legally described in Exhibit "A" attached hereto and incoporated herein;

  NOW, THEREFORE in consideration of the mutual convenants contained herein, and upon the express condition that the lien of the aforesaid Mortgage held by Mortgagee is a valid and subsisting first prior lien on the premises described in Exhibit "A" and on the further condition that the execution of this First Modification will not impair the lien of the Mortgage and further upon the express condition that in the event of a breach of either of the above expressed conditions this First Modification will not take effect and will be null and void:

  IT IS HEREBY agreed to by the parties as follows:

1. The foregoing recitals are hereby adopted by the parties hereto and under a part hereof and are binding upon the parties.

2. Borrower and Mortgagee hereby convenant , promise and agree to perform each and all of the convenants and agreements contained in the Mortgage and Assignment of Rents to be performed by the Borrower and/or Mortgagor at the time and in the manner in all respects provided therein and to be bound by all terms and provisions of said Mortgage and Assignment of Rents

3. It is further agreed however, that the Mortgage and Assignment of Rents are hereby modified to provide that the Mortgage and Assignment of Rents shall secure the payment of the Original Note, the Additional Note and any renewals, substitutions and extensions hereof, in addition to the payment of any and all sums heretofore loaned and advanced by Mortgagee or the City to Mortgagor and/or the Borower, all of which sums together with the amount owing on the Original Note and the Additional Note shall not exceed Seven Hundred Twenty Five Thousand and No/100 Dollars ($725,000) or such lesser amounts that may be due under the Original Note and the Additional Note and the performanceand observance by the Mortgagor, Borrower and any guarantors of any indebtedness, secured by the Mortgage, of all of the convenants, agreement, and conditions contained in the Original Note, the Additional Note, the Mortgage, the Assignment of Rents, in all other instruments pertining to the repayment ofany indebtedness secured by th eMortgage and/or Assignment of Rents (including any guarnty thereof) and in any other security agreement relatin to the sums secured by the Mortgage and/or Assignment of Rents.

4. <establishes an escrow account for the property taxes>

5. <statement that says all parties will adhere to the agreement>

6. <statement about what happens if there is a default>

7. All the real property decribed in Exhibit "A" herein shall remain in all respects subject to the lient, charge and encumbrance of the Mortgage, Assignment of Rents, Original Note, and Additional Note and nothing containd herein and nothing done pursuant hereto shall affect or be contrued to affect the lien, charge, encumbrance or the conveyance created by the Mortgage and Assignment of Rent, except as expressly provided herein.

8. The original executed copy of this First Modification shall be duly recorded with the Recorder of Deeds of Cook County, Illinois. This First Modification, together with the Original Note, the Additional Note, the Mortgage, the Assignment of Rents and any other documents executed by the Borrower and Mortgagor in connection with the indebtedness secured by the Mortgage and the Assignment of Rents as modified hereby, shall be binding upon the Borrower and Mortgagor and their respective succesors and assigns.

<signatures of Jim Gay, Martin Medicino, Anthony Griffin representing the Berwyn Development Corporation>

<notarized statements that Jim Gay and Martin Mendicino are partners in Windsor Partnership>

<notarized statement that Anthony Griffin is "known to be of the Berwyn Development Corporation">

EXHIBIT "A"

LOT 2 AND THE EAST 1/2 OF LOT 3 IN BLOCK 5 IN ANDREWS AND PIPER'S FIRST ADDITION TO BERWYN, A SUBDIVISION OF SECTION 31, TOWNSHIP 39 NORTH RANGE 13, EAST OF THE THIRD PRINCIPAL MERIDAN, IN COOK COUNTY, ILLINOIS.

COMMOM ADDRESS
6906-08 Windsor Avenut
Berwyn, IL 60402

PIN
16-31-125-007-0000

[markberwyn]

OK, but where does the "illegal" part come in?

The BDC has a "rule" that the money it loans be used for improvements and not for mortgages, taxes, etc, but does that rule actually have the force of law behind it? Because BDC loans have to be approved by the council, presumably the council OK'd this. What do the council minutes say?

I don't mean to excuse the BDC---using BDC funds for improvements only seems like a good rule. But unless I'm missing something, I'm not seeing criminal behavior.

[buzz]

Good grief Ted, was that supposed to clarify anything ?

The whole transaction is probably "pure as driven snow" but how do they (BDC) avoid an image of impropriety when they're granting a loan to fellow board members ?  Both OOT owners are board members aren't they ?  And because you're a board member should you be penalized and denied a loan ?  That doesn't sound fair either. 

[markberwyn]

The whole transaction is probably "pure as driven snow" but how do they (BDC) avoid an image of impropriety when they're granting a loan to fellow board members ? 

Presumably they can say it was vetted and approved by the city council.

[Ted]

OK, but where does the "illegal" part come in?

The BDC has a "rule" that the money it loans not be used for improvements and not for mortgages, taxes, etc, but does that rule actually have the force of law behind it? Because BDC loans have to be approved by the council, presumably the council OK'd this. What do the council minutes say?

I don't mean to excuse the BDC---using BDC funds for improvements only seems like a good rule. But unless I'm missing something, I'm not seeing criminal behavior.

  The BDC has loaned other businesses in Berwyn money to pay off their mortgage at a lower interest rate (Jack's Tools and Benny's Pizza come to mind).

  Those two loans were approved by the city council.

  I think rfischer is bringing up whether one property involving the city and BDC (i.e. Seneca restaurant) can and should be used to secure a loan for another property invoving the BDC (i.e. OOT).

     It is odd that the original loan was in 2010 but not recorded with the Recorder of Deeds until 2013. 

  The 3 year span between the original loan in 2010 and the recording of the loan in August, 2013 is really strange to me.

  Finally, there is the question of whether the city council approved the loan of $92,062.52.  I am going to look back at city council minutes from September and October. 

[Ted]

Good grief Ted, was that supposed to clarify anything ?

I was just posting the document.   I don't understand all the legalese either, but it does appear a lien involving 6544 W. Cermak was used to secure a loan for OOT for $92,062.52.

[markberwyn]

Also, isn't the BDC a public entity? (It files a Form 990 every year.) If so, you should be able to request to see the loan application, which may shed some light on what OOT said it would use the money for.

[mustang54]

  Ted I'm pretty sure you can use property as collateral on other property. Actually some borrowers I believe can request it as added security to recover the loan in case of default. If the BDC or the city requested it in order to make the loan it was a very smart move on their part. Especially with the mortgage lender having first position.

[Ted]

  Ted I'm pretty sure you can use property as collateral on other property. Actually some borrowers I believe can request it as added security to recover the loan in case of default. If the BDC or the city requested it in order to make the loan it was a very smart move on their part. Especially with the mortgage lender having first position.

I agree that you can use one property as collateral for a loan for another property.

But, if it involves a loan from the BDC is that ethical - that the BDC is using one business property to secure a loan for another business?

If this involved private individuals, then I would agree.  But, we are talking about a quasi-public entity using tax payer money.

  btw, the property taxes on the OOT property do not add up to $92,000 for the years 2009 through 2012.  They add up to around $78,000.  It adds up to around $93,000 if you include the 2008 tax year.

 

[Ted]

  I took a look through the city council agendas from June 2010 through December, 2013.

Unless it is under some section other than the Berwyn Development section of the agenda or unless it was a late added agenda item, I did not see this loan on any agenda between June 2010 through December 2013.

  The link for the agenda-only for the first CC meeting in October 2013 was broken.  It did not point to anything.  But, I looked at the agenda in the Full Packet and there was no item for this loan in the first city Council meeting in October in the full packet.

  The original loan for $385,000 was on the city council agenda in June of 2010 but there is no mention in that documentation of an additional loan of $92,000.

  There is an application for TIF funds for Riddles Comedy Club, 6910 Windsor in May of 2012 for $93,500 and another TIF application of $250,000 for 6910 Windsor in January of 2011.

  But, those were TIF applications for funds, not loans and the address was 6910 Windsor, not 6906-6908 Windsor

[Ted]

OK, guys, I am at a loss.

  I just spent the last few hours going through 4 years worth of city council minutes, city council agendas and city council full packets.

  No where do I see city council approval of a loan for $92,062.52 to the property at 6906-6908 Windsor.  No where. 

  I don't even see it on any city council agenda.  The original loan was approved by the city council in June of 2010 so this loan would have to have been after June of 2010.

  Can anyone find what city council meeting this loan was approved at?

   Thanks
    Ted

[buzz]

  I think rfischer is bringing up whether one property involving the city and BDC (i.e. Seneca restaurant) can and should be used to secure a loan for another property invoving the BDC (i.e. OOT).

That makes it even more curious because 6544, according to the assessor's web-site, belongs to a Steve Agos, not mentioned in any document you found.  But curious does not in any way mean illegal, as rfischer implied, it just means it's a another finance game I don't understand.

I know this is a different scenario, but stuff like this reminds me of the Anderson Ford debacle.
The City guaranteed that loan and we took a huge hit.

[Ted]

  I think rfischer is bringing up whether one property involving the city and BDC (i.e. Seneca restaurant) can and should be used to secure a loan for another property invoving the BDC (i.e. OOT).

That makes it even more curious because 6544, according to the assessor's web-site, belongs to a Steve Agos, not mentioned in any document you found.  But curious does not in any way mean illegal, as rfischer implied, it just means it's a another finance game I don't understand.

I know this is a different scenario, but stuff like this reminds me of the Anderson Ford debacle.
The City guaranteed that loan and we took a huge hit.

  I agree Buzz.  I don't know that anything illegal happened.  The BDC has loaned other businesses in Berwyn money to pay off their mortgage.  It just seems curious that the property at 6544 Cermak would be mentioned in a loan involving OOT.

  But, I still have one simple question - At what city council meeting was this loan of $92,062.52 approved by the city council? 

  Can the BDC make an additional mortgage loan to someone for a relatively large sum ($92,000) without city council approval?

[pkd50]

I don't know any of the players in all of this, but to answer your last question....with clout anything is possible. 

[justme]

 Steve Agos is the owner of Seneca and owes the city literally thousands in unpaid water bills. (Funny, when Omega in Downers Grove didn't pay their water, the city shut them down, no questions asked.)

Maybe the city put a lien on the Seneca property?

If the news was tipped off to this, we would all get answers...maybe....

I would question the comment made on the Life site but don't feel like registering

[Ted]

Steve Agos is the owner of Seneca and owes the city literally thousands in unpaid water bills. (Funny, when Omega in Downers Grove didn't pay their water, the city shut them down, no questions asked.)

Maybe the city put a lien on the Seneca property?

If the news was tipped off to this, we would all get answers...maybe....

I would question the comment made on the Life site but don't feel like registering

  According to the Cook County Recorder of Deeds site, there was a lawsuit filed in November, 2013 by Spectrum Builders against the Seneca Restaurant property, asking for a lien against the Seneca Restaurant property(PIN # 16-19-428-023-0000).

  The defendants in the lawsuit (Case # 2013CH25243) are:

  "Chicago Title Land Trust Company (successor trustee to Lake Shore National Bank) as Trustee under Trust No. 6317, Steve Agos d/b/a Seneca Restaurant, 6544 Cermak Inc. d/b/a Seneca Restaurant, Spalter Finance Company, The Berwyn Development Corporation, and Unknown Owners and Non Record Claimants"

  That is an indication that the BDC has/had some type of property ownership claim on Seneca Restaurant.

[Ted]

 More information from the Recorder of Deeds site about transactions involving Seneca restaurant and the BDC:

0. In 1988, the Seneca Restaurant property was put into a land trust - originally with Lake Shore and then transferred to Chicago Title & Trust.

1. On November 13, 2000, the Berwyn Development Corporation  was granted a "junior mortgage" in the amount of $60,000 from LaSalle Bank for the Seneca restaurant property.  There has never been a release of this mortgage recorded.

2a. On June 4, 2004, the Berwyn Development Corporation was granted another mortgage for the Seneca Restaurant property from LaSalle Bank in the amount of $390,000.  There has never been a release of this mortgage recorded either.

2b. On the same day (June 4, 2004), an assignment of the mortgage was granted by LaSalle Bank to the Berwyn Development Corporation.

3. On September 17, 2007, the Berwyn Development Corporation brought a lawsuit (Case # 2007CH25891) against Chicago Title and Trust to put a lien on the Seneca restaurant property.

[Ted]

That makes it even more curious because 6544, according to the assessor's web-site, belongs to a Steve Agos, not mentioned in any document you found.  But curious does not in any way mean illegal, as rfischer implied, it just means it's a another finance game I don't understand.

It does appear that the BDC has or had some type of ownership claim on the Seneca property.  The last two mortgages recorded involving Seneca ($60,000 and $390,000) were "on the hands" of the BDC, not Steve Agos.

  Even if none of this is illegal (I am still waiting to hear when the OOT loan was approved by the city council), it is annoying.

  It is annoying that OOT would yet again get more tax money (via the BDC) for their mortgage problems.

  It is annoying that a board member of the BDC would get a $92,062.52 loan from the BDC without city council approval.

  It is annoying that the BDC would use one business property that it apparently has ownership claims on (Seneca restaurant) to get a mortgage loan for another business property (the Olive or Twist bar).

  All of this may have been legal.  But, it is extremely annoying.  And, the BDC shell game involving Seneca restaurant  to support the loan to OOT (if that is indeed what happened) just reeks to high heaven.