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Officially Screwed

In one amazingly dumb deal, the city stiffed a property owner, the developer who would get his land, and itself.



For years the city hounded Walter Ogloza to hurry up and sell his properties on West Lawrence and North Laramie, insisting they were needed for a condominium complex that would rejuvenate the area. In October Ogloza crumbled and sold his two lots. The city finally got the land it coveted. But not only has no development begun, Ogloza hasn't gotten paid. "The city bugged me--'Sell, Walter, sell,'" he says. "So I sold. Now where are the condos? They were supposed to pay me in November. It's March. Where's my money?"

It's the latest stumble in the ongoing fiasco of the Jefferson Park tax increment financing district, a doozy of a deal even by TIF standards. As I wrote in the Works last month, the TIF was set up in 1998 not to counter blight--the area was booming--but on the flimsy grounds that Jefferson Park was at risk of future blight. In 2002 the city decided to take control of a stretch of slightly over two blocks within the TIF and turn them over to Demetrios "Jimmy" Kozonis, a well-connected developer and close ally of 45th Ward alderman Patrick Levar, whose ward office was in one of Kozonis's properties at the time.

From the start other property owners resisted. One of them, Tony Kurzac, wound up selling Kozonis his tire store after the city unveiled its plans. A second, bike store owner Donald Zordani, held out, then aggressively sued, charging the city with "using the power of government to allow [Kozonis] to avoid the open real estate market and develop an area . . . for purely private gain." The city backed off on its attempt to seize Zordani's land, and at a public meeting in November Kozonis proposed a new development plan that would build around the bike store.

Ogloza owned two vacant properties, one at 5201 W. Lawrence, the other just across the street at 4759 N. Laramie. In a 2002 hearing regarding the Jefferson Park TIF, he testified that he'd already gone to the planning department with a proposal to build a medical clinic on the Laramie site and a shopping mall on Lawrence. The planning department turned him down. Tom Loverde, the official he'd approached, later went on to work as development director for Kozonis's company Mega Realty.

For a time in 2003, Ogloza says, he negotiated directly with Kozonis, but they could never agree on a price. On December 21, 2004, the city sued to seize his property using the power of eminent domain. In most such cases it's only a matter of time before the city gets its land--the main issue is how much it will have to pay the owner. Ogloza figured he'd run out of options. "They wouldn't let me build on it, and once they sued me I couldn't sell it to anyone else," he says. "What could I do?"

After several months of haggling, lawyers for the city approved purchase agreements with Ogloza's lawyer, agreeing to pay $1,424,500 for the two properties, according to court records. The city promised to deposit the sales money in an account with the county treasurer by November 30, 2005. In the meantime Ogloza and his wife, Liz, used one of the agreements as collateral to secure a $700,000 loan to buy another piece of property. But November 30 came and went, and the money still hadn't been deposited. So Ogloza had his lawyer, Daniel Shapiro, call Ellen Avery, the lawyer for the city. Avery promised to look into what was causing the holdup.

Days turned into weeks, and Ogloza was in a jam. He was ringing up hundreds of dollars in interest on his new loan, and over the summer city inspectors had ticketed the properties, citing him for weeds and debris. While Shapiro begged Avery to get the city to pay up, Ogloza ran in and out of various courts, pleading with hearing officers to rescind the fines, which by December approached $5,000 including late fees. "I told the hearing officer the city owns the land--how can the city fine the city?" Ogloza says. "They said, 'Has the city paid you?' No. 'Well, then it's your land.'"

In fact, the city never planned to pay for his property. When the Community Development Commission, the mayorally appointed body that oversees TIFs, gave final approval to the Jefferson Park development plan in March 2004, planners and lawyers for the city made a big deal out of the fact that the city itself would not be responsible for buying the Ogloza and Zordani properties. Instead, "the planning department's intention is to require [Kozonis] to front fund the acquisition costs for these parcels," Kathleen Ransford, a lawyer for the city, explained at the hearing. "So the city is going to seek to acquire them, but the city is going to ask [Kozonis] to pay the acquisition prices to the property owners." In effect the city was acting like a broker--a questionable use of eminent domain that more than one commissioner challenged, though the CDC narrowly approved the deal anyway.

That deal also allowed Kozonis to build a seven-story, 132-unit condominium complex on the site. But when he unveiled his plans last November the community erupted at the thought of seven stories of condos towering over its bungalows and ranch houses. In the face of the opposition, Alderman Levar (who didn't return calls for this story) flip-flopped, vowing to prevent Kozonis or any other developer on the block from building higher than six stories.

The city "put the cart before the horse," says Ron Ernst, a Jefferson Park activist and longtime opponent of the TIF development plan for West Lawrence. "They made a mockery of the zoning process by entering an agreement to build something that requires a zoning change even though they had not asked the community for its consent."

In the process Kozonis, for all his clout and connections, has been left hanging. "It's hard to feel sorry for him," says Ernst. "But the city did agree to let him build seven stories, and now it's backing out."

The city never offered Ogloza a reason for why it hadn't paid him. But Ernst suspects that Levar's flip-flop explains it. "You have to figure the city's saying 'Come on, Jimmy, give us the money,' and Kozonis is saying 'No way. If I don't get my seven-story building you don't get the acquisition money,'" Ernst says. "And you know . . . it's not his fault the city made a stupid deal."

Kozonis didn't go out of his way to disagree with Ernst's explanation. When I asked him if he has a binding agreement with the city he said, "I have a lot of agreements with a lot of people. They change their minds. I don't want to have any agreements with anyone anymore." In response to all other questions he had the same answer: "Ask the city."

According to Jennifer Hoyle, spokesperson for the city's law department, the deal with Kozonis was void once the city backed off on seizing Zordani's property. True, Kozonis had floated an alternative plan, but "the agreement that the developer reimburse us was contingent on getting the bike shop," she says. As for why it didn't pay Ogloza, Hoyle says "details had to be worked out."

On March 14 Judge Alexander White ordered the city to close with Ogloza by March 31. In addition to more than $1.4 million for his land, Ogloza's now owed interest on his loan and an unspecified amount in attorney's fees; his fines for weeds and debris have been waived. It remains to be seen whether another deal can be brokered with Kozonis or some other developer.

"The city couldn't have screwed this up any more if they tried," says Ernst. "They forced Ogloza to give up his land and now they don't know what to do with it. They can't build their seven stories like they planned. And now they're out $1.4 million or whatever for land they never intended to buy in the first place. It will probably stay vacant for years."

Art accompanying story in printed newspaper (not available in this archive): photo/Carlos J. Ortiz.

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