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Hi-Way slobbery: who blew the Boulevard Arts Center deal?

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It was one of those can't-lose community development opportunities urban planners dream about. Two groups of southwest-side activists--the Greater Southwest Development Corporation and the Boulevard Arts Center--had joined hands to transform the Hi-Way theater, a boarded-up, tax-delinquent, onetime X-rated movie house at 6315 S. Western, into an arts center. The center would benefit black and white neighborhoods throughout the southwest side, creating 700 jobs and pumping millions of desperately needed tax dollars into county and city coffers.

Everything was in place; all that was needed to get the project started was an official request from the city to the county for the property. There was only one minor hitch: if the request wasn't made before early October, the Hi-Way would be put up for auction at a scavenger sale.

For reasons unknown, the city failed to make that official request in time, and the theater was snared by a private investor at the October 29 auction. Now the community's dreams of an arts center are all but dead, leaving observers to wonder how in the world the city managed to bungle such an easy and much-needed endeavor.

"There was a big misunderstanding somewhere, and everyone's pointing fingers of blame at each other," says Harry Meyer, the Development Corporation's assistant director. "I don't care who's at fault. All I know is that someone screwed up and a lot of good people on the southwest side are paying the price."

The Development Corporation, which has helped ignite nearly a decade of development on and around the intersection of Western Avenue and 63rd Street, was brought into the project about two years ago at the request of the Boulevard Arts Center. At that time, the widely respected arts organization was in its fifth year of offering art training and dance and theater performances and had outgrown its location in a church on 51st Street.

"We looked at about 100 buildings; it was a strenuous hunt," says Patricia Devine-Reed, Boulevard's executive director. "But for one reason or another--either the conditions were too bad or the costs too great--the buildings were not appropriate."

Finally, in April of this year, they decided to fix their sights on the Hi-Way, which had been closed since 1983. Over the years the theater had become a boarded-up rattrap whose presence frightened investors away from the area.

"Transforming the Hi-Way was a big step in the right direction for Western Avenue," says Meyer. "With Boulevard as the main tenant, developing the building was very viable; it would help us finish the job of revitalizing Western Avenue."

After a little research they discovered that the theater's current owner was more than two years delinquent on property taxes. (According to Meyer, the Hi-Way's debt, including late-payment penalties, was roughly $380,000.) Instead of waiting for the Cook County treasurer's office to auction the Hi-Way off to the highest bidder at a scavenger sale, the two groups decided to take advantage of a program whereby the county forgives the debt if there's a viable plan to put the building to good use. The county transfers the title of the tax-delinquent property to a municipality, like the city of Chicago, which then donates the property for development. "In the long run, they figure that we'll be better off if the property is in good hands," says Meyer.

"In our case, as a not-for-profit, we probably wouldn't be paying property taxes on the Hi-Way," he says. "But we would fix it up so it wasn't an eyesore, and the businesses inside would create jobs and generate sales taxes. It would cost about $1.2 million to rehab the theater. We could raise that money through grants and low-interest loans, but the deal wasn't doable unless we got the building for free."

To get the building, the two groups would have to ask the city to ask the county to accept a "no-cash" bid for the Hi-Way at the scavenger sale. There's no guarantee that the city would win possession even if the county agreed: according to county rules, a private investor's bid supersedes the city's if he pays at least $1 more than what was owed in taxes (in this case, $380,001). In addition, the current property owner has six months after the auction to retain his property by paying off his tax debt.

But neither event was likely, says Meyer. "Who would want to spend $380,000 for the Hi-Way? And why would the old owner suddenly want to pay his debt? It doesn't make sense. The way we saw it, the Hi-Way would be ours once we had city and county support."

Starting in late April, Meyer, his boss Jim Capraro, and Devine-Reed began looking for investors, eventually winning commitments for about $1 million in grants and loans from various foundations and governmental bodies.

"If the city was going to submit a no-cash bid on our behalf in time for the auction we had to get our proposal to them by May 15," says Meyer. "We had to work our tails off putting together pages and pages of documentation that would satisfy the city's concerns about how we planned to finance the project."

During those first hectic weeks of May, Meyer, Capraro, and Devine-Reed were in constant contact with the city's Department of Economic Development. It was clear that Mayor Daley actively endorsed the arts center, and on July 24 the City Council unanimously approved it as well. Meyer and company assumed the city would immediately send their proposal to the County Board's Tax Delinquency Committee for review.

Instead, city officials let nearly two and a half months pass before they sent the proposal to the county, and apparently no one outside Mayor Daley's inner circle knows why. DED officials would not comment, and the one public information officer who was dispatched to answer questions didn't even know the specifics of the case.

County officials, on the other hand, made themselves readily accessible for comment. "The city just didn't get their proposal to us in time; if you want to know why, you'll have to ask them," says county commissioner Herbert Schumann Jr., who chairs the tax-delinquency committee. "Their first correspondence was from DED on October 4. That was a letter to board president [Richard] Phelan that did nothing more than notify us of the plan."

Two weeks later the city sent Schumann a more specific, though still incomplete, description of the proposal. Schumann says he asked for more information but that the city didn't seem to be in any great hurry to provide it. "They said there wasn't a rush, since the earliest the Hi-Way could go up for sale was November 11," says Schumann. "That's what they told us, anyway."

And why didn't Schumann confirm this information with County Treasurer Ed Rosewell?

"We get hundreds of requests for no-cash bids," says Schumann. "It's the city's responsibility to make sure that all the details are in order."

Meanwhile, Rosewell's office--unaware of the arts center proposal--had scheduled the Hi-Way to be auctioned on Tuesday, October 29. On October 28 Meyer got the bad news.

"I had been calling people at DED for a week or so asking if the property was coming up for sale, and I never got a response," says Meyer. "Finally, on October 28, the day before the auction, I got this call from someone in DED who basically said, 'Hey, guess what? The county's not prepared to make the no-cash bid on our behalf.'"

In a panic, Meyer called Schumann's office, where he learned that the tax-delinquent committee wasn't scheduled to hear the proposal until October 31. So he called Rosewell's office, where he learned that he could only halt the auction by obtaining a temporary restraining order from a judge.

"I don't know anything about TROs; I'm no lawyer," says Meyer. "I'm depending on the city for my information. I asked DED: should we seek a TRO? And they said no. They said there's only a 2 percent chance that anyone will bid on this property. In retrospect I have to wonder, what would it have hurt to get a TRO? And how in the world could they calculate the chances down to 2 percent? But at the time I went along; I figured these are the people who know."

The October 29 scavenger sale began at 8:30 in the morning; within an hour someone named Romel Koktapeh had bought the building for $19,500.

"I have never been in the Hi-Way, but I drove by and I thought it had a lot of character," says Koktapeh, a regular at such scavenger sales. "I didn't know people wanted to put an arts center there; I didn't know what I was going to do with it at all. I was going to decide that later."

When Meyer found out the Hi-Way had been auctioned, he headed straight for the Department of Economic Development. "I was outraged at the DED," says Meyer. "They had told me it wasn't going to be a problem. They had told me that no one would bid on the building. Now they told me to have the County Board overturn the sale."

But treasury officials say an auction cannot be overturned. "What we have here is a valid sale on those back taxes, and neither we nor the County Board have any grounds to put that sale aside," says Ron Marshall, a spokesman for the treasurer. "This is basic tax sale 101."

Nonetheless, a spokesman for the city's Law Department says the city is "consulting with the state's attorney's office to determine whether the sale will ultimately be confirmed, and we are exploring whether there are any other ways to go forward with the project."

In other words, to avoid further embarrassment the Daley administration may ask a judge to nix the sale or attempt to buy the Hi-Way from Koktapeh.

"I did get a call from someone at DED, but I don't know what I'm going to do," says Koktapeh. "All I know is that I didn't do anything wrong. I bid and I paid. The guys in the scavenger sale's office were all laughing. They said this had never happened before and they guaranteed it wouldn't happen again."

That declaration, however, is of little solace to arts center supporters. "We did everything that we were supposed to do and then we wind up getting screwed," says Meyer. "This isn't the way city government is supposed to work."

Art accompanying story in printed newspaper (not available in this archive): photo/Steven D. Arazmus.

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