After Co-Signing On Defaulted Loan, Maywood Forced To Pay $300K Settlement For Failed Grocery Store

Maywood Market photo

A photograph of the inside of Maywood Market when it was opened. | Benjamin Chernivsky/Chicago Tribune

Maywood MarketThursday, April 14, 2016 || By Michael Romain || Update: 7:26 PM

When it opened six years ago, Maywood Market was touted as the village’s “first full-service grocery store in more than 20 years” and former mayor Henderson Yarbrough noted that it was going to be the “catalyst to future economic development,” according to a statement released by the village at the time and subsequently included in a 2011 article by the Better Government Association.

Today, the site of the grocery store, which records indicate cost around $3.25 million in taxpayer money to develop, sits empty. And, far from catalyzing economic growth, the store — which closed around a year after it opened in 2010 — has turned out to be the gift that keeps on taking.

In 2010, the developer of Maywood Market needed $250,000 to “float cash flow for operations,” according to an August 2015 memo drafted by village attorney Michael Jurusik. But Seaway Bank, formerly First Suburban National Bank, wouldn’t loan the money unless the Village of Maywood essentially co-signed for the loan, which it agreed to do.

When the developer defaulted on the $250,000 loan in 2011, Seaway decided to pursue the party in the best position to pay the loan back — the village.

“That promissory note of $250,000 was not paid,” said Jurusik at an April 13 board meeting during which the repayment was discussed. “Interest has been accruing since 2010.”

The amount of the principal, the interest, late penalties and attorney’s fees totals more than $300,000, records indicate. Jurusik recommended that the board members vote to pay the settlement, since if “you litigated it you’d lose.”

Last year, Jurusik said, Seaway demanded that the village pay around $311,000 — an amount that included the roughly $250,000 outstanding principal and roughly $61,000 in accrued interest — in full and immediately.

Seaway also filed a lawsuit against the Maywood Market developers, listed as George Basdekis, Bob Haralamopoulos and Jim Stathopoulos. Jurusik said the bank hasn’t had any success in collecting money from the owners because when the grocery store failed, the owners didn’t have many assets to pursue.

At Wednesday’s board meeting, Jurusik touted his ability to negotiate the money owed by the village down to $300,000 and was also able to talk Seaway into agreeing to a 30-month payment arrangement whereby the village would pay down $10,000 a month without the accrual of new late fines, interest and additional fees.

He also noted that, in the unlikely event that the developers do repay Seaway, then the bank will provide the village “a credit equal to the amount of the funds” recovered, according to the settlement agreement.

Jurusik said the village needs to pay down the money if it’s to make the site attractive to the several prospective developers that have been recently eyeing the site. He also noted that the settlement agreement is a culmination of the village’s years-long attempt to secure the site from its previous owner in order to get it back on the tax rolls. When the grocery store went out of business, the building’s ownership, and all of the accompanying liabilities, virtually reverted back to the village.

In addition to the $300,000 settlement payment, the village would also need to pay the costs of extensive electrical repairs on the vacant building before it can turn it over to prospective developers.

Village officials said that, several years ago, the building was vandalized and more than $200,000 worth of copper wiring was stolen from inside of it. The village has also put thousands of dollars into policing services, materials and lighting to secure the boarded-up building, which has become a constant ache for some residents and board members.

“We’re talking about over $300,000,” said Trustee Isiah Brandon. “That’s more streets that could’ve been repaired, more folks who could’ve been hired. I guess the village co-signed … to support this particular business, which I believe was a huge mistake as well.”

“Where does it end? Where does it end? It ends in our pockets,” said Lucille Redmond, a resident who has been outspoken against the Maywood Market development and the village’s handling of the building since the grocery store went out of business.

“We are steady losing money on this Maywood Market that is sitting there being vandalized and just deteriorating,” she said at the April 13 meeting. “Taxpayer dollars are going to waste.”

Redmond brought up the development’s ties to former mayor Yarbrough, questioning whether or not Yarbrough’s sister-in-law, Sharlene Estelle, pocketed any money after the vandalism. When it opened, Estelle’s State Farm insurance agency was hired to provide the insurance policy for the grocery store.

According to the BGA article Redmond cited in her comments, after the store closed it would have been likely that Estelle would “lose the Maywood Market insurance policy as the coverage shifts to the village government’s existing policy,” according to village officials BGA reporters interviewed at the time.

At Wednesday’s meeting, Trustee Michael Rogers noted that the building is currently insured, but that a claim may not have been filed after the act of vandalism in a timely manner for a policy to cover the stolen wiring. The board didn’t indicate which firm the village is currently contracting with to provide insurance.

“The building is still insured. It was insured as far as I know throughout the course of time, but recently … whenever the electrical things were taken was years ago,” he said. “You have to file the claim within a reasonable amount of time usually … we really wouldn’t be able to replace that wiring off of a claim now because that was so long ago.”

The board voted 4 to 2 to consider approving the $300,000 settlement payment at the next regular board meeting on April 19. Trustee Isiah Brandon and Mayor Edwenna Perkins both voted against the motion. Trustee Yarbrough was absent.

If the board approves the payment, part of the money will come out of the Madison Street TIF fund, Jurusik said. VFP

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4 thoughts on “After Co-Signing On Defaulted Loan, Maywood Forced To Pay $300K Settlement For Failed Grocery Store

  1. Mr. Romain, could I trouble you to do a little research for the voting public?

    Who was sitting on the Village of Maywood board, and how did each member vote when the decision was made to indemnify public assets for the benefit of a private business venture. I’d like to make sure I vote these same generous benefactors back into office so I can propose some of my cockamamie business ideas before some more-than-willing venture capitalists who have had so much experience minimizing private risk with public money.

  2. @John Yi On the documentation attached to the agenda for the April 13, 2016 meeting, the documentation shows that the co-signing for the loan was signed by then Maywood Village Manager, Jason Irvin. During that time, Henderson Yarbrough was the Mayor.

    My question concerning this is if the owners of the store did not have the financial means to continue operating prior to the loan, what would make anyone (the Mayor, Village Board, Village Attorney, Bank officials) think this money would turn things around? I understand that from time-to-time, alternative means of financing are needed. However, the alternative means for the entire project had already placed a $3.25 million burden on the already overtaxed citizens of the Village. I understand that the village attorney “negotiated” this settlement, but where was “expertise” on advising the Village as to not co-sign for a loan that was just a mess from the beginning? It amazes me that the people who have the greatest say so on what happens in the village of Maywood DO NOT live in the village and are not taxpayers of the village. Check the list of village employees and department heads. Just see how many who control what is spent have an actual vested interest in the village (property, homes, businesses, etc.).

  3. This whole deal was shady form the start. First, the guys who owned the cleaners 1st and Lake got an excessively tidy sum for the property to redevelop at that corner (failed condo project, lot is empty) Subsequently, the same Greek guys that owned the cleaners come in to develop the Maywood Market (many people questioned what experience they had running a grocery store).Store fails in a very short period of time–most citizens that did try to shop there question whether they know how to run a grocery effectively, which they didn’t–just as we suspected.
    Now, with this recent revelation–how can you have received a very tidy sum $$ for the cleaners you just sold, then convince certain powers within the Village to let you run a grocery store which you have no experience at (and get the Village and taxpayer to pay for most of it)–and then tell he Village and bank you have no operating capitol for ongoing operation of the store either, so need to Village to co-sign a $250,000 loan??? (then disappear and leave us taxpayers holding the bag–again?)
    The condo project was shady and this one is glaringly so, it cost us taxpayers a fortune and we have nothing to show for it. A lot of citizens said this years ago, but this needs an investigation by the states attny. How much you want to bet it won’t happen though? Wake up citizens!

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