A corner lot that will be the new home for DePaul University’s Blue Demons basketball team is the object of a court fight between a clout-heavy bank and Chicago’s McCormick Place over how much it’s worth.
They’re fighting over how much taxpayers will have to pay for the land at the northeast corner of Indiana Avenue and Cermak Road — a property McCormick Place has purchased twice in the past two decades.
Whatever the final price, the Metropolitan Pier and Exposition Authority, the city-state agency that runs the convention center, will have spent more than $9.6 million to reacquire a property it once bought for $650,000 — and then gave away for nothing.
Back in 1994, McPier used its eminent domain powers to seize the property for $650,000, then gave it to Lakeside Bank, whose longtime home had been gobbled up by Chicago’s ever-expanding convention center.
Two years ago, McPier decided it wanted the property back. Once again, the authority seized the bank’s branch office and land, this time to build an event center that will be DePaul’s new basketball home.
McPier paid $9.6 million, which allowed Lakeside Bank to buy a South Loop parking lot for $5.3 million — a deal McPier arranged for the bank by threatening to seize that property too. The former parking lot is now home to a two-story branch for Lakeside Bank.
Bank officials now say they want much more for the property, on which they had a 6,000-square-foot branch. And they’re hoping a Cook County jury will agree.
“The $9.6 million is a preliminary number until we go to jury trial, which we are doing,” says Philip D. Cacciatore, who, following in the footsteps of his late father Victor Cacciatore Sr., is the bank’s board chairman and chief executive officer.
Philip D. Cacciatore. | Lakeside Bank photo
Cacciatore, whose father served on DePaul’s board of trustees, won’t say how much more he thinks McPier should pay. He and McPier officials agree on this, though: The land has become far more valuable since McPier gave it to the bank for almost nothing 21 years ago.
“They gave us that land for $1,” Cacciatore says. “It was vacant. At that point in time, there was no gentrification” of McCormick Place’s South Side neighborhood.
Residential development has sparked soaring real estate values in the area.
In court documents, Lakeside’s attorneys argue that, rather than just compensate the bank for the value of the land and the demolished bank building, McPier should pay the bank for the “highest and best use of the property” — in other words, for what else could go there.
Northeast corner of Indiana and Cermak Road, site of former Lakeside Bank. | Rich Hein / Sun-Times
James Reilly, who recently retired as McPier’s chief executive officer and who oversaw the Lakeside Bank real estate deal, says he thinks the bank got a fair price at $9.6 million.
“I think we’re on absolute solid ground,” Reilly says, pointing out that McPier paid $271 a square foot, which is slightly more than it paid for other land it condemned for the event center and hotel.
McPier and the bank each obtained appraisals for the land, but neither will make those public, citing the pending court case.
McPier funds its expansion projects by borrowing money through bond sales. It repays that money, in part, by taxes it collects on restaurant meals, hotel rooms and car rentals.
Lakeside Bank, which ended last year with $1.2 billion in assets, opened in 1966, serving employees of the Lakeside Press, owned by printing behemoth R.R. Donnelley & Sons. Operating on land leased from Donnelley, Lakeside lost its original home at 2268 S. Dr. Martin Luther King Jr. Drive in 1994, when McPier seized Donnelley’s property for more convention space and a Hyatt hotel.
James Reilly, then the CEO of McPier, the Metropolitan Pier and Exposition Authority, in 2014. | Sun-Times file photo
“The bank didn’t want to move,” Reilly says. “Cacciatore Sr. called me from his deathbed … and begged us not to take the bank.”
As part of the deal, McPier agreed to find a new home for the displaced Lakeside Bank, which settled on the corner of Indiana and Cermak, three blocks from the bank’s original home. McPier directed its attorneys, the firm then known as Earl Neal & Associates, to file condemnation lawsuits to seize the land.
McPier ended up paying $650,000 for the land. Victor Cacciatore Sr. agreed to pay McPier $600,000 for the property. McPier agreed to pay Cacciatore $600,000 to relocate and build a new bank. So the bank ended up getting the property for nothing, McPier records show.
“They wanted to be in the neighborhood, and that corner made sense even though it was a derelict area,” Reilly says. “It was probably the cheapest piece of property we could have bought.”
Victor Cacciatore Sr.
Victor Cacciatore Sr., who died two years ago, had been a longtime supporter of political figures including former Gov. Rod Blagojevich. Under Cacciatore, Lakeside Bank’s board included former U.S. Attorney Dan K. Webb and William F. Cellini, the Springfield powerbroker who held sway over state contracts and jobs under a half dozen governors until he went to prison for trying to extort a businessman who invested state pension funds.
By 2013, McPier had decided to expand again, this time with another hotel to serve the convention center along with an event center, partly funded by DePaul. McPier’s law firm — now called Neal & Leroy and headed by Langdon Neal, who took over his father’s legal practice — filed a condemnation suit to acquire land, including the Lakeside Bank property, for the projects.
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McPier now has all of the land for the event center and hotel, having settled all of the lawsuits except for the one filed by Lakeside Bank.
Amid that court battle, McPier’s board passed an ordinance in September 2013 that directed Neal to help Lakeside Bank relocate to the site of a parking lot at 1350 S. Michigan Ave.
JRG Capital Partners LLC had bought the lot just four months earlier for $2.9 million.
Harry Huzenis | JRG Capital Partners photo
“We did not want to sell,” says Harry Huzenis, a partner in JRG. “Our intention was to build.”
“McPier, as we were told, had condemnation rights,” Huzenis says. “If we didn’t reach some agreement, McPier was going to condemn. Finally, they came to a price that motivated us.”
Under Illinois law, McPier has the power to seize any property within a mile of the convention center so it can relocate people or businesses it’s displaced.
Huzenis got McPier’s final offer of $5,325,250 in a letter from Neal’s law firm on Nov. 14, 2013, stating that if the offer wasn’t accepted, McPier would sue to seize the property. Huzenis took the deal, making a profit of nearly $2.5 million on the property, which he’d owned for seven months.
Though Neal and McPier negotiated the sale price, Philip Cacciatore said the bank bought the parking lot with the money it got from McPier. But he says the bank wouldn’t have had to pay as much if McPier wasn’t part of the negotiations.
“If they hadn’t gotten involved, I could have bought the property for a lot less,” Cacciatore says. “Once the owners found out they were going through eminent domain, they drove the price up.”