Building anxiety in Orland Park
BY SUSAN DEMAR LAFFERTY email@example.com August 26, 2011 10:02PM
Flaherty and Collins, the developer of the Echelon property in Matteson, has not completed the project or responded to resident complaints. | Larry Ruehl~Sun-Times Media
Open house Monday
The village of Orland Park is hosting an open house from 6 to 8 p.m. Monday at the civic center, 14750 S. Ravinia Ave.
Stations will be set up with displays on various subjects including the Ninety7Fifty apartment complex, the financing of the development and the overall Main Street triangle redevelopment.
The public is invited to drop by, view displays and ask questions of village staff, officials and the developer.
“We will stay as late as necessary to answer questions,” village manager Paul Grimes said.
Updated: November 4, 2011 10:54AM
Orland Park officials say the proposed luxury apartment building, Ninety7Fifty on the Park, will boost the local economy and serve as an anchor to further development, but similar projects — albeit condominiums — by the hand-picked developer have flopped elsewhere.
Take the Echelon of Matteson.
At a development near 207th Street and Cicero Avenue that Indianapolis-based Flaherty and Collins launched in 2007, condominium owners are threatening to sue over what they say is poor workmanship and shoddy construction. Flaherty and Collins also has troubled
projects in North Carolina that ended up in bankruptcy — an ambitious 53-story condo tower in Charlotte that was never completed, and a 274-unit apartment complex in Raleigh, later sold to a Chicago investment firm, according to the Indianapolis Business Journal.
“We’re apartment guys who dabbled in condos. We’re batting 1.000 in apartments and we’re 0-for-2 in condos,” CEO Dan Flaherty told the SouthtownStar. “Apartments everywhere are doing really well, and I don’t see that market changing.”
Orland Park’s plan to borrow $62 million to finance an upscale apartment complex in the Main Street triangle will be the subject of a public open house Monday night. Details of the village’s agreement with Flaherty and Collins Properties will be reviewed 6 to 8 p.m. at the Orland Park Civic Center, 14750 S. Ravinia Ave.
The proposal is unlike any Orland Park has offered, and between the cost and the accompanying displacement of several Orland Plaza businesses, the entire project has drawn a good deal of public scrutiny.
As the plan nears its most critical stage — it’s expected to come before the village board on Sept. 6 — supporters and detractors are still weighing in.
Matteson condos a bust
From all outward appearances, the 50 units at the Echelon are very attractive condos in a convenient location. But after the first phase of Flaherty and Collins’ proposed 168-unit development was complete, the condo market tanked and only one-third of the units were built.
Current owners have a laundry list of issues that include leaking windows, leaking plumbing, mold, mismatched cabinets, buckling floors and no soundproofing. They also were promised a pool and clubhouse that never got built because not enough units were sold, they said.
Condo owner Nicole Taylor said the firm “should not be allowed to build again.”
But according to the Indianapolis journal, the 18-year-old company has a “sterling record.” It manages more than 12,000 apartment units and nearly two dozen projects in 10 states.
Still, Echelon resident Maxine Carr said every time it rains, water comes in her living room window, causing puddles on the window sill and wood laminate floor. She fears she will get mold, like another neighbor.
Carr filed an insurance claim for damages to the new unit she bought one year ago, but her insurance company denied it. She provided the letter from the insurance company saying water damage was due to “faulty workmanship to the flashing and the installation of the deck above” her unit.
When she called Flaherty and Collins, she said she was told her condo was no longer under warranty.
Carr said she may have to sue for repairs and damages.
Barb Hollivay, who purchased her unit three years ago, has a hole in her garage ceiling from her upstairs neighbor’s leaking bathroom.
Noise from adjoining units is so loud, “it feels like they are living in the house with me,” she said. “There is no privacy.”
Residents said they can literally hear every move their neighbors make. Sometimes they can even see what others are doing through the vents in the walls, Taylor said.
They said they complain at homeowners association meetings, to the property management company and to Flaherty and Collins but never get a response.
“People have just accepted it because they believe they can’t get anyone to hear them,” Hollivay said.
The Better Business Bureau reported that three complaints from Echelon owners were filed in 2008, 2009 and 2011, but all were resolved with the BBB’s assistance, according to its website.
Flaherty said he was not aware of any unresolved complaints in Matteson.
“Whenever we get a call, we fix what needs to be fixed,” he said. “This is news to me. We don’t run from problems.”
Nevertheless, the Orland Park project will be “totally different,” than Matteson, Flaherty said.
Matteson has “significantly different” building standards, and Echelon was designed as a low-cost project to make it attractive to buyers, he said.
The Echelon was his firm’s first venture into the condominium market, he said. The plan was to build 168 units, but after the first 50 were built, the market slowed down. Now, they are “waiting it out,” he said.
“They were wise not to finish building,” said Pam Hirth, Matteson’s director of community development. “We would not want them built and standing empty.”
More condo chaos
Another unsuccessful Flaherty and Collins condo project — 210 Trade in Charlotte, N.C. — was never built. Steel was erected two years ago over the lower-level retail shops, but that’s how it still stands today in Charlotte’s downtown area, said David Weekly, of Charlotte’s land-use department.
He said there were timing issues and legal issues with the building permit.
“We never abandoned that deal. It just didn’t make economic sense,” Flaherty said.
The market started going bad early in that process.
“It made no sense to build. Everyone would have lost more money,” he said.
At one time, Orland Park wanted condos to anchor the Main Street project, but village officials changed course more than a year ago. The market for condos and that for apartments are distinctly different, Flaherty said, which is why he doesn’t except similar results in Orland Park.
Orland Park village manager Paul Grimes said officials here are well aware of Flaherty and Collins’ bankruptcy issues.
“Most developers have projects that do not work out,” Grimes said. “Flaherty and Collins’ reputation is very solid. Many developers from five years ago don’t exist today. They came through (the recession) pretty well.
“We are confident that they are a good partner,” he said.
The Orland Park project will be very similar to one Flaherty and Collins did in Indianapolis — Cosmopolitan on the Canal, which has 218 apartment units, a saltwater pool, aqua lounge and cafe with first-floor retail.
According to property manager Karla Snider, a Flaherty and Collins employee, Cosmopolitan has had a waiting list for residential units since October, and 7,000 square feet out of 10,000 square feet available for retail space has been filled.
The first phase of apartments opened in February 2010 and the second phase in May 2010. It includes studio, one- and two-bedroom units renting for between $1,000 and $2,575 monthly.
Renters are mostly young, single, urban professionals. One difference from Orland Park is that the Cosmopolitan on the Canal project is in downtown Indianapolis, a city of about 800,000 people.
Flaherty and Collins also hopes to break ground next spring on a similar apartment complex near a new train station in Ramsey, Minn.
The city of Ramsey is financing the project to the tune of $6.8 million and expects final approval of the deal in the next few months, according to Heidi Nelson, executive director of Ramsey’s Housing and Redevelopment Authority.
Trustees there questioned the developer’s bankruptcy cases and are satisfied with the responses they got from Flaherty and Collins, she said.
They also have been in touch with Orland Park officials and did their own market studies, she said.
Ramsey does not have a lot of rental housing, she said.
“We are pushing the market. It’s a new product for this area,” Nelson said.
It’s also a new product for Orland Park, but one that will do well, given the “great visibility and high traffic,” said Rich Killian, CEO of Prospect Equities and owner of Orland Park’s largest real estate office by number of agents.
The Ninety7Fifty apartment project is “smarter than condos,” Killian said. The apartment market is “absolutely thriving” because people are not qualifying for mortgages, he said.
He predicts a lot of people will want to live there because it’s close to transportation.
“Orland has a lot more going on than just the mall. People come from other towns to Orland Park,” said Killian, who grew up in the village. “This will be good for the whole area.”
Flaherty said apartments at a rail stop are “as safe as you can get” in the current market.
Potential renters of the luxury units are condo buyers who don’t have good credit or a down payment or are afraid of owning property because of declining values, Flaherty said.
He admits that it is a “complicated transaction,” but it is also “low risk,” he said, because of all the “rights and protections” given to Orland Park.
The village should recover its money in 10 years, Flaherty said.
“Once it is built, everyone will love it,” he said. “I give Orland Park officials credit for their long-term thinking.”