Jeff Brown’s bridge lending firm has lost patience with long-stalled housing development plans botched by investors in the embattled builder CA Ventures.
Brown’s Wheaton-based debt fund T2 Capital Management filed a foreclosure lawsuit this month against affiliates of CA Ventures that own a vacant development site in the northern Chicago suburb of Mundelein where as many as 401 housing units alongside a 120-unit senior care facility were once envisioned, public records show.
But after almost a decade of fits and starts, construction hasn’t commenced on the nearly 10-acre site at 440 East Crystal Street, which is owned by an entity called SB Mundelein Station that traces back to Springbank Capital Advisors, a company that partnered with CA Ventures on multiple development deals in the area that failed to come to fruition.
T2 alleges in its foreclosure complaint that SB Mundelein failed to repay a $2 million loan it took out in 2015 using the property as collateral, despite agreeing to several modifications that extended the debt’s maturity date to September 2023.
Another $1.9 million in junior mortgages against the property are subordinate to T2’s claim to the property, it alleges. The junior mortgages were taken out by SB Mundelein from investors who put money into other projects that CA Ventures headed up, some of which were eventually abandoned. Jeff Krol, a frequent collaborator of CA Ventures, led several of the investor entities that loaned SB Mundelein the additional funds on top of the T2 debt.
“We’re hopeful to work something out with T2 so we can sell this property, which is the quickest way to get everybody paid back,” Krol said, adding that several buyers have expressed interest in the site in recent months but a deal hasn’t come together. The site has been listed for sale with CBRE brokers, with an asking price of just under $4.8 million, a brochure shows.
T2 is seeking to be repaid over $3.1 million, including over $1 million in interest, much of it calculated at a higher “default rate” laid out in the loan documents since the loan has been delinquent since 2023, the suit claims. Brown said his firm wouldn’t comment on pending litigation.
The multifamily arm of CA Ventures guaranteed to repay the T2 loan if certain “recourse events” occurred with the parcel, the lawsuit shows. T2 claims the guarantee has been triggered because it didn’t authorize SB Mundelein to take out over $700,000 of the junior debt now encumbering the property.
CA Ventures CEO Tom Scott has said his firm remains committed to defending several lawsuits, and he’s planning on relaunching a new investment vehicle that could offer opportunities to financial backers of some of CA’s troubled deals to recover.
Springbank initially pitched 333 apartments, 68 townhomes and a 120-unit senior care facility on an adjacent site in Mundelein, according to a 2017 Daily Herald report. But then the village government and SB Mundelein performed a land swap in which the developer took over the bordering parcel now targeted by T2’s foreclosure action.
The village built a park on its portion of the site, which used to be a guitar factory, while SB Mundelein switched gears to a plan with 86 townhomes for its parcel, which used to be the village’s public works headquarters.
That also hasn’t worked out yet. Another developer, M/I Homes, wanted to make a deal for the land in 2023 and build 125 townhomes, although so far that plan hasn’t moved forward, either.
The likely need for any developer to get a tax increment financing package from the village has been one of the roadblocks, as public officials were initially hesitant to provide such assistance, Krol said. However, they may be more flexible today, he said. The parcel is near the suburb’s downtown train station, and village officials likely want to see it put to use again.
“Previously, the village didn’t take it as seriously as they do now. I think they realize there have been enough stops and starts that they need to,” Krol said. Village officials didn’t return a request for comment. David Trandel, who played a key role in leading Springbank, didn’t return requests for comment.
In Winnetka, developer John Murphy last year took over a development site with a housing plan after a previous construction proposal for the property by Springbank and CA Ventures also stalled out.
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