Skokie Developer E&M Hit with $24M Hotel Site Foreclosure

Developer Mark Meyer has run into his latest roadblock at a troubled downtown Skokie hotel project.

Meyer’s firm E&M Strategic is now facing a foreclosure lawsuit over its $23.7 million construction loan, igniting another dispute in a series of setbacks for the hospitality plan meant to enhance the downtown of the northern Chicago suburb.

Plans to bring a mixed-use building featuring a Homewood Suites by Hilton Hotel and Conference Center to 4930 Oakton Street in Skokie broke ground in 2022, with the village government agreeing to build a $9.5 million parking garage nearby.

The hotel was set to have 143 rooms as well as a rooftop bar, 13,000 square feet of ground-floor retail, 10,000 square feet of indoor meeting space and 5,000 square feet of outdoor meeting space. Early estimates suggested the hotel would attract 47,000 guests who would spend $12.5 million annually in Skokie and generate 65 to 80 jobs.

Yet the road since its beginning stages has been rocky for E&M. The project encountered a budget shortfall, ongoing litigation over liens filed against the developer alleging contractors have gone unpaid for their work, and now a foreclosure on the loan supporting its construction.

A spokesperson for the village of Skokie said officials are “frustrated by the pause in construction,” and expressed optimism the project would move forward, perhaps with a different developer.

Financing shortfalls and legal disputes over liens can leave a stalled project to hang in limbo for months or years unless there’s financial means to breathe new life into a development.

In this case, that relief just might come from mortgage lender X-Caliber Funding’s decision to foreclose on the construction loan provided to Meyer in 2022 and strip his firm’s control of the site to open it back up to the market.

“Recent developer inquiries and interest in the project highlight its continued viability,” the village spokesperson said.

X-Caliber’s complaint filed late last month claims that E&M failed to obtain prior written consent from the lender before increasing its construction budget by about $17.3 million, resulting in a breach of contract.

The developer also allegedly failed to deposit funds back into its construction reserve account when asked, failed to fund other “payables” associated with the property and did not “maintain adequate capital for its business operations,” as required by the mortgage agreement, according to court records.

In ongoing litigation over the property’s outstanding mechanic’s liens, attorneys for E&M claimed that the project’s general contractor, Russell Construction Company, gave E&M an initial cost estimate that was much lower than what it turned out to cost, which was why they needed to increase the project budget, records show.

Regardless, X-Caliber moved to foreclose on the construction loan, which has a remaining unpaid principal balance of just under $9.4 million. It asked a Cook County Circuit Court judge to order the property to be sold at auction.

An attorney for X-Caliber Funding declined to comment on behalf of the lender. An attorney for E&M Strategic did not respond to requests for comment made Wednesday. Russell Construction also didn’t return a request for comment.

The hotel project was six years in the making when it broke ground back in 2022, and the partially completed structure has been sitting on the site since Meyer paused construction less than a year later.

A few months into construction, various mechanic’s liens were filed against the property by subcontractors hired by Russell Construction. Scaffolding rental service Safway Atlantic, for example, recorded a lien on the property for just under $300,000 for a crane and hoists supplied to the site, according to court records. Safway is one of several parties claiming it hasn’t been paid for work performed on the property.

When the project hit a budget shortfall and Meyer paused construction in 2023, subcontractors moved to enforce their mechanic’s liens against the property, filing lawsuits in Cook County court to foreclose on the liens, public records show. Since then, the subcontractors have been duking it out over whose lien should be first in line to be paid out.

Skokie’s Village Board offered to help Meyer close a budget shortfall of about $10 million with a loan of $4.5 million in February of 2023. The decision was made by board members in a closed-door executive session that the Illinois Attorney General’s Office has since found violated the Open Meetings Act, Patch reported last year.

The $4.5 million loan was going to be granted in addition to the $13.5 million in tax increment financing package that the village agreed to contribute to the development when it was approved. However, the $4.5 million was ultimately never released to Meyer because he was unable to find other investors to contribute the rest of the funds needed to move forward with the project, according to the village.

Editor’s note: This story was updated to correct the name of the general contractor on the project.