Real Estate & Property Law

Difficulty of obtaining tenants

By Alan Ackerman

Daily Herald

The former owners of an Arlington Heights strip mall sued the village in federal court Friday, seeking more than $5 million for losses allegedly due to the village scaring tenants away.

Ron Popp and Victor Valenti bought the Arlin-Golf mall, a short strip of stores off Arlington Heights Road just north of Golf Road in June 2001, said their attorney Joseph M. Williams.

Contrary to reassurances given by the village before the pair bought the property, Williams claims, the village announced six months later in January 2002 it was creating a tax increment financing district to redevelop the mall and the adjacent International Plaza at Golf and Arlington Heights Road.

In the meantime, Popp and Victor had put money into fixing the place up, which increased the occupancy rate to about 74 percent, Williams said. But the suit claims that village representatives repeatedly told prospective clients they were 60 to 90 days from taking the land by eminent domain and leveling the buildings.

In one case, the suit claims, a tenant the pair managed to land was told by the village that the municipality actually owned the land, which was not true, the suit claims.

Meanwhile, the suit claims the village paid one tenant, Bangkok Cafe, $30,000 to relocate, and other tenants fled, fearing the mall was doomed, Williams said.

Even though the pair could not retain tenants, the taxes on the property went from $27,000 when they bought to $60,000 when they sold late last year.

The village eventually paid $1.6 million for the Arlin-Golf mall, which the suit claims was less than its true $2 million value. Williams claimed Popp and Valenti sold only because of financial threats the village made against them and the fact that they were on the verge of financial ruin.

Additionally, the suit seeks over $5 million in lost rentals and other expenses.

The difficulty of obtaining tenants when an owner faces the prospect of condemnation is overwhelming. The eminent domain process is difficult under the best of circumstances. However, when one does seek rental reimbursement the local statutes and laws must be closely followed.

Full post as published by National Eminent Domain Blog on April 08, 2009 (boomark / email).