Sugar Grove to subdivision: No more building until you pay up

Owners of vacant lots in the unfinished Hannaford Farm subdivision are being held responsible by Sugar Grove for costs of public improvements not done.

In late March the village placed liens on 83 lots, saying that the owners are in breach of the subdivision's annexation agreement with the village. Most of the lots are owned by the developer, Hannaford Farm LLC, but 18 are owned by custom builders and individuals.

Until the liens are paid or otherwise released, nothing can be built on the lots.

Streets need a finishing layer of asphalt, manholes need to be crowned, and a section of a bike trail that was cut out needs to be replaced, among other work, Village President Sean Michels said. The village estimates the cost of the work at $1 million.

"We are trying to protect the existing homeowners," who have a right to expect the work to be done and who have already paid for their share of it, Michels said. The subdivision was approved for 139 lots and 40 are occupied.

Any money collected off the liens will be held in escrow, Michels said, until the village suit against Hannaford Farm LLC for breach of the agreement is resolved.

The village tried to draw on the letter of credit the developers submitted when construction began to guarantee required public improvements were finished. That letter of credit was underwritten by Benchmark Bank, which was shut down last fall by the FDIC and its operations turned over to MB Financial. Michels said the village hasn't been able to get the money from the bank.

"The normal course of action is not the normal course," Michels said.

Ed Saloga of Sugar Grove, one of the primary Hannaford developers, said "there is a lot of interest in the subdivision" but that the liens "will definitely slow things down.

"That's just another fee that will have to be passed on" to buyers, he said.

Two custom home builders protested the village's actions at a board meeting this week. Bob Rasmussen of Midwest Custom Homes said it was unfair to bill individual lot owners for the failings of the main developers. He said he asked the village for the "punch list" of incomplete items, and was astounded to see the list was four years old. "How did they get so old?" he asked.

"How do you differentiate from the developer?" Michels said of the builders' complaints. The 2004 annexation agreement specifies that it is binding not just on the original landowners and developers, but successive landowners and developers.

Saloga's partner, Tim Lunn of Red Bud Properties, could not be reached for comment.