There was a time when “condo conversion” referred to turning apartment buildings into condominiums.
But in another sign of a struggling housing market, a proposed conversion in Itasca would do the opposite: Rental units would replace a building now filled with mostly unoccupied condos.
And not unlike conversions of the past, the one in Itasca is decidedly controversial.
The village's plan commission in a split vote recommended Wednesday that the building at 2 Itasca Place, near Nordic Road and Route 53, be converted from condos to rental units. An attorney for the building's developers said they have been unable to sell 63 of the 70 units in the 5-story building due to the sagging real estate market.
“The loan had come due, and without the sales (the developer) couldn't pay it,” said attorney Paul Conarty, who represents developer Itasca Properties, LLC.
The building sits next to another 70-unit, 5-story condo at 1 Itasca Place, where most units are occupied. That building would remain as condos, according to village documents.
For more than two hours Wednesday, about 50 residents weighed in on the issue. Nearly half agreed with the proposal, which would “prevent the south unit from becoming derelict ... forcing the unit owners in the north building to shoulder the maintenance costs for the entire project,” Conarty said in a memo to Itasca officials.
But other residents and neighbors opposed the plan. Frank Rice, who lives in a house about 500 feet away from the condos, said he worries rental units could cause the neighborhood to decline.
“We're all concerned that transients will be introduced to the neighborhoods,” Rice said on Thursday. “Condo owners have a stake in the building and take care of it. Renters generally do not care about the place or the neighborhood. The vast majority do not even have insurance on their own possessions.”
Itasca officials said they understand residents have strong feelings, but must put the proposal “through the paces” in order to address the vacancies.
The empty building is slated to be sold to Naperville-based Marquette Companies soon, Conarty said, adding that the company's goal is to eventually convert the building back into condos once the housing market recovers.
Conarty says the demand for condos remains high among young people who want one as their first home, and among empty-nesters looking to downsize from houses.
“When the market fell apart, they weren't able to sell their homes and were unable to buy the condos,” said Conarty. “The credit markets dried up at the same time, and young folks who would want to buy a condo as their first home were struggling to pay school loans and other expenses, so they were not able to buy either. It's a snowball. This economy has wreaked havoc on all real estate.”
Six of the seven remaining owners at 2 Itasca Place will move into condos in the adjacent building. Another owner sold his unit and left the complex.
Conarty said his client Donald Morris, co-owner of Itasca Properties, felt this was the best solution for the residents, who were promised condos.
“He could have just simply rented the units and nobody could have stopped him,” he said.
Despite the bad market for condos, Conarty said he did not think the reverse conversion in Itasca signals a trend. The situation there was unique with the few remaining owners having the option of moving next door into similar condos. Converting an entire building while the owners are still in it, he noted, would require “100 percent concurrence from the owners.”
Now, under Marquette's ownership, all units will be rented at 2 Itasca Place for an average of $2,300 per month.
Opponents such as Rice say this is a high rent, and questions why the condos weren't simply sold at a more reasonable rate to encourage ownership.
“They said there is no market, but my point is there is always a market at the right price,” Rice said.
Because Marquette paid a “not insubstantial price” for the building and is pushing for zoning that will allow for conversion back to condos, Conarty argues they have a vested interest in maintaining the “very luxurious” condos.
“They can't let it fall apart and turn into a slum,” Conarty said.Copyright © 2013 Paddock Publications, Inc. All rights reserved.