The long-stalled construction of a big subdivision in tiny Gilberts is expected to get a new infusion of life soon.
Only two model homes were built in The Conservancy, a planned 985-home development on the northwest corner of Galligan and Freeman roads, before the original developer Neumann Homes of Warrenville filed for bankruptcy in late 2007.
Now, Gilberts Development LLC, which acquired the property in December 2012, wants to resume the project, a significant addition to the village of about 7,200 residents northwest of Elgin.
The original developer borrowed $15 million to fund infrastructure improvements performed by the village on the more than 1,100-acre property, including roads and water and sewer connections.
Gilberts Development is managed by Troy Mertz, who is also the manager of Delaware Bond Trust LLC of Elmhurst, one of the bond holders of the original investment. The others are Oppenheimer Funds Inc. of Rochester, N.Y., and Invesco of Oakbrook Terrace, he said.
The loan was intended to be repaid through a Special Service Area tax tacked onto the development's property tax bills, but the bonds defaulted when Neumann went bankrupt.
All three bond holders recently agreed to restructure the loan by taking a loss of about 35 cents on the dollar, Mertz said. The agreement is being finalized by lawyers, he said.
"The bond holders collectively are taking a write-down on their position and reinvesting for the next 20 years in the village of Gilberts, which is a beneficial thing," he said.
Also, the village and the developer are working together to establish a new SSA that will be paid by the developer as building permits are issued, Village President Rick Zirk said.
The village will hold a public hearing on the proposed new SSA at 7 p.m. Tuesday at the start of the village board meeting at 87 Galligan Road.
The subdivision's proximity to Gilberts Elementary School -- built in 2007 partly thanks to the infrastructure improvements performed for The Conservancy -- is a plus for homebuyers, Mertz said.
Interest in building in Gilberts never waned, Zirk said. Even at the height of the recession, the village issued at least 50 permits a year, thanks to the opening of the new Advocate Sherman Hospital in late 2009 on Randall Road, Zirk said.
"The development moving forward does a lot of good for the village; it provides additional rooftops to support the business community, and also park impact fees for our parks," he said. "(Mertz) has brought it back to the forefront."
The village spent about $1 million in attorney's fees during Neumann's bankruptcy proceedings, said Zirk, who was elected in 2009. "It was money foolishly spent. We should not have been involved in that."
Gilberts Development has demolished the model homes, which were an eyesore and a potential hazard, and it has performed testing of water, sewer and stormwater infrastructure, Martz said.
"Everything is great," he added.
The plan is to start building on about 122 lots already approved by the village near Freeman Road, and build the rest of the subdivision gradually, he said.
The original plan also called for a commercial strip along Huntley Road, Mertz said, which will get an infusion of traffic once the long-planned Longmeadow Parkway extension is built.