Gasthaus refiles lawsuit against Elgin Tower Building

A downtown Elgin bar owner is continuing his fight to stop a plan to redevelop the iconic Tower Building - a move that finds city officials and business owners baffled and disappointed.

Marco Muscarello, owner of the Gasthaus Zur Linde, refiled his lawsuit Wednesday asking for a judicial review of the plans for the Tower Building at 100 E. Chicago St. Muscarello argues the city's approval process was a sham that violated the state's constitution.

The Tower Building has been sitting empty after it was condemned more than a year ago. Developer Richard Souyoul of Chicago said he wants to move forward with converting the building into apartments, but the lawsuit is stalling the process.

Councilwoman Rose Martinez said it's hard to fathom why Muscarello wants to stop something that would benefit all of downtown.

"What's the point of this?" she said. "Somebody is willing to help revitalize and build up this Tower Building. That is a good thing."

Having people work on and eventually live in the Tower Building would bring more customers to all nearby businesses, including the Gasthaus, located next door to the Tower, said Leo Urdaneta, owner of Domani Cafe.

"I think the whole thing is stupid," he said. "I don't really understand what is their point in stopping the development of this building."

Jerry Newman, owner of Central Barber Shop, agreed. "I'd like to see why they want a building there that's rotting away," he said.

Marco Muscarello and his son Charles, who represents his father in the lawsuit, did not return requests for comment Thursday.

Souyoul, who is partnering with St. Louis-based Capstone Development Group, said the lawsuit could affect financing for the estimated $14 million project. He hopes to obtain about $2 million in state tax credits, part of the River Edge redevelopment zone, set to expire in December 2016, he said.

Capstone plans to buy the building for $1 million, but the lawsuit has slowed down the closing, Souyoul said.

Souyoul previously stated that construction needed to start no later than next month to obtain the credits, but on Thursday he was more vague. "If the lawsuit drags on, it could put the Riverfront credits in jeopardy," he said.

The lawsuit also seeks to stop the Tower Building developer from obtaining about $4.7 million in tax-increment financing money the city is contributing to the project. In TIF districts, property tax revenues are diverted from local taxing bodies in order to encourage redevelopment.

"The conditional-use permit is arbitrary, capricious, unreasonable and not substantially related to the health, safety, morals, and general welfare of the public," Muscarello wrote in part of the more than 80-page complaint. Elgin's approval of the redevelopment was "a charade," he also wrote.

Elgin Corporation Counsel Bill Cogley said "the lawsuit is without merit and we will defend against it accordingly."

Urdaneta speculated Muscarello might be "vindictive" toward the city, whose liquor control commission is pondering changing the Gasthaus' liquor license from 3 a.m. to 2 a.m. after several disturbances in and outside the bar.

The initial lawsuit was dismissed in late June by Judge Thomas Mueller, who gave Muscarello the option to refile by Wednesday.

Councilman John Prigge said he believes Muscarello would continue the fight even without the liquor license issues.

"I respect the right that people have to pursue remedy through our court system," he said. "How that will affect the project, and the amount of money we're a part of (paying), will be determined."

Deirdre White, executive director of the Downtown Neighborhood Association of Elgin said she, too, was disappointed that Muscarello is undeterred. "The downtown area is moving forward at such an incredible pace, but the Elgin Tower rehabilitation represents in an iconic way the strength of this town and this community," she said.

The next step is for city of Elgin attorneys to respond before both sides go before Mueller on Aug. 12, at which time a date to argue the case could be set.