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'Difficult' Elgin Tower Building sale completed

The Tower Building in downtown Elgin has new owners after nearly two years of negotiations for a project to turn it into apartments.

Capstone Development Group of St. Louis closed Wednesday on the $900,000 sale of the 1929-era building that belonged to the Stickling Foundation, said developer Richard Souyoul, who is partnering with Capstone for the project. "It was a very difficult deal," he said.

The vacant, 15-story building will be turned into 45 apartments. Workers are doing facade and asbestos remediation work, Souyoul said.

Stickling Foundation manager Neal Pitcher has not responded to requests for comment for more than two years.

The deal was complicated by the condition of the building - which was condemned in May 2014 and had chunks of limestone falling off its facade - and lawsuits filed by the owner of the adjacent, now-closed Gasthaus Zur Linde bar. All that made securing financing a difficult process, Souyoul said.

The estimated $16.6 million redevelopment project, which includes $6.35 million in tax increment financing from the city, was first discussed by the city council in September 2014. The developers struck an agreement with the foundation in March that allowed them to start the work.

The project is banking on $2.6 million in state historic tax credits that expire in December. "We are on schedule to finish by the end of the year," Souyoul said.

Souyoul praised city officials for helping the project move forward.

"The city was absolutely fantastic," he said. "Without their help, this thing would have never gotten done."

City Manager Rick Kozal expressed satisfaction at the closing.

"It's time to begin celebrating the Elgin Tower's return to its former glory - a triumph that could not have occurred without the singular resolve of both the Elgin City Council and Capstone Development," he wrote via email.

Marco Muscarello, owner of the former Gasthaus Zur Linde, filed a lawsuit in Kane County that alleged spot zoning by the city. The lawsuit was dismissed by a judge, and the Second District Appellate Court affirmed the ruling.

Muscarello is trying to appeal part of that lawsuit to the Illinois Supreme Court. He also filed a federal lawsuit, claiming retaliation by the city, due for a status hearing Sept. 6.

Muscarello's son, attorney Charles Muscarello, dismissed Souyoul's claim that his father's lawsuits slowed down the sale of the building.

"If they were having trouble financing the building, or the fact that they needed more money from the city of Elgin, are not a result of anything we did or did not do," he said.

Souyoul said the cost to develop the Tower Building is about $335,000 per unit, the same as a high-rise apartment building project in downtown Chicago that his company is involved in.

While rent in the Chicago building would yield about $3.35 per square foot, the Tower Building would yield about $1.30 per square foot, he said. "We needed all the tax credits and the TIF money."

  The Tower Building in downtown Elgin has new owners who said they will convert it to apartments by the end of the year. Rick West/rwest@dailyherald.com
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