Algonquin sues local bank for $1.8 million

The village of Algonquin is suing a Barrington-based bank, saying it has not made good on a letter of credit worth nearly $2 million.

In the lawsuit, filed Aug. 27 in McHenry County Circuit Court, Algonquin says that Lakeland Development Group agreed to put up a $1.8 million letter of credit as security for improvements it would perform as it built the Creeks Crossing subdivision north of Sleepy Hollow Road.

The deal was included as part of a 2006 annexation agreement between the village and Hoffman Estates-based developer, according to the suit.

The work included improvements to Sleepy Hollow Road and adding streets, water and sewer services.

The developer so far has completed three of 50 homes planned for the 29.2-acre parcel, Algonquin Village Attorney Kelly Cahill, but not the improvements.

Last Monday, village trustees passed a resolution demanding that the Barrington Bank and Trust Company, which issued the developer's letter of credit, to turn over the $1.8 million by the end of the following business day.

"The bank has not paid and they haven't told us why," Cahill said.

The village is asking that the bank pay the $1.8 million and cover its legal fees on the case, court documents said.

The developer is not named in the lawsuit.

The bank has 30 days to file a response. A bank representative did not respond to a phone call seeking comment.

Both sides are due in McHenry County court Dec. 30.