MetroSouth plan halted in Blue Island as developer misses payment deadline

Developers behind a plan to turn the long vacant MetroSouth Hospital in Blue Island into a senior living facility asked the city for more time to pay off debts associated with the building.

Lockwood Development Partners’s plan for the senior living facility was approved by the city in January but was contingent on the firm’s ability to pay $270,000 in outstanding liens and utility bills within 60 days. That deadline was not met, causing Lockwood’s attorney to ask aldermen at Tuesday’s City Council meeting for more time to gather the remaining balance due.

“We’ve paid $50,000 of the water bill; there is still a good amount to go,” said Nick Standiford, a lawyer from the firm Schain Banks. “We are making progress. We are making slow progress with the money we have right now. We expect a lot more money to come soon.”

Standiford asked the city to move the 60 day deadline by 90 more days, giving his client until June 21 to come up with the remaining $220,000 due. Lockwood is waiting for a loan request to be approved by Builder Capital, Standiford said. He didn’t provide specifics about the size of the loan or the timeline.

“If we can’t get it done by that date, I would come back before you and explain why we couldn’t get it done and hopefully the reason was sufficient,” Standiford said.

He requested amending the existing deal between the city and Lockwood by moving back the payment deadlines by 90 days. Aldermen could vote on the adjusted deal at the next City Council meeting in two weeks.

Ald. Bill Farehenwald, 4th Ward, expressed hesitation about the proposal.

“I would prefer not to change the existing ordinance,” he said at the meeting, arguing instead the city should work in good faith with Lockwood to get the outstanding funds from them as soon as possible.

“We’re past the date, so to make the ordinance conform to provide new dates in it, paperwork wise, I’d prefer that,” Standiford responded.

“And I don’t see it as paperwork,” Farehnwald said.

“Well, the lender will. The lender will not want to think that there is some sort of alleged default under the agreement,” said Standiford. “And so that’s why we need to have the agreement reflect dates we can achieve.”

“Alright, I’ll think about it,” the alderman said.

A contractor at Tuesday’s meeting confirmed he had been paid in full by Lockwood when asked by Fahrenwald.

After the meeting, 7th Ward Ald. Joshua Roll said he was concerned about the early solvency issues. But he also conveyed that Lockwood’s proposal is still the most complete plan Blue Island has been presented regarding the massive, vacant hospital complex.

“I have no problem being flexible, being patient and working with them,” Roll said. “Generally speaking, I think it’s all moving in a very positive direction relative to the options we’ve had in the past.”

Residents have expressed a strong preference for having a hospital return to the site instead of the limited-service urgent care operation Lockwood is proposing to accompany the senior living facility.

But city leaders say they have tried unsuccessfully to bring a hospital to the area, citing changes in the economics of health care that have the many in the industry moving away from infrastructure such as that at the former MetroSouth campus.

hsanders@chicagotribune.com

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