Articles
Saturday, June 7, 2008
Neumann Headed for Auction
Source: Kane County News
GILBERTS - Remnants of Neumann Homes Inc. are headed for the auction block.Chicago-based NRC Realty & Capital Advisors, LLC is coordinating an auction of 26 new homes, 23 partially completed homes and 29 fully improved lots in Illinois and southern Wisconsin for Neumann Homes - the Warrenville home builder which filed for Chapter 11 bankruptcy in November.The problem, Gilberts Village Administrator Ray Keller said Thursday, is that the two single-family homes up for auction in The Conservancy lack occupancy permits.
"From the viewpoint of the municipality, we're very concerned about any attempt by Neumann Homes or their agents to sell individual homes in incomplete subdivisions to unsuspecting buyers," Keller said. "Those two homes are not occupiable because the infrastructure has not been completed in that type of subdivision. This seems to be an attempt to get cash from any means possible."
In Gilberts' case, the homes are isolated and have "very minimal" public utilities. He noted that a nearby sewer lift station currently is inoperable.
"You have to have public water and sewer," Keller said. "Drainage has to be sufficient so that a house doesn't flood. You also have to have a road to provide access to the lot so emergency vehicles can reach it. ... The basic infrastructure has to be in place."
Lakemoor Assistant Village Clerk Bonnie Sikora said two Neumann townhouses slated for auction also lacked occupancy permits. She added that inspections were ongoing, and that the models could be ready by June 28. Efforts to reach Neumann attorney George Panagakis in Chicago were unsuccessful.
At its peak, Neumann Homes built more than 1,000 homes a year for several years. The company exceeded $517 million in closing revenue in 2005. But in its Chapter 11 petition in U.S. Bankruptcy Court in Chicago, the company said it was more than $100 million in debt, with about 5,000 creditors.
Neumann Homes was founded in 1980 by Mark Neumann, who later served as a U.S. congressman. His brother and chief executive officer, Kenneth, subsequently resigned, according to Evan Gladstone, executive managing director of NRC Realty Advisors in Chicago. NRC is handling the auction.
"This is a one-day only opportunity for homebuyers, small builders and opportunistic investors to purchase these properties discounted from their original prices," Gladstone said.
Gladstone encouraged buyers to visit the sites ahead of time - perhaps with their builders and decorators in tow.
Keller, meanwhile, urged the public to look before leaping into an "unpleasant situation for everyone involved." He cautioned that it could take months, perhaps years, before another builder assumed Neumann Homes' obligations under the annexation agreement.
In 2006, Gilberts loaned $1.5 million to the builder so that it could buy 20 acres for Gilberts Elementary School. Because the builder defaulted, District 300 must pay the village back using impact fees.
"The school district will be reimbursed by Neumann or some subsequent developer on a house-by-house basis," Keller said.Keller said the bankruptcy stopped all work on what was to be the 985-home Conservancy, with just two foundations dug and two model homes built. Options subsequently expired on two parcels around the elementary school.
"We are quite fortunate that we did not have half-built homes," Keller said, but he noted that the school "sits alone in the middle of a swath of open, undeveloped land."
Also, a planned 20-acre park and two wells remain on the drawing board. Gilberts expects those improvements will be made by someone.
The question is when.
"There is nothing to say that a developer in the process of building houses can't sell subdivision lots to another party," Keller said. "Our concern is they are not occupiable. The bankruptcy court is not obliged to check in with the municipalities."
Housing auction
The auction begins at 11:30 a.m. Saturday, June 28, at the Westin Hotel, 400 Park Blvd., Itasca. Properties are available for review at www.nrc.com/807. The auctioned properties include townhomes, single-family homes and home sites for sale. The incomplete homes all are under roof, sheathed, and at a minimum at trim stage or beyond.
In addition to units in Gilberts and Lakemoor, the list includes:
- Nine, three-bedroom homes in Grayslake's Lake Street Square. Eight homes are completed and will be sold with an occupancy certificate. One home is partially, yet substantially, complete.
- A three-bedroom home on 2.1 acres at 43 W058 Prairie St. in Sugar Grove.
- Six, fully-improved lots off Tanner Road in Tanner Trails, North Aurora. They range from 14,000 to 17,193 square feet.
- All homes will be available for viewing 1 to 4 p.m. Saturday, Sunday, and June 14, 15, 21 and 22.
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