A townhome development in Riverside threatened with foreclosure since December 2008 is in the hands of U.S. Bank after the institution and the townhomes owners settled the lawsuit on May 17.
Swept up in the real estate collapse that affected the entire nation, the development at 21 N. Herbert Road was the victim of poor timing, said former owner Eric Sundstrom, who owns Sundstrom Agencies Inc., an insurance business in Riverside.
“If we would have done it two years earlier, we’d have been out and done,” Sundstrom said.
Sundstrom said that he could not discuss the details of the settlement agreement between him and his brother, David, who was also party to the foreclosure action. The Sundstroms, along with the development’s project manager, James F. Gay, and the general contractor, David Knecht, had formed 21 Herbert LLC as the development company for the proposed 10 townhome project.
In addition to the townhome development, the bank also seized the Sundstrom Agencies office at 52 E. Burlington St., which had been part of the guarantee for the $7.3 million mortgage that 21 Herbert LLC took out in May 2007.
When the foreclosure suit was filed in December 2008, 21 Herbert LLC owed $3.3 million on the mortgage, according to court records.
Sundstrom Agencies moved out of its longtime home on May 1, Sundstrom said. The business had been located at 52 E. Burlington St. since 1971. It is now located at 345 E. Burlington St.
However, the old Sundstrom office building will soon have a new owner. Terri Tabor, owner of Salon D’Amore at 37 E. Burlington St., confirmed last week that she is buying the property. The closing was planned for this week.
Salon D’Amore has been at its present location for six years. Buying the Sundstrom property will allow more parking and about double the interior space. Tabor said the plan is to offer more “spa-type” services when the salon makes the move, “we’re hoping in October when we get done with the build-out.”
As for the townhome development at the corner of Herbert Road and East Burlington Street, attempts to reach a representative from U.S. Bank were unsuccessful. Sundstrom said that the development is for sale and is listed at $2.3 million.
The Burlington Townhomes, a luxury development comprising 10 three-story units, was pitched to Riverside at the height of the real estate bubble in spring 2006. Sundstrom had hoped to break ground during the summer of that year, but the project got bogged down in the village’s zoning review and was not approved until December 2006.
At the time, Riverside was in the midst of a comprehensive revision of its residential zoning code, and the Burlington Townhomes became something of a case study for the new code.
“Did we get held up by a couple of things?” Sundstrom asked, remarking about the multiple reviews by several commissions. “Yeah. That didn’t help. There should be some way to streamline that.”
As it turned out, construction didn’t begin until late summer 2007, and by that time, the real estate market had already begun to contract. Instead of building all 10 townhomes, Sundstrom phased in construction. The western five townhomes were erected and the corner unit substantially completed as a model by October 2008, when the asking price for units started at $750,000.
But two months later, Park National Bank, which loaned the money for construction, began foreclosure proceedings. The foreclosure suit took so long in part because Park National Bank itself was taken over by the federal government in November 2009 and its assets transferred to U.S. Bank.
At this point, Sundstrom said, he’s glad the foreclosure lawsuit is over.
“It’s a big relief,” he said. “It’s unfortunate what happened. We took heavy hits, but it’s over and done with.”