Newberry Plaza unit owners challenge commercial conversion plan
Loop North News

CONDOMINIUM LIFESTYLE 1040 N State St - MAP

(Above) MLS photo of Newberry Plaza, a 52-story mixed-use complex in Chicago’s Gold Coast neighborhood.

4-Apr-21 – The war between Newberry Plaza Condominium Association and a cadre of unit owners opposed to a proposal to convert to commercial space common elements of their high-rise has settled down for the moment but has not gone away.

The fight over plans to transfer ownership of some of NPCA’s common element property to an outside interest through a no-cost long-term lease started in the summer of 2020 and quickly escalated until opposing sides drew battle lines and called lawyers.

A group of unit owners calling themselves Newberry Plaza Community Coalition opposes plans to redevelop the property into retail and commercial space. NPCC says that based on working drawings, unit owners will lose 10,145 square feet of real estate, and their condo association will receive no cash payment for the property that would be transferred through a 99-year lease. Assuming a value of $1,000 per square foot, NPCC says more than $10 million in real estate value is being taken from them.

Newberry Plaza Newberry Plaza

(Above) Proposed design (left) that would add three floors of commercial space to the east side of Newberry Plaza. Current design at right.

A special January 13 meeting of the NPCA board of directors followed a regular meeting of the association, at which vote totals were announced showing 73.7 percent of ownership in favor of the project and 26.2 percent against or abstaining.

During the condo board meeting, seven of the eleven board members voted to move forward with the proposed redevelopment project. The four board members who voted against it stated specifically that doing so would be in violation of NPCA’s declaration and bylaws requiring a 75 percent favorable vote.

Newberry Plaza Community Coalition has since notified the board and its development partner, 11 East Partners, that they “cannot move forward with the proposed redevelopment project without 75 percent approval of NPCA owners, which they did not achieve, by their own admission,” and that the “vote to move forward with the project by seven members of the board was a violation of the NPCA declaration and bylaws, and therefore a violation of their fiduciary duties.”

11 East Partners already owns property on the north and south sides of Newberry Plaza, and has expressed interest in acquiring approximately 10,000 square feet of space between the portions they already hold.

In a February 19 letter to Sudler Property Management attorney David Sugar, NPCC attorney Caren Lederer put the association on notice that, “despite the failed vote of the owners, a majority of the board then voted to proceed with the project, despite it violating the declaration.”

Lederer says that while a claim by board members that a “significant majority” of owners approve the ownership transfer is true, it is “patently irrelevant.”

Caren Lederer

“In light of the plain mandate of the [NPCA] declaration, it is evident that these board members have violated their fiduciary duties to the [NPCA] and its members,” said Lederer (left). “We again demand that the [condo board] comply with all of the provisions of the declaration and bylaws, and that they discharge their fiduciary duties in accordance with Illinois law.”

NPCA and Sudler’s attorney have not responded to requests for comment, nor have they made any statements about whether or not they intend to advance the conversion project.

 Previous story: Newberry Plaza board votes for redevelopment

By Ronald Roenigk | Loop North News | insidepublicationschicago@gmail.com

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