Appeals panel: Forest Preserve didn't overstep law when buying Barrington Hills horse ranch out of foreclosure

Jonathan Bilyk May 19, 2015, 3:15pm

A state appeals panel has determined the Cook County Forest Preserve District did not violate the law when the district purchased a Barrington Hills horse ranch out of foreclosure by first purchasing the mortgage note from the bank, and then standing as the highest bidder when the property went to foreclosure auction a few months later.

A three-justice panel of the Illinois First District Appellate Court ruled May 18 the Forest Preserve District was within its rights to work with the bank holding the bad loan to use taxpayer money to first purchase the loan, and then bid to secure the property itself, despite a suit brought by a group of taxpayers, including the former owners of the horse ranch, who argue state law does not allow the Forest Preserve District to act as a “speculative investor” in real estate.

“According to plaintiffs' position, this court should prohibit (the Cook County Forest Preserve District) from purchasing a mortgage and participating in a foreclosure sale,” the justices wrote. “Yet, if a third party purchased Horizon Farms, (the district) would be able to acquire the land by eminent domain, assuming it would be able to prove that the acquisition was necessary for a public purpose.

“This process could take much longer, possibly resulting in a higher price for the land … It is presumed the legislature did not intend its legislation to result in absurd or unreasonable consequences.”

Justice Maureen E. Connors authored the opinion, with justices Mathias W. Delort and Joy V. Cunningham concurring.

The opinion arose following Cook County Circuit Judge Thomas R. Allen’s decision supporting the district’s power under the law to purchase land in such a manner, if it could, and rejecting the arguments to the contrary from plaintiffs Todd Baker, Richard Kirk Cannon, Meryl Squires Cannon and Wanda Dziopek.

The plaintiffs, which included some of the previous owners of the land, had sued as taxpayers questioning the legality of the district’s use of tax revenue.

The case stemmed from the district’s purchase of Horizon Farms, a 397-acre ranch located along Algonquin Road (Illinois Route 62) in the suburb of Barrington Hills, near Cook County’s far northwest borders with Kane, McHenry and Lake counties.

The Forest Preserve District finalized the purchase of the land in May 2014 for about $14 million.

However, the purchase was plagued by controversy.

Until the district’s purchase, the land had most recently been bought by a the Cannons, a couple who had told the Chicago Tribune they intended to build a home there and retire on the land, while raising horses. They had acquired the land for $19 million in 2006, using a mortgage from Amcore Bank issued to two corporate entities for which the Cannons were guarantors, identified in court documents as Cannon Squires Properties LLC and Royalty Properties LLC.

The loan matured in 2009, and Horizon’s owners could not pay the full principal and interest due, triggering foreclosure proceedings. Amcore, along with the Horizon Farms mortgage and note, were later acquired by BMO Harris when Amcore failed.

In June 2013, the Forest Preserve District acquired the mortgage note from BMO Harris for $14 million, becoming the assignee of the loan. And in October 2013, the Forest Preserve District participated in the auction for the land, emerging as the highest bidder when the results were confirmed a few months later.

The purchase of the loan and the land, however, was challenged by the Cannons and other plaintiffs in August 2013.

They argued Illinois law limits forest preserve districts to “fee simple” transactions when buying land, and does not allow such districts to use “speculative” maneuvers to secure favorable land prices or to insert themselves into “private foreclosure litigation.”

The trial judge disagreed, and on appeal, so also did the three justices hearing the matter.

The justices said the law requires forest preserve districts to purchase land for public purposes, and not “for profit” – but the law does not provide only one exclusive way for such districts to buy land.

Districts can also acquire land by other means under the law, including by gift, grant or purchase, which can include negotiated purchases or eminent domain condemnation, as appropriate, the justices said.

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