A real estate development firm that had traveled the world, selling the idea of luxury condos high above downtown Chicago in what was to be one of the biggest additions to Chicago’s iconic skyline in decades, is now asking a federal judge in Chicago to order a publicly-funded Irish national banking agency to pay out $1.2 billion for allegedly torpedoing the planned Chicago Spire project out of “bad blood” and “spite,” leaving Irish taxpayers holding the bag and a giant hole in the ground in Chicago.
On Feb. 27, Irish real estate developer Garrett Kelleher and Shelbourne North Water Street Corporation, the company Kelleher formed to market and develop the Spire project, filed suit in federal court in Chicago, leveling their towering damages claims against the Irish government’s National Asset Management Agency and National Asset Loan Management.
According to the lawsuit, Kelleher in 2006 had launched his marketing and development efforts for the Spire, which at about 2,000 feet in height would have stood as the tallest residential building in North America, if not the world. It was to be built on a 2.2 acre site bordered by the Chicago River, Lake Michigan and Ogden Slip, which the lawsuit describes as “the last major undeveloped site in downtown Chicago.”
The project, with its signature “breathtaking,” twisting look, had been designed by “world renowned Spanish architect” and artist, Santiago Calatrava.
In 2008, Kelleher’s team traveled to cities throughout the U.S. and the world, to pre-sell condos at an average cost of $1,400 per square foot, according to the lawsuit. Ultimately, they pre-sold 370 of 1,200 condos, including half to people outside the U.S., the lawsuit said.
By mid-2008, Kelleher’s group had spent $300 million on the project, including “design, marketing, sales, foundation and substructure,” which was funded by “a $225 million equity investment by Shelbourne and a further $90 million” loan from Anglo Irish Bank.
However, following the collapse of the worldwide real estate market in 2008, Anglo Irish was left unable to maintain funding, the lawsuit said. In 2010, Kelleher said he was informed the loans he had personally guaranteed had been transferred to NAMA, which was formed in the wake of the financial collapse to handle Irish real estate investments.
However, in his lawsuit, Kelleher asserts NAMA misled him about the status of those loans, and ultimately also misled others about the Spire project, reducing the marketability of the site. Further, Kelleher said, when he attempted to partner with a British capital firm to redeem the loans for their full value, NAMA instead sold them for one-third that price to Related Midwest, costing Irish taxpayers $57 million, and leaving the fate of the Spire site up in the air, as Chicago waits on Related’s development plans.
In all, Kelleher asserts he has lost $1.2 billion, including $685 million in future anticipated profit from the Spire site.
He is represented in the action by attorneys J. Joseph Bainton and Katherine B. Felice, of the firm of Barclay Damon LLP, of New York, and Michael J. Kelly and Adam C. Toosley, of the firm of Freeborn & Peters LLP, of Chicago.