Bankrupt Neumann Homes sues towns to return impact fees
Neumann Homes Inc., which had been one of the 10 largest homebuilders in the Chicago area before filing bankruptcy last year, has sued more than two dozen municipal governments on a theory that, if valid, could be another hit in already-depressed local budgets.
Neumann, based in Warrenville, sued towns including Antioch; Naperville; Kenosha, Wis.; and Aurora, Colo., to get back impact fees, according to documents filed in U.S. Bankruptcy Court in Chicago.
Neumann posits that the fees were fraudulent transfers because the homes aren't constructed, thus conferring no value on the homebuilder. The localities can respond by contending that Neumann received sufficient value by receiving permission to proceed with the projects or proposals, even if the projects weren't completed.
The village of Antioch found out late Monday that it was named in the suit.
"Our legal council is preparing a response. We'll take a hard look at it and hope the judge makes the proper ruling," said Antioch Village Administrator Jim Keim.
The developer filed for Chapter 11 reorganization in November 2007, listing assets of $291.8 million and debt totaling $286.9 million, including $151.1 million in secured debt. In addition to underdeveloped land, assets included 233 homes completed or in construction at the outset of the reorganization.
The company claims municipalities and school and water districts refused to pay when Neumann sought refunds of permit fees and cash bonds to make improvements such as landscaping on undeveloped properties.
"The suits are similar," Kevin Keating, an attorney with Keating & Shure Ltd., said, without giving details. Chicago-based Keating represents Neumann in most of the lawsuits.
Neumann paid more than $930,000 for permits and deposited about $471,000 as cash bonds for the municipalities and districts, according to the filings.
Kenosha was paid $49,444 in permit fees and $7,800 for a bond, according to one complaint. Naperville was paid $33,305 in fees and Aurora $14,785, Neumann said.
In Antioch, Neumann is trying to recover building permit fees of $135,000, Keim said.
Naperville city officials said late Monday that they have not been served with the suit and have not seen it.
"It would be inappropriate to speculate about it at this time," said Naperville spokeswoman Nadja Lalvani.
Other suburban communities, including Sugar Grove, have unfinished Neumann subdivisions and are not aware of litigation involving the impact fees.
Impact fees are negotiated in good faith, said Sugar Grove Village Administrator Brent Eichelberger.
"We'd defend it vigorously if we were named in the suit," he said.
He added that his village is involved with other litigation with the builder.
Many suburban leaders say they have grown frustrated in dealing with the unfinished Neumann projects.
"This newest lawsuit is the next thing in the Neumann saga," Keim said of the latest suit.
• Daily Herald business writer Kim Mikus contributed to this report.