K. Hovnanian Cos., a longtime suburban Chicago homebuilder, is re-entering the city's housing market after a 50-year absence, on land once planned for development by Antoin "Tony" Rezko.
The Naperville-based company, a division of Hovnanian Enterprises, paid $5.1 million in December to acquire 35 lots in Chicago's Sauganash neighborhood, and it plans to soon begin construction on a model for the single-family homes, which will start at more than $700,000.
A project at the site, 4300 W. Peterson Ave., has been a long time coming. In 2004, Rezmar Corp., co-founded by Rezko, received the city approvals necessary to construct 35 homes on the former commercial site that, at different times, was home to Skil Corp. and Walgreen Co. Home prices were to start at close to $1 million.
But the project never got off the ground. The local housing market collapsed and Rezko, a fundraiser for former Gov. Rod Blagojevich, was convicted in 2008 on federal corruption charges.
Other attempts to develop the site faltered, and K. Hovnanian began negotiating a year ago for the land owned by Sauganash Equities Development Corp., according to Andrew Konovodoff, the company's Chicago division president.
"It's a good steppingstone for us," Konovodoff said. "So far, we've worked well with everyone (in the city). What's helped is, this site was already preapproved. If this works, we'll go full steam ahead" looking for other Chicago sites.
The development, called Sauganash Glen, will have four home designs that will range from 4,200 to 4,500 square feet, and most will come with three-car garages, a rarity in the city.
K. Hovnanian has not built a home within Chicago since the late 1950s or early 1960s, Konovodoff said. That means its learning curve will include dealing with Chicago building codes as well as detached garages and alleys.
"They're used to dealing with suburban municipalities and they know the rules, how it works," said Lance Ramella, a senior vice president at John Burns Real Estate Consulting.
"In the city, it's a new set of rules and a new permitting process and it goes through the alderman. (K. Hovnanian) has done a great job in finding infill sites in the suburbs. The next logical step for them is to find great infill sites in the city, and by definition, every site in the city is infill."
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