When an investment company first bought into her South Shore condo building, Monique Foster felt a wash of relief.
It was 2014 and, like other condos throughout the country, the Silver Coast Citadel had been hurting for money. The 1920s yellow-brick courtyard building, which winds around the top of the 7200 block of South Yates Boulevard like a snake, had been developed into a condo in 2001. A beautiful, old building in a prime location near the lake, the Metra Electric, and a public library, its larger units sold for more than $100,000.
But in the years following the housing crash, more than two dozen of the building’s ninety-eight units went into foreclosure. Condos rely on owners to pay monthly assessments to pay their taxes, expenses and maintenance costs; a round of foreclosures can run a condo’s association’s emergency reserve fund dry.
That year, Icarus Investment Group bought two of those foreclosed units. In 2015, Icarus bought five more units, four of those in foreclosure. Though the company was leasing out its units to renters, to Foster, their buy-in felt like a vote of confidence in the building’s future. “We were in the green again,” she remembered thinking.
But that feeling started to sour as the company gained more power in the building. By 2019, Icarus and a separate Icarus-managed LLC had acquired nearly half the units in the building and with those units nearly half of the building’s voting power. Icarus employees assumed leadership of the board, replacing former resident-owner board members.
Last year, the Icarus-run board put the building on the market, marketing it as an ideal candidate for a deconversion into a rental building. But what the listing didn’t mention was that the building had been in court with the city over building code violations since 2019—and the board hadn’t yet moved to repair the most serious violations. The listing was removed, and the building didn’t sell. The board has since put remaining owners on the hook for nearly half a million dollars in two “special assessments” to fund building repairs.
Some owners, alleging delayed construction and the board’s lack of transparency with financials, say they believe that the company is trying to force them out of the building rather than get the building back into shape.
Reached for comment, an Icarus spokesperson did not respond directly to residents’ allegations but provided a written statement:
“It is a tough spot for all unit owners in the building … When the city files a case against a building, the building has to take action. Unfortunately the action the building has to take to make these repairs are extensive and costly, but the building is taking action and doing what is necessary to make sure the building is in compliance.”
The Department of Buildings would not comment on the building’s status, citing pending litigation.
With several hundred thousand units across Chicago, condos make up one of the city’s largest sources of affordable homeownership. But market trends of the last fifteen years have somewhat threatened their stability.
After the housing market crashed, developers started eyeing condo buildings—some of them still struggling to rebuild their finances—as sources of new multifamily rental housing. For a developer, a condo deconversion promised good profits; for a building’s owners an out from a financially struggling building and an opportunity to receive more than market rate for their units.
Condo deconversions can be mutually beneficial for both parties, but that’s not always how it plays out on the ground. At Silver Coast Citadel and other condos throughout the city, unit owners have watched as property groups and investment firms have bought up hundreds of units in buildings of interest, a strategy that some developers have used to circumvent board approval and gain voting power in the building.
As interest rates have risen, condo deconversions have grown less frequent. But at the Silver Coast Citadel, and perhaps a handful of other condos throughout the city, resident-owners remain stuck between two market trends, beholden to the leadership of an investment company and locked out of the decision-making process. Outside of the courts, though, experts say there’s little that can be done about it.
Foster started looking for apartments in 2008, shortly after graduating from college. She set her sights on South Shore, where she has family ties. She came across a one-bedroom apartment listed for less than $40,000 in the Silver Coast Citadel. She put down an offer and moved in.
“It was the last thing my mother told me I had to do, and probably the best thing,” Foster said.
The housing crash gave her and others a cheaper path to homeownership; just a few years earlier, a unit in the building had sold for as much as $133,000. But it also set off a yearslong wave of foreclosures that hit condo buildings particularly hard. Between 2007 and 2018, more than fifty units were foreclosed on at Silver Coast Citadel.
Adding to the building’s financial straits was another problem. The building was developed into a condo in 2001. But by 2007, the original developer hadn’t sold sixteen of the building’s ninety-eight units and owed more than $180,000 in monthly assessments to the condo association, records show.
Foreclosures and the original developer’s unit holdings provided an early foothold for Icarus to buy into the building, the records suggest.
Icarus Investment Group picked up its first two units in 2014 through foreclosure sales, property records show.
In 2015, Icarus bought five more units, all of which had also recently gone through foreclosure.
In March 2016, an Icarus-managed company, CLO Investments LLC, bought eleven units in bulk. Those units were owned in trust through a bank, so the individual owner’s name is not listed on the deed. But cross referencing property records showed that these units were among the sixteen units still owned by the original developer.
The unit acquisitions meant a few things. First, that the building would receive more monthly assessments, easing the financial burden on the building’s other owners. And second, with more assessments coming in, the board might be able to build up its reserve fund, a building-wide savings account that all condominiums are required to maintain to fund routine or emergency expenses.
Foster remembered having an initial sense of relief that the company had bought these units. “We were in the green again,” Foster recalled.
But as time passed, Icarus and CLO Investments continued to acquire more units.
Through the rest of 2016, Icarus and CLO Investments purchased fourteen more units from a mix of individual owners, companies, and foreclosure sales. Each of these were ultimately transferred by quit-claim or special warranty deed to CLO Investments or a third related entity, CLO Holdings Portfolio.
The exact relationship between CLO Holdings Portfolio and Icarus is unclear. Icarus CEO David Pezzola is listed as the manager of CLO Holdings Portfolio in the LLC’s most recent corporate filing; the principal address provided is a West Loop office suite to which CLO Investments and numerous other Icarus-managed entities are also registered. (In the prepared statement, an Icarus spokesperson stated that neither Icarus nor Pezzola held ownership over CLO Holdings, but did not respond to further questions via email from the Weekly.)
Foster started to feel nervous about the company’s stake in the building. She said the company had been leasing out its units to renters and that she was noticing damages like broken windows and doors.
By the 2019 annual election, at least forty-five of the ninety-eight units in the building were owned by Icarus or the two related entities.
That year, the company voted out the previous board members and voted in its own employees, members said. A 2019 annual filing by the condo association shows two Icarus employees, Jessica Koonz and Jared Snyder, listed as the board’s president and secretary. Reached by phone, a third listed board member said they have not been affiliated with the company since 2018 and had no direct involvement with the building or board.
According to one resident-owner who asked to remain anonymous due to fear of retaliation, building governance changed once Icarus employees were voted onto the board. Board meetings, previously held in person at the South Shore library branch around the block, were now hosted only over Zoom, that owner said. Members said that they were muted until the last few minutes of each meeting, during the designated “open forum” period. On some occasions, Foster said, she wasn’t able to get into the Zoom meeting at all, either because the host wouldn’t let her in or hadn’t noticed she was in the Zoom waiting room.
State law requires condo associations to hold annual elections. But the board has not held annual elections since 2019, members said.
In a provided statement, the Icarus spokesperson did not address or respond to the South Side Weekly’s questions about annual elections or other allegations relating to board governance.
In that time, existing building violations grew more serious, public records show. In 2018, the city’s building department cited the building for its concrete balconies, which were showing signs of wear. The next year, the city filed a lawsuit against the building over the balconies and other minor code violations. When a building inspector returned to the building in 2020, they found that the balcony supports were sagging and significant cracks had developed in the concrete.
Through 2022, permit applications were filed for minor building repairs and one unit renovation, but none for comprehensive balcony repairs.
In December 2022, a buildings department inspector identified a “large section of concrete missing” from third and fourth floor balconies as well as “large cracks,” which an inspection report referred to as “dangerous and hazardous.”
That year, the board had placed the building on the market, marketing it as a candidate for deconversion into rentals. By then, the three companies owned at least fifty units, according to a review of property records.
According to the sale listing, that amounted to around fifty-six percent of the building’s total ownership. (Depending on their size and shape, some units may carry higher or lower percentages of the building’s total ownership.)
“The majority of units at Silver Coast Citadel are investor-owned, with one entity owning fifty-six percent of the entire building. As Silver Coast Citadel is in essence functioning as an apartment building, stabilization from condominiums to apartments is a straightforward path,” the listing reads.
Members said that the building didn’t get any offers. The building is no longer on the market.
A spokesperson denied that Icarus owned more than two units in the building but did not respond to subsequent questions about the sale listing. (Currently, Icarus is recorded as owning two units in the building. But the group has acquired more than a dozen other units, transferring those units’ deeds to the two entities that are listed as managed by Icarus or by Icarus CEO David Pezzola.)
Since then, the board has moved to impose nearly half a million dollars in special assessments, members said.
Foster said that she wasn’t opposed to the first special assessment of $250,000, which was supposed to fix the structural concerns in the balconies and address smaller code violations. The company gave members around five months to pay their part. Each member’s portion is tied to the size of their unit. Foster, who owns a smaller one-bedroom unit, was responsible for around $3,500, she said.
But on May 3, the board voted to pass a second special assessment, totaling $220,000. In its request for the second assessment, the board specified that the additional money would go toward repairing the building’s central air system and additional code violations.
Foster now questions the legitimacy of the two assessments. She said that she saw some work being done on the balconies last fall, but that the work stopped without explanation, she said.
Records show that on May 23, 2023, a permit application was submitted to replace fourteen concrete balconies.
Visits to the building in May and July showed one balcony with visibly degraded concrete on the south end of the building. No construction equipment or signs of construction were present on the property.
The board told members that the money from the first special assessment was gone. In its April 18 request for the second special assessment, the board wrote: “Unfortunately, there is no money available in our condominium association’s operating fund or reserve fund for these two urgently needed projects. Therefore, we have no choice but to impose a $220,000 special assessment on each of the Silver Coast Citadel’s owners.”
Each unit owner would be required to pay their portion “in a single lump sum payment” by May 15, the letter says—less than two weeks from the vote to pass the measure.
For Foster, a financial aid manager at a graduate school, that came out to around $1,500. “I’m a single female who works in corporate America, so for me to cough up $3,500 was a thing for me.…Then to ask for [more] right away?” Foster said. “I try to live as close to bare minimum as possible, so I did have savings that I could pull from, but if you don’t have that, it’s significant,” Foster added.
Icarus did not respond to specific questions and allegations, but in a prepared response stated:
“Prior to the recent special assessment, there was a meeting held with unit owners to discuss the impending costs and possible ways forward. One way forward, which did garner unit owner interest and support, was selling the building. Of course weighing costly special assessments versus a sale is not an easy or clear-cut decision, especially when the decision involves many individuals with varying interests and needs.”
Foster and another member worry that without further intervention, more special assessments will come. In an April 18 letter to unit owners, the board wrote that it was working with an independent consultant to “prepare a reserve study…an in-depth analysis of the condition of all of our building’s common elements to help us anticipate and prioritize other major repair and replacement projects.” Foster said that the board estimated the cost of hiring the consultant at upwards of $50,000.
“They’re trying to run us out of money,” alleged the building owner who requested anonymity. “Everyone’s been pretty upset.”
Founded just over ten years ago, Icarus Investment Group quickly made a name for itself in the South Side rental market.
The company first made headlines in 2018 for its $20.3 million purchase of a 325-apartment housing portfolio near Midway Airport. The company now owns at least 1,500 units through Chicago, according to its website.
The company’s main focus has been housing in the neighborhoods surrounding the Obama Presidential Center. “We bought, rehabbed and rented 100 units in Woodlawn when people thought we were crazy to invest in the neighborhood,” the company’s website reads.
David Pezzola cofounded Icarus at the age of twenty-six after several years in the insurance industry, according to the company’s website.
Pezzola didn’t respond to multiple requests for comment. But on his LinkedIn page, Pezzola describes Icarus as a company whose “primary objective” is ”to create passive income for investors.”
“Icarus Investment Group targets areas that have low costs to purchase with respect to the cost to rent and buys properties that have opportunity to yield positive cash flow rapidly after acquisition,” the LinkedIn description reads.
While Icarus is better known for its dealings in the rental market, public records show that Icarus has had involvement in the deconversion of several condo buildings between 2015 and 2021.
Icarus and Icarus-managed entities have filed condo removal documents on seven other South Side condo buildings in the last eight years, according to data from the Cook County Recorder of Deeds. The office processes the document that a property owner submits in the final stage of a condo deconversion, which formally removes the building from the state’s Condominium Property Act.
The buildings, which are located between Bronzeville and West Woodlawn, range from three to eight units. Two of these buildings were sold to new purchasers, records show; but the remaining five appear to have remained under the ownership of Icarus or an Icarus-managed holding company or trust.
It’s neither illegal nor uncommon for an outside property company or investment group to buy up units in a condo.
Some companies may simply acquire a few units to rent out. But in the last ten years, it’s become increasingly common for companies to buy multiple condo units as a way of pursuing a deconversion.
It’s what condo lawyer David Rudolph calls a “hostile takeover”—as opposed to a “friendly” deconversion, where the condo owners have collectively decided and voted to sell their building to an interested buyer.
Hostile takeovers are easier in smaller condos, where it takes fewer unit purchases to get a majority vote.
But that hasn’t stopped firms or even individuals from buying many units in larger buildings.
Larger New York-based company Strategic Properties owned forty percent of the units at a 163-unit Loop condo building when the board moved to deconvert the building in 2019.
That same year, some owners in an East Lakeview condo spoke out after a businessman acquired seventeen units in their sixty-unit building.
There are some ways for condo associations to deter investors from buying up condo units in their building, Rudolph said. One way is to amend the association’s bylaws to prohibit or limit the leasing out of units. Another is to amend the bylaws to limit the number of units that a single entity may own, although companies could skirt this requirement by forming new LLCs or holding companies.
In practice, a condo that doesn’t have these restrictions written into their by-laws could use a right of first refusal to buy or lease units in the building instead of selling them to an outside buyer.
But that would require the association to have enough money to buy or lease the unit, a reason for doing so, and, often, a majority vote from the building’s membership, according to a blog post by the Community Associations Institute, an international interest group that represents members of condos, HOAs, and cooperatives.
Once an investment company already owns a significant number of units, it can be “impossible” to put any of these measures into effect, Rudolph said. For a bylaw amendment to pass, between two-thirds and seventy-five percent of owners must vote in favor. A company that owns more than twenty-five percent of a building’s units could potentially tank the effort.
“Once you have a simple majority, it’s pretty much game over,” deconversion consultant Alex Argianas told Slate in 2021.
In the past several years, legislators have introduced bills that would limit investors’ ability to pursue unsolicited deconversions, but only a handful have passed.
In 2019, 42nd Ward Alderman Brendan Reilly filed an ordinance that increased the threshold for a vote on a condo deconversion to pass, from seventy-five percent (as required by state law) to eighty-five percent.
The ordinance, which passed, was not designed to block condo associations from deconverting, but to ensure that a majority of condo owners are on board with the sale.
“We had seen a rash of deconversions going on downtown where the developer was looking to scoop up condo buildings, and some of their tactics were questionable at best,” Reilly said.
One 2021 bill would have required all condos in Illinois to restrict board membership to resident owners. That bill didn’t pass—but an amended version did, which guaranteed condos the right to amend their by-laws to require that a majority of board members be resident-owners.
“When a condominium board is made up of off-site board members, residents’ needs may not be accurately represented,” wrote the bill’s sponsor, Senator Laura Murphy (D-28), in a press release. “This legislation gives condominium associations the chance to ensure decisions are being made by the people who live there.”
Protecting condo owners has been a large part of a yearslong campaign by the Community Benefits Agreement Coalition to battle displacement spurred by the development of the Obama Presidential Center.
Though neighborhoods like Lincoln Park, the Near North Side, and Lakeview have lost the most condo units through deconversion, no neighborhood has seen more total building deconversions than Woodlawn (forty buildings), an analysis of Recorder of Deeds filings shows. South Shore follows not far behind with thirty buildings.
As of 2019, South Shore had the highest eviction filing rate of any neighborhood in Chicago; in the third quarter of 2022, the neighborhood led the city in investor purchases of homes, according to the Illinois Answers Project.
Members of the coalition have said that rising infrastructure repair costs and property taxes have stressed their condo buildings’ finances, making them more vulnerable to deconversion.
The Woodlawn Housing Preservation ordinance, passed in 2020, created loan funds and grant programs to benefit longtime homeowners, as well as tenant protections and affordable housing development requirements for the neighborhood.
In 2022, then mayor Lori Lightfoot passed a pilot program that would provide grants and low-interest loans to South Shore condo and co-op owners.
The CBA Coalition says that more protections are needed for South Shore, which was cut out from the Woodlawn ordinance during City Council negotiations. Their demands, which include tens of millions for homeowner grants and a Right to Return for current and former South Shore residents, have the backing of newly elected 5th Ward Alderman Desmon Yancy and 20th Ward Alderwoman Jeanette Taylor.
Together, these measures could help longtime condo owners stabilize their buildings and protect against unwanted deconversions—though it’s not clear whether any of these programs would immediately benefit buildings like the Silver Coast Citadel, where one company already owns a significant percentage of the building.
Litigation remains as a last option for owners who feel their board—whether investor-run or not—is not acting in the building’s best interest.
Condo boards have a fiduciary duty to all members in the building. It’s a responsibility, enshrined in Illinois law, for a board to protect and act in its members’ best interests.
If individual owners can prove that their board is acting against their best interests, or that it has conflicts of interest, they might stand a chance in a lawsuit.
In June, owners of a Bronzeville condo filed suit against a majority investor-owner in their complex for breaching that duty. In the complaint, the plaintiffs accuse the company, which holds three of five board seats, of forcing special assessments as a means of pushing people out and deconverting the building into rentals, Crain’s reported. The suit is still ongoing.
If the Silver Coast Citadel had received an offer when it went on the market last fall, the board would have had to call for a vote on the deconversion, per state law. For that deconversion to go through, eighty-five percent of the building’s owners would have had to vote in favor of selling.
Though Icarus has fifty-six percent of the vote, Foster thinks that they would have had trouble getting up to the eighty-five percent they would need to convert the building.
“The owners that I’ve talked to and that I know are people who log into these Zoom calls [board meetings], none of us plan to sell,” Foster said.
Part of that is because of a lack of trust in Icarus’s leadership, she said, but part of it is because for her and others, the building is home. “You can’t put a value on that,” she said. “And I can’t guarantee that you’ll have my best interest in mind when you sign those papers.”
Even if remaining owners chose to sell, it would be hard to get a fair price for their unit with a pending city lawsuit. The lawsuit places a lien on the building and each individual unit. Any buyer of an individual unit or the whole building would assume responsibility for the lien, and any costs associated with the lawsuit and building repairs.
According to a May 23 court filing, the city is petitioning the court to appoint a receiver for the building. If approved, that receiver would assume control over the building and have the power to enforce building repairs.
Despite the predicament, Foster remains optimistic about her and others’ fight for the building. “I think they felt like [Icarus] could come in and then leave whenever they wanted to, without really having to answer or respond to us,” Foster said. “But the few of us are very mighty, and we’re not letting up.”
Emeline Posner is a contributor to the Weekly. They last wrote a three-part series on the dissolution of a Kenwood co-op, What Happened to the Tudor Gables?