The proposed home of a Walgreens drug store on the corner of North Main and Auburn Street and the ambitious Guilford Crossings subdivision that stretches from North Alpine Road to Mauh-Nah-Tee-See Country Club are being foreclosed on by Associated Bank.
Green Bay, Wis.-based Associated Bank filed the foreclosure suit Oct. 14 against KMD of Auburn LLC, Guilford Crossings LLC and Steven S. Murphy.
The suit alleges that KMD of Auburn LLC, whose principal investors are Murphy and Mike Kaspar, a former partner in the Murphy Group Companies, mortgaged the North Main-Auburn Street property in September 2008 for $725,000. As of October, they still owed $719,465 in principal and $10,552 in accrued interest.
The land used to be home to Table 13 and Salon 1300, a restaurant and hair salon, as well as Audio Installers. Those businesses moved or closed and the buildings were leveled in March 2009 to make room for what would have been the area’s 22nd Walgreens location in Boone, Ogle and Winnebago counties.
But 2009 was the year the economy morphed from a normal recession into the Great Recession and Walgreens halted its building plans nationwide. The lot remains vacant.
Guilford Crossings was proposed in 2006 when the real estate market was still soaring. But it took a few tweaks to the development plan to get the 40-acre mix of residential, multi-family and commercial space approved by the Rockford City Council though. The subdivision portion of the project didn’t begin construction until 2008.
But home building though has been hit hardest in the recession and its aftermath. In 2006, builders in Winnebago and Boone counties started 1,665 new homes. But when real estate prices crumbled and foreclosures reached record levels, the market for newly built homes dried up.
In 2008, the year Murphy began building in Guilford Crossings, builders started just 277 homes in Boone and Ogle counties. This year, builders are on pace to build fewer than 100.
In 2006, Guilford Crossings LLC, of which Murphy is the sole investor, mortgaged the 40-acre tract for $5.275 million. As of October, Murphy still owed $5.17 million along with nearly $76,000 in accrued interest.
Murphy did not return a phone call for this story. He is just the latest of a long line of developers washed under by the foreclosure wave that eroded home and land values by 30 percent since 2007. Already this year, foreclosure suits have been filed against such noted developers as Rubloff Development, Kurt Carlson, Jan Mansfield, Summit LLC and Florian Guski.