Like so many other young would-be homeowners in Chicago’s febrile real-estate market of the past decade, Matt and Sarah Adess hoped to find both a place to live and a high-performance investment. It was the summer of 2000 and the couple, both 24 years old, wanted something that “was an attractive space and a steppingstone to whatever the future was going to bring us,” recalls Matt Adess, who was studying at Loyola University Medical Center with an eye toward one day starting an oncology practice.
That’s why the pair were delighted to find the nearly completed four-story red-brick building on the southwest corner of North Avenue and Leavitt Street in super-hot Wicker Park. They had seen “a lot of cookie cutters,” says Sarah Adess, who was teaching in a preschool at the time, but this building had distinctive floor plans. With expansive living spaces on the main floor, a partial loft above, and rooftop decks, it combined elements of layouts used in townhouses, lofts, and single-family homes.
And the location, a few blocks west of the hip North-Milwaukee-Damen intersection, suggested that this would be a smart place to buy. So in October 2000, the couple paid $457,500 for one of the building’s four three-bedroom condos. “We stretched,” Matt Adess says. Today, appraisers tell them, condos with about the same square footage, location, and finishes would be worth about $707,500, a 55 percent increase.
Those other condos, however, don’t have four-inch-wide cracks running along walls throughout the unit. Or a granite fireplace mantel that tilted about 30 degrees from one side to the other before finally snapping under the strain. Or a ten-foot-long fissure in the parapet facing the street. Or nails that pop out of walls as parts of the building slowly sink deeper into the unstable soil.
In May, the Adesses sold their condo back to the builder, Krzystof Karbowski of MCM Realty, for their original purchase price plus about enough to cover the $70,000 they paid in special assessments to try to shore up the building. But the Adesses say the settlement did not cover the roughly $50,000 they spent to rent another place after structural engineers (hired by the condo association) cautioned them to get out of the building on Leavitt last summer (they had to continue paying the condo’s mortgage while renting elsewhere). Nor did it cover the lost appreciation on their investment, or repay them for nearly five years of worrying whether the building would fall down around them. At one point, reports Matt Adess, the engineers “said they didn’t know if the loft was still stably attached to the rest of the building. It could fall down on the floor below it.”
The structural engineers “told us they could no longer guarantee our safety if we stayed there,” says Sarah Adess.
In the building frenzy that has characterized the renaissance of many Chicago neighborhoods, thousands of new houses, condos, and other residential spaces have gone up. Most have proved to be structurally sound, if not always as attractive as neighbors would like. And while most builders follow through on their city-approved plans, others opt to make unapproved changes “fairly often,” says Peter Scales, spokesman for Chicago’s Department of Buildings, though he couldn’t provide a precise number as to how often that occurred. “We always have a caseload,” says Scales.
This structure, at 1548-54 North Leavitt Street, is one of those exceptions, a building resting on unsteady soil and lacking a support column for one of four major load-bearing beams. That column was in the construction plan approved by the city, but it was never installed, leaving unsupported approximately 19 feet in the middle of that load-bearing beam. Eventually, the building started to collapse on itself.
It’s not clear who in the chain of contractors decided to place the building on weak soil and go without the column. Jake Rosenberg, the former owner of the southernmost condo (the one with the least damage), thinks Karbowski approved both decisions as “shortcuts to keep his cost down.” Mark Roth, the condo owners’ attorney, argues that Karbowski was inexperienced in construction, and that he “didn’t put somebody in place who micromanages every detail of the job, makes sure everything- everything-is done exactly as it has to be done.”
Remarks made by Karbowski during his deposition reveal that the developer indeed had only the slightest familiarity with the plans for the project, that his technical skills were minimal, and that he had little to do with the day-to-day operation of the project (or, apparently, of his company itself). While acknowledging that he selected the subcontractors-and that he had no procedure in place to monitor their competency-Karbowski insisted that it was the responsibility of the subcontractors to inspect their own work and to get the necessary permits approved. “We don’t do that,” said Karbowski in his deposition.
“A lot of bad construction results from bad supervision,” says Michael Sher, a Chicago attorney who has handled many construction-related cases but was not involved with this one. “If you’re in a hot market where [you want] to get the product to market soon, there’s pressure to get the job done as quickly as you can.”
The story starts in 1998, when Krzystof Karbowski bought the empty lot at North and Leavitt; someone had long since taken down the building that had previously stood there. Mark Roth suspects that the rubble from the old building was pushed into the cavity of the old basement and then filled over. It’s not clear whether anyone ever tested to determine the soil’s ability to hold a new building. (The city requires that ground that will hold a new residential building must have a load-bearing capacity of 4,000 pounds per square foot, though no one from the city verifies the soil’s actual load-bearing capacity before approving plans.) Karbowski bought the lot and plans for the building as a package from another developer who had intended to build there. The plans, drawn by the architect John Hanna (who says he dealt only with the first developer of the project), clearly call for the support column that was never installed.
Roth says some aspects of the building’s construction “indicate he [Karbowski] did not have a basic understanding of practices in the construction industry.” (In his deposition, Karbowski admitted that he had no experience in reading architectural drawings.) Among the problems: several floors were not properly fastened to the north and south walls of the building. That did not contribute to the cracking, but “that’s indicative that [Karbowski] was using day laborers who didn’t know how it’s done, and he didn’t have anyone telling them,” Roth says.
This past May, after a legal battle of almost four years, Karbowski and three subcontractors settled with the four owners out of court, paying $2.2 million to be divided among the owners (after legal fees are subtracted). According to Roth, Karbowski contributed about 85 percent of the settlement-approximately $1.855 million-and got possession of the building; by Roth’s reckoning, the lot alone may be worth nearly $1 million. Despite the settlement, Karbowski faults the homeowners. “We have to make repairs because those owners ruined the building,” Karbowski told Chicago. “They wouldn’t let us in to do anything for three years, and it got worse. They ruined that building.”
Karbowski had emigrated from Poland to Chicago in 1986, when he was 20. He worked first in a car wash, then for a cleaning service, and later delivered pizzas. He became a developer, he said in his deposition, in about 1995, with no education or training in construction or architecture. He had renovated or built five or six buildings by the time he launched the Leavitt Street condo project, which was to have retail space on the ground level along North Avenue. Four vertical condos would occupy the second and third floors, and decks were planned for the rooftops. The entrances and parking were in the back.
Jake Rosenberg, a trader, bought the end unit, with 2,500 square feet of living space and 1,500 square feet of outdoor space on two levels, for $464,000. In December 2000, he moved in.
“I first started seeing problems, as in ‘cracking,’ within two or three months,” Rosenberg says. “Over the doorways, the [drywall] taping was coming up,” indicating that the building was settling unevenly-not unusual in new buildings. “Karbowski was very accommodating about coming over to fix stuff,” Rosenberg says.
The Adesses, too, say they started seeing cracks about that time, and got prompt repairs from Karbowski’s crews. Sarah Adess estimates the builder’s crews “were in our unit numerous times over the first two years. It began to be a bit more of a problem when they would come and fix everything and then within four to six weeks we would see new cracks in the same places,” she says. “We noticed baseboards separated from the floor.”
At first, confesses Rosenberg, “I thought Matt and Sarah were just complainers.” But as time went by, the cracks grew and multiplied in their condo and the one next door, owned by Dawn and Bob Lindeman (who have since moved to Nebraska and did not respond to a request for an interview). “It looked pretty bad in [the Adesses’] condo,” Rosenberg says. “The cracks were getting longer all the time.” Ultimately, the four-owner association hired a structural engineer to take a look; after they showed Karbowski the engineer’s report, the builder shored up the concrete footings beneath the existing columns on the beam whose middle column was missing. “He was just adding concrete to a sinking building,” Rosenberg says, “so within no time all the cracking got worse, and he said he’d done all he could-and stopped taking our calls.”
By early spring 2003, the unit owners had determined they would get no resolution from Karbowski, so they hired Roth, who brought in another structural engineering company to do exploratory boring around the site. The engineer found that the soil at 1548-54 North Leavitt lacked “virtually any load-bearing capacity down to about four feet below ground,” Roth says. “Now, the city requires 4,000 [pounds per square foot], but anyone will tell you that’s overkill for safety. You could do it with 3,000-and if he had, we wouldn’t be sitting here talking about the building.”
(In the building’s city-approved plans, the fine print clearly states, “All foundation excavations are to be inspected by a qualified soil engineer.” According to expert testimony gathered by Roth, it is the responsibility of a developer to ensure that the appropriate testing is completed, usually at the time of excavation. Karbowski did not do this. In his deposition, he said that he did not discuss the condition of the soil with his subcontractors, and he claimed no one told him the soil conditions were deficient.)
The engineer also blamed the cracks on the absence of the column to support that fourth load-bearing beam-a beam that sat directly beneath the north wall of the Adesses’ condo. Roth thinks the decision to leave out that column was entirely aesthetic: it would have intruded on the view for entering the building’s ground-level commercial space on North Avenue. (The other beams were inside the building’s garage.) “It would have been kind of unsightly,” Roth says.
Roth contends Karbowski approved eliminating the column to make the commercial space more appealing to tenants. (A mortgage lender took the space; its owner, who had also bought one of the residential units, is now engaged in a separate lawsuit against Karbowski.) In his deposition, Karbowski claimed that the steel subcontractor, Telza Welding, had said the column was unnecessary. “The steel guy was supposed to do this support and he didn’t do it,” Karbowski told Chicago. “I’m not a steel guy. I’m not a structural engineer. When you hire somebody to build by the plans, they’re supposed to build by the plans.” (Roth says that Telza paid $70,000 of the $2.2-million settlement. Telza declined to comment for this article.)
According to established city procedures, violations like the ones on Leavitt are supposed to be caught and fixed when a developer applies for a certificate of occupancy, which verifies that residents can move into a new residential structure. But in June of this year-more than five years after the Adesses and others moved into the Leavitt Street building and several weeks after Chicago requested information about the building-Peter Scales, spokesman for the Department of Buildings, determined that no certificate of occupancy had ever been issued for that property. Karbowski must never have applied for one, Scales says, adding that “the onus is on the developer to get the documents in order.” Further, according to Scales, city hall does not have a system in place that follows up on building permits to determine whether completed projects ever get those certificates of occupancy.
With the cracks worsening, the residents stayed in the building, paying out as an association almost $300,000 to engineers and others. By last summer, with some cracks as much as six feet long and four inches wide, Sarah Adess says, the structural engineers “told us they could no longer guarantee our safety if we stayed there.” The Adesses, who by then had two children, moved to a rental apartment.
As the legal battle over Leavitt Street continued to inch forward, Karbowski went on building new projects. His Web site, www.mcm1001.com, lists three projects with condos now available for purchase. One of his most visible current projects (with all the units listed as sold) is an angular structure of alternating red and yellow brick that hugs the east side of the Kennedy Expressway, between Chicago Avenue and Division Street.
The settlement, finally reached in May, leaves at least some owners feeling as if they had missed out on a valuable investment as Chicago’s real-estate values rose astronomically. The Adesses say that before they bought their unit, they saw the condo and its potential for sizable value gains as a step toward buying a bigger home for themselves and their future children. Rosenberg says that although none of the owners really wanted to settle for a price that would not at least cover their debts in full, attorneys told them to take what they could get.
As part of the settlement, the unit owners returned title to the condos to Karbowski, who said he would stabilize the building-something the owners hadn’t let him do, he claimed, “for all those years”-and likely refit the place for rental apartments. But at press time, a stop work order from the Department of Buildings had been posted at the site. The alleged violation? “Interior structural alterations contrary to permit.”