No changes at Tuscany Woods after bank failure

HAMPSHIRE — A week after the bank that owns Hampshire's Tuscany Woods Unit One development was seized by the Federal Deposit Insurance Corp. and given to U.S. Bank, the changeover seems to have made little impact on the subdivision or village finances.

"It seems to be status quo so far," Village Administrator Eric Palm said.

Because the capital reserve of its parent company had slipped below acceptable levels, Park National Bank was seized by the U.S. comptroller of the currency Oct. 30 and turned over to the FDIC, which in turn turned it over to Minneapolis-based U.S. Bank. Park National's 31 Illinois offices, including ones in Geneva and West Dundee, opened Saturday as branches of U.S. Bank.

FDIC spokesman David Barr said Monday that U.S. Bank would continue to honor checks drawn on former Park National accounts.

Barr said the FDIC had worked out an agreement to divide expected monetary losses at the failed bank between the insurance agency and U.S. Bank, which will benefit by expanding its market share in the Chicago market.

Park National, through a new subsidiary called Tuscany Woods Holdings LLC, had become owner of the unbuilt parts of the subdivision earlier this year after original developer Pasquinelli Homes failed to make payments on a mortgage loan from Park National.

Palm said an attorney for U.S. Bank has told him that, in Palm's words, "it's business as usual at the bank, and they will continue to be actively involved in the subdivision." Palm said, "We would welcome the opportunity to work with U.S. Bank to complete the development."

In February, Park National hired Gladstone Builders to finish partially completed townhouses and houses at Tuscany Woods and sell the homes. Gladstone's sales office in Hampshire opened for business as usual this week, though Gladstone Vice President Adam Dontz said he was not yet ready to comment on the company's future status.

Dontz said about nine townhouses have been sold since Gladstone took over the sales office. Palm estimated that leaves up to 24 unsold townhouses and eight to 10 unsold single-family houses.

Pasquinelli originally expected to build 641 units on 409 acres along the north side of Route 72. Unit One accounted for about half that acreage and 342 of the homes. But only about one-sixth of the homes had been finished when the housing market collapsed and the bank foreclosed on Pasquinelli's mortgage. No work had been done on adjoining Unit Two.

Palm said $1.3 million has been pulled out of an escrow account the village and Park National set up a few weeks ago to pay for Unit One's final street paving, entranceway improvements and some landscaping. Those improvements originally had been guaranteed by letters of credit at Park National that Pasquinelli arranged before the mortgage foreclosure. When village officials began hearing hints this fall that the bank, too, was in shaky financial shape, the village cashed in the letters of credit and put the money in an escrow account with a title company.

The village had the right to withdraw the escrow account if the bank were seized by the FDIC. When that indeed happened, the village board held an emergency meeting Monday morning and voted to withdraw the funds.