Park Ridge Council Not Ready to Extend Loan To Fired Exec

Former Park Ridge City Manager Jim Hock will be waiting a little longer to find out whether the city will make a deal with him to extend payments on a $350,000 loan the city gave him to buy a home when he was hired in 2008.

Alderman voted Nov. 7 to wait a month to decide whether to offer Hock a “forbearance agreement.” In that time, they want interim city manager Shawn Hamilton to get a formal appraisal of Hock’s home and find out roughly how much it would cost and how long it would take to foreclose on the house.

“It does take quite a bit of time,” said Sixth Ward Ald. Mark Mazzuca, who made the motion to defer action while the city gathers more information. “Twelve months would not be unreasonable.”

Two council members – First Ward Ald. Joseph Sweeney and Second Ward Ald. Richard DiPietro – voted against the motion to delay action.

Earlier: Former city manager asks for forbearance

City attorney Everette “Buzz” Hill has put together a proposed forbearance agreement to offer Hock, which would have required the former city manager to keep the townhouse on the market and forward all offers to the city, which would decide whether an offer should be accepted. It would also require Hock to forgo the remaining $47,000 worth of severance payments due to him, applying that amount to the loan, on which he still owes $288,000. He also owes his bank $133,000 on their loan, which is considered the first mortgage and would be paid off first after the house is sold.

The village has not made any severance payments since Nov. 1, when Hock officially defaulted on the loan.

Hock used the loan – and a smaller mortgage from a financial institution – to purchase a $550,000 Summit Avenue townhouse when he was hired. The original contract called for Hock to pay off the entire loan within six months of leaving his job with the city, which would have made the payment due Nov. 1.

But the real estate market has tanked since summer of 2008, and Hock has been unable to sell the house. It is now listed at $459,000 after two price reductions.

Mayor David Schmidt questioned why the city would offer any kind of forbearance to Hock at all.

“My position is to find out if it’s worth $420,000 and if it is, foreclose on it, sell it and get our money out,” Schmidt said.

Mazzuca said it wouldn’t be that simple, because foreclosure carries its own costs and the city could end up losing money.

Schmidt also questioned how the city’s loan ended up being the second mortgage on the property. Hill said that when Hock told him the bank insisted on it, he raised the issue with the former mayor, Howard Frimark, who told him to go along with it.

Mazzuca said that might not have seemed like a big risk in 2008, when the value of the house was more than enough to cover both mortgages.

Schmidt said that’s not a valid excuse.

“Everybody thought real estate values were going to hold or skyrocket, and it didn’t happen,” he said. “It’s the job of the attorney to protect us from this.”

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