City moves ahead with legal action surrounding historic downtown building
The City of Aledo was the sole bidder Oct. 1 for the historic downtown Button Building. The building, located at the northwest corner of Main Street and College Avenue, was sold for $170,000 at a sheriff's sale at the Mercer County Courthouse.
The city foreclosed on the property in a court proceeding against Zook Investments. The city held the mortgage as the result of a tax increment financing (TIF) loan it made to Zook in 2013.
City Attorney Mark Walton explained why the city had to bid even though it held the mortgage. He said the loan and the mortgage are two different things.
"It's a misconception when you have a mortgage you're the owner of the property," Walton said.
He compared the sale to a bank foreclosing on a person's house, with the city taking on the role of the bank and Zook being in the position of the homeowner.
"Almost 90 percent of the time the person holding the mortgage ends up buying the property," Walton said of foreclosure sales. "It's a way to seize the property."
The transaction is somewhat complex. For instance, the city attorney explained where the $170,000 goes.
"When nobody else bids, you're using your own money to bid," Walton said. "The money goes to the city. Zook's debt is reduced. … The money goes back to the city. Nothing really changes hands. He (Zook) effectively sold the property for $170,000. He didn't want to sell it, it was forced upon him."
Walton said the city's action is known as a "credit bid."The amount the city bid was not the full amount Zook owed on the property. The remaining money is called the deficiency judgment. He did not have the exact figures in front of him but said the deficiency was in the neighborhood of $50,000.
Asked if the city will seek a judgment in court to recover the deficiency, Walton said, "I don't know what our plan is at this point." He added typically court action is pursued, however.
City Clerk Jarod Dale said once the sale is confirmed by a judge in Mercer County Circuit Court, the City Council will, in time, review the options as to the future of the building. While the Button Building's future is uncertain, it has a rich past.
Vintage Button, which closed this past summer, was the most recent tenant of the building. According to geocaching.com, the Button Building was erected in 1856, then rebuilt in 1868 after a fire in 1867. The building was originally a 50-room hotel. According to the website, businesses in the Button Building over the years included The Aledo House, the Hotel Livermore, The Mercer House and The Mercer Building.
According to an article in the Times Record, one of the so-called Orphan Trains came to Aledo from New York City. "The orphans could be viewed on July 2, 1869, at 1300 hours at The Button House," according to the Times Record, referring to the Button Building's name at the time.