For more than five years, Hoffman Estates Mayor Michael O’Malley has lived in a bucolic 132-year-old farmhouse. But in all that time, according to the mayor, he hasn’t paid a dime of rent or made a single mortgage payment.
The extraordinary deal, the mayor said, is courtesy of Raymond Plote, a Chicago-area developer and road builder whose companies have received more than $10 million in contracts from the village and whose land O’Malley promoted for a new Chicago Bears football stadium.
O’Malley not only bought the farmhouse and more than an acre of surrounding land from Plote but also secured his mortgage from the developer. At the time, O’Malley said, his personal finances were in shambles and he knew he couldn’t qualify for a loan from a conventional lender.
O’Malley never has told the Hoffman Estates Village Board about his personal dealings with Plote, who now wants to build a huge residential complex and a golf course in the village.
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“Did I do something wrong?” O’Malley asked in an interview with the Tribune. “If I did, I didn’t mean to.”
Though the real estate deal with the developer is a potential conflict of interest for the mayor, O’Malley has broken no laws, said Richard Williams, the lawyer for the Village of Hoffman Estates.
State law prohibits municipal officials from having a direct or indirect financial interest in any contract approved by the village. But it doesn’t prohibit an official from having a financial relationship with a contractor–as long as the official doesn’t promise to perform an official act in return.
Still, the financial arrangement that O’Malley made with Plote is highly unusual.
Records show that O’Malley moved into the farmhouse six weeks after the Village Board voted in August 1992 to annex the house and land at Plote’s request.
In an interview this week, O’Malley said he never paid rent to the developer after moving in. Nearly two years later, O’Malley turned to Plote to finance the purchase of the house and the land, records show.
According to the mayor, he paid Plote $70,000 down and borrowed $135,000 more from Plote. But he said Tuesday that he has not paid principal or interest on the loan since the deal was struck in 1994.
Following Tribune inquiries, Thomas Royce, a lawyer for O’Malley, said Wednesday that the mayor has made payments under the terms of a note. But Royce declined to say how much O’Malley has paid or to elaborate.
“I think that would be a matter of attorney-client privilege,” Royce said.
Nor would Royce or O’Malley disclose the terms of the loan, including the interest rate.
O’Malley said he turned to his friend Plote because he realized a financial institution wouldn’t have lent him the money.
“My credit sucked. I have a bunch of kids,” said O’Malley, who has 10 children.
It is hard to determine just what the mayor’s family income was at the time he and his family moved into their home in 1992. But his mayoral salary was $9,000 a year, and he held a part-time job with the Illinois secretary of state’s office that paid $17,000 a year. O’Malley’s wife owns a janitorial service, but it is unclear whether the firm was operating at the time.
O’Malley, first elected in 1989, is a popular mayor. He is known for his work on behalf of children and the poor. In 1991, he helped prevent the Children’s Advocacy Center, which helps abused youths, from closing. O’Malley also established a self-help fund in the village that provides loans and grants to the needy.
And O’Malley has been credited with bringing big businesses to growth-minded Hoffman Estates, most notably the corporate offices of Sears, Roebuck and Co., which moved from Chicago in 1992.
O’Malley also has been an advocate for Plote.
In 1995, O’Malley introduced Plote to Bears officials when the National Football League team was searching for an alternative to Soldier Field.
“He put us in touch with Ray Plote,” said Ted Phillips, the team’s vice president of operations. Phillips described Plote as a “close, personal friend” of the mayor’s.
Following secret meetings between Bears President Michael McCaskey and Plote in O’Malley’s farmhouse, the team agreed to buy Plote’s 200-acre parcel along the Northwest Tollway. But the agreement has since fallen through, and Plote has joined with an adjacent land owner to propose building 3,000 residential units and a golf course.
Phillips said that while the Bears paid a small price to Plote for an option on the property, the team had been prepared to pay the developer “substantial money” for his land to build a stadium.
O’Malley “would love to see the Bears out there,” Phillips said. “He was a big proponent of it being a good location.”
The mayor denied that he had put the Bears in touch with Plote.
When he moved into the farmhouse, O’Malley said, it needed substantial renovation. The floor was rotten, and the house needed sewer and water lines, he said.
O’Malley said he and his wife made those repairs and also paid real estate taxes on the property. Cook County records show he began paying the taxes in 1994, the year he bought the house and about two years after he moved in.
O’Malley also said that when he formalized the purchase of the home, he consulted with Williams, the village lawyer, because he wanted to avoid any appearance that he was receiving a bargain from the developer. He said the purchase price was set at $205,000 because Plote had paid $200,000 for it in 1991.
Plote could not be reached for comment. The developer’s lawyer, former South Barrington Mayor Warren Fuller, declined to comment other than to say he acted as Plote’s attorney in the sale to O’Malley.
O’Malley and Williams said the mayor hasn’t used his influence to sway the Village Board on behalf of Plote.
Williams and the mayor pointed to a $4.9 million 1996 street-repaving contract. O’Malley opposed awarding the contract to Plote’s company, Plote Inc., because it had not been the lowest bidder.
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Orange Crush Recycling was the low bidder. But after questions arose about whether Orange Crush was qualified to do the work, the Village Board awarded the project to Plote Inc. O’Malley voted against Plote.
Later, the board reversed itself and awarded the contract to Orange Crush.
In 1995, Plote Inc. was the low bidder on the village’s annual street revitalization program and was awarded the $5.6 million contract. In 1997, Plote Inc. was again the low bidder and won a $5.3 million contract.
According to minutes of board meetings, O’Malley voted to award the contract to Plote in 1995. The minutes don’t indicate whether the mayor voted on the 1997 contract, though he proposed the motion to award the work to Plote.
Plote’s firms have been involved in many of Illinois’ biggest road projects. His chief development firm, Par Development Inc., has become a major builder and golf-course developer throughout northern Illinois.
In 1994, Plote Inc. battled with the City of Chicago over the company’s rock-crushing operation, which was part of the state’s massive reconstruction of the Kennedy Expressway.
The crushing operation, near Lane Technical High School, drew complaints from nearby residents and Mayor Richard Daley after Plote cut down nearly 200 trees on a lot to make room for debris and equipment.
The city eventually sued and forced Plote to close at that site.
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