Deal For $3 Million, Restrictive Covenant With Billionaire Ishbia Tabled By Park District

WINNETKA, IL — A narrowly divided Winnetka Park District board voted to table a deal it negotiated with billionaire Justin Ishbia to accept $3 million in exchange for signing on to a half-century restrictive covenant on publicly owned lakefront parkland.

Following the dramatic revelation of an anonymous, no-strings-attached offer to match Ishbia's "donation," commissioners voted 4-3 to postpone action on the deal with the billionaire, whose offer had many strings attached — despite his previous claim to the contrary.

"I think we need to carefully consider this alternative contribution, because I have never known a public body to place a 50-year restrictive covenant on a public park that provides a private owner with control over that park," Commissioner Colleen Root said ahead of the vote to table the deal.

"I find it to be something that we have a duty to our public to investigate whether the $3 million that has just been raised is something that would provide a fair services to our community, and, in listening to the public this evening, would be more palatable to our constituents," Root said.

The restricted donation agreement between the Ishbia Family Foundation and the park district was on Thursday's agenda for action, but its language was not finalized until late afternoon before the vote.

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Under the revised contract, Ishbia's foundation would fork over $1 million when the Elder-Centennial project is ready to begin construction and the other $2 million when it is complete.

The money has been earmarked for specific renovations of Centennial and Elder Lane beaches, including a new breakwater structure and a fenced dog beach next to the under-construction Ishbia compound, which is set to be the most expensive in state history.

"Basically, the property line will be at the end of the steps, walkers will be unable to get to the public trust area close to the lake because of the dog beach fence," Commissioner Cynthia Rapp said. "So this stretch — should the exchange go through as it's currently constituted — will basically create, in my view, a private beach."

The restricted donation and associated restrictive covenant are separate from the controversial land swap agreement between the affluent village's park district and the billionaire newcomer, which remains on hold.

"We don't have an easement in the restricted donation agreement, the beach is included in the current property exchange, which is now dormant," Rapp said. "So, should that happen, it creates a private beach, and I think that's a bit of a point that has gotten lost. I think that is also potentially a motivator for our interested donor."

The restricted donation deal, which calls for an "arbiter" to be appointed to resolve disputes, includes a provision by which billionaire's foundation can claw back the whole $3 million if the park district makes changes to the beach in the next 50 years — initially he sought 100-year term.

Ishbia, who has a net worth of $3.2 billion, is the son of the founder of Michigan-based United Wholesale Mortgage, which is now run by his billionaire brother and fellow Phoenix Suns co-owner Mat. He runs the private equity firm Shore Capital Partners.

An Ishbia spokesperson has so far declined to answer repeated inquiries as to why the billionaire has chosen not to give an unrestricted donation to the park district's nonprofit arm, the Winnetka Parks Foundation.

Initially, Ishbia described his offer as $3 million as one with "no strings attached," but it soon became clear that the "donation" was conditional on the park district agreeing to a long-term agreement that would give the billionaire a privileged position in determining future of the publicly owned parkland abutting property has purchased in recent years.

Ishbia later walked back the "no strings attached" claim, suggesting there were "misunderstandings" and clarifying he only meant that it was not connected with the land swap.

In a commentary published in October, Ishbia said he "agreed, when asked by the park board in August, to donate $3 million" toward the lakefront renovations, but he neglected to mention the negotiated conditions he attached to the "donation."

After purchasing and razing three Sheridan Road lakefront mansions south of Centennial Park — plus another one sandwiched between Centennial and Elder Lane — Ishbia has been building the most expensive home in state history.

The cost of acquiring the land and constructing the massive compound is estimated to rise up to nearly $78 million, significantly more than the previous record-holder.

The three parcels south of Centennial Park — 195, 203 and 205 Sheridan Road — have been combined to allow for Ishbia to construct a nearly 70,000 square feet house. And the property between the parks, 261 Sheridan Road, is the subject of the dormant land swap agreement.

While the park district has long hoped to acquire the property and allow Elder and Centennial beaches to be contiguous, Ishbia dropped $6.2 million to buy the house and has since used it as leverage in an effort to acquire some of the public parkland abutting his property.

Commissioners James Hemmings, Cynthia Rapp, Colleen Root and Jeff Tyson voted in favor of the motion to table, while Warren James, Eric Lussen and Christina Codo supported bringing it to a vote. Codo and Lussen are the two board members on team that negotiated the deal with Ishbia's representatives.

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During the period of the meeting reserved for public comment, Elizabeth O'Brien, a partner at the Levenfeld Pearlstein, read a statement on behalf of another partner at the law firm, Rob Romanoff.

O'Brien told commissioners their firm represents a longtime Winnetka resident who wants to give an anonymous $3 million gift that would help the district complete its lakefront improvement project without being obligated to a private individual for decades.

"The gift would be made in lieu of the current conditions that have been attached to a proposed donation for the improvement of Elder Park and Centennial Park and the use of parks generally. Our client's hope for this gift is that it will grant the Winnetka Park District greater flexibility and autonomy in planning the future of these unique public spaces," O'Brien said.

The anonymous donor wants no recognition and intentionally keeps a low profile in the philanthropic area, O'Brien said, adding that their attorney's would be able to provide financial references to demonstrate the money is there.

"Our client's gift would help the district start to move on from a controversy that has unnecessarily divided the Winnetka community," O'Brien said.

Following the offer, the board president — demonstrating either a lack of knowledge about the Open Meetings Act or an intent to thwart it — suggested that commissioners would not be allowed to talk about the offer. She was corrected by the board's attorney shortly thereafter.

The OMA prevents public bodies from taking final action on items that are not on their agendas. It does not restrict what board members can discuss in open session. Board members are required by law to take OMA training within 90 days of taking office. Codo did not immediately respond to an inquiry regarding when she last completed the training.

Ishbia spokesperson Allison Door, a vice president at the public relations firm Edelman Smithfield, provided a statement when asked if her billionaire client would be willing to match the anonymous $3 million unrestricted contribution and remove his requirement of a restrictive covenant on the public land.

"If the Park District chooses to proceed with an alternative source of funding," Ishbia said. "I would be happy to discuss contributing to another WPD project in the future."