Restrictive Covenant With Billionaire Justin Ishbia Approved By Winnetka Park District

WINNETKA, IL — Park district commissioners narrowly approved a restricted donation agreement with a local billionaire last week in exchange for a $3 million contribution to help pay for improvements to its beaches at Elder and Centennial parks.

In a 4-3 vote, the Winnetka Park District board on Thursday approved a restrictive donation agreement with the Ishbia Family Foundation, a nonprofit controlled by the family of Justin Ishbia, the private equity billionaire who is building the most expensive home in state history on the south side of Centennial Beach.

As part of the deal, the board agreed to place a 50-year restrictive covenant on the lakefront park that requires several specified elements of the planned improvements remain in place, including a dog beach and associated fencing, a pedestrian bypass, an ADA-accessible pathway and stone breakwaters.

If park district officials decide to change any of those elements, the billionaire's family foundation can take the district to court to get a judge to overrule them. Additionally, if they make changes to the breakwater elements in the future, the district could be on the hook for paying damages.

Among the final changes to the donation agreement, which was first proposed more than four months ago, are a clause that requires the loser in any legal dispute between the parties to pay the winner's legal bills.

"That's designed to make sure that the parties act judiciously and not frivolously," Adam Simon, the park district's attorney, told commissioners before the vote. "You have to make sure if you proceed, bring a dispute, that you're confident you have a good faith chance to win, because if you file a frivolous claim and lose, you're not only going to pay your own fees you're going to pay the opponent's fees as well."

Once park district officials have obtained final construction permits for the improvements, they will share them with Ishbia's representatives, who will have a chance to confirm each of the five specified elements are up to snuff.

"At that point, they have a chance to say, 'Forget it, we think it's changed, we're not going to do the donation,'" Simon said. "The agreement ends and the covenant never gets recorded, so it just dissolves."

Another addition to the agreement since last month's meeting makes it clear that Ishbia's foundation is not receiving any interest in the beach itself and that the park district has full authority to make changes to the beach, as long as it is not one of five specified elements.

"The Parties agree the restrictive covenant shall not result in and shall disclaim any express or implied limitation on the WPD’s discretion with respect to the use or improvement of any part of Centennial Park which does not comprise a Project Element," according to the 13-page agreement approved Jan. 18. "The Parties further agree the restrictive covenant is not intended to convey any interest in property whatsoever."

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Commissioners Christina Codo, Warren James, Eric Lussen and Jeff Tyson voted to approve the agreement, while Colleen Root, James Hemmings and Cynthia Rapp voted against it.

"I think that we have narrowed the restrictions to the elements themselves in such a way that it serves not only the donor but also us, as we move forward," Codo said ahead of the vote. "And that's very important to me because I do want to maintain public access, I do want to maintain the dog beach and I do want to maintain ADA access."

James said the donation agreement was not perfect, but it provides the park district the opportunity to move forward and accomplish one of its long-sought goals.

"It's really hard to get things done in this town," said James.

"This marks the 10th year that I have been serving the park district on this issue," he said. "I was asked almost 10 years ago to serve in the lakefront advisory committee 10 years. It shouldn't take that long."

Another of the updates to the final agreement since it the last draft was presented to the board in December clarifies the role of the "arbiter" of the deal. Executive Director John Peterson, who retires at the start of next month, will remain the initial arbiter under the agreement, but instead of Peterson picking his successor whenever he ceases to be, the parties will rely on the standard arbitration process.

Hemmings, who said he was unable to support the agreement, questioned the need to have an arbiter at all once the project is completed. He also said he had a fundamental issue with the board accepting a liquidated damages provision and agreeing to record a half-century restrictive covenant against its land in order to receive a donation.

"I have significant issues with both of those. I don't think a liquidated damages provision is appropriate in a monetary donation. I understand why Mr. Ishbia wants it, but frankly, his mistrust of the park district, to me, is not justification for accepting and setting a precedent for having liquidated damages in these kinds of agreements," Hemmings said.

"I find the 50 years to be extended and also, frankly, just arbitrary, based on the concern that's been articulated, I think, from Mr. Ishbia through folks that have been negotiating with him and otherwise," he said. "I can't agree to this. I can respect those who do find this agreement to be in the best interest of the public, I do not."

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Root said she certainly wanted to see the beach improvements completed but said it was more appropriate to move forward with an agreement after the district has received permits from state and local officials and without a restrictive covenant.

"This agreement is tying the hands of future boards, and it really creates the opportunity for public land to be under the control of a private entity, even though it may be limited, as you said, to the project elements," Root said. "It's a case, in my opinion, and I will look to counsel to contradict me, where a government entity is actually providing a restrictive covenant to a private entity and I find that to be something that we should not establish as a precedent."

Root said the district did not need Ishbia's $3 million to move forward with the plan, referencing a recent anonymous donor's offer to give it another $3 million that would not come with a restrictive covenant — but it would stop the district from swapping public land with Ishbia.

Commissioners previously agreed to such a swap in a now-dormant October 2020 agreement that would see the billionaire give the district the house he acquired between Elder and Centennial beaches in exchange for a portion of Centennial beach next to his other properties.

Litigation challenging the deal remains pending in Cook County court, though a judge has already dismissed an earlier version of the complaint.

The potential anonymous donation was revealed last month by attorney Elizabeth O’Brien of Levenfeld Pearlstein, and commissioners have developed a rough outline of the contours of a potential deal.

The requirement that the district cancel the land swap agreement could open it up to legal liability, though Rob Romanoff, another attorney from Levenfeld Pearlstein, said the money could be used to respond to litigation and the donor would consider contributing more money if needed.

In addition to blocking any potential land swap, it would require district officials refrain from entering into "an agreement, easement or similar restriction with a private party that restricts the design, modification or operation of the park."

In a statement after the meeting, Ishbia said he was honored to help the district and pleased that the park district will be able to begin the improvements "in the foreseeable future."

Earlier: Park District Tables Restrictive Covenant, $3 Million From Billionaire Ishbia