A breakdown of city of Dayton expenditures also shows the city has spent $938,591 on the project. That doesn’t include $420,000 the city spent to pay off liens on the Schwind building, which has been torn down.

More city spending could follow. Dayton Interim City Manager Shelly Dickstein is concerned that another round of winter weather could damage the historic former newspaper building.

“We’ve looked at the cost to fill the hole so it’s not sitting there blighting the community and so that the building could be buttoned up and not exposed,” Dickstein said.

Rauch estimates the cost to finish the demolition would be $500,000 — to remove basement walls and fill in holes.

So now the demolition costs are up to $1.75 million.

The crazy part- this exceeds the cost projections former local developer Bill Rain had estimated to turn the Schwind into housing for students and still comply with the HUD restriction, but the city wouldn’t offer to help at all, finally forcing him out of the deal which he was given hope on by his “friend” Steve Budd at CityWide. Rain was going to use the DDn building as first floor retail and convert the upper floors of the very solid building into parking for the project. The historic Cox building- would have been adapted use as well.

However, local “power brokers” weren’t paid off, and Rain left for Tampa, where he’s done a series of much larger projects, including the conversion and adaptive reuse of a hospital into a long-term care and assisted living facility. (Full disclosure, Rain is a friend, and a client, I visited the hospital project several times and saw first hand what he did. I also witnessed his work on the St. Clair Lofts and Ice Avenue Lofts in Dayton).

The DDn even admits that they were all excited about these out of town hucksters with their no-money down deal:

The stalled state of the project is a stark contrast to the excitement that accompanied the original announcement from Cox Media Group that “a preliminary plan has been agreed upon for the sale and revitalization of the vacant historic Dayton Daily News building and adjacent property.”

“In addition to the sale of the historic Dayton Daily News’ building and property, Cox Media Group Ohio is contributing $1 million to restore and protect the legacy of the historic building,” the April 2013 announcement said.

The Cox people were most excited, but won’t say this- to get out of the property taxes on their empty building (they also demolished Channel 7 asap to avoid paying property taxes) and to not have to pay the Special Improvement District tax that supports the Downtown Dayton Partnership.

Bennish does manage to get this gem into the story:

In the 2013 announcement, CMGO (Cox Media Group Ohio) said it had been working with the city of Dayton, Student Suites and a California-based nonprofit, United Housing and Community Services Corporation, to finalize a plan to build an $18 million multi-purpose complex on the property. Sinclair was not involved, but once the project was completed its students would have access to housing just a short walk from their classes.

United Housing would own the project “once it was leased up,” said Sorrell.

Attempts to reach United Housing were unsuccessful and there was no listing for the non-profit in a statewide telephone directory.

In a bond document on file with the city of Dayton, United Housing was listed as the borrower of the proceeds of the bonds issued by the port authority.

Student Suites, the document said, “gathers a team of architects, local contractors and financial experts to provide a completely finished project.”

Note the part about “bonds issued by the port authority”- yet earlier in the article Jerry Brunswick (withdrawn school board candidate), the current straw man in front of the Port Authority (another organization that screws up public money with little oversight):

Jerry Brunswick, president of the Dayton-Montgomery County Port Authority, said in the early stages of the project the plan was for the authority to issue tax-exempt bonds to finance up to $15 million. The bonds would be sold through an investment banker.

“I never heard that the (bankers’) investment committee approved it,” Brunswick said. “And we asked. We were told they never approved it. If there was a lien in front of the property, it would certainly impede a positive credit decision.”

He added: “A lien in front of you is not a great way to sell a project. The project still makes sense. We’d like to issue the bonds and we have a new program that can be a part of this.”

Uh, if it had a lien on it then, and now it has a lawsuit and an unfinished hole, I’d say this deal is dead.

Bennish briefly covered the buildings’ history- but, that back story is full of the institutional knowledge that is needed to really understand how we got to where we were today.

With the long-shuttered Arcade across the street, the Student Suites project was seen as a ray of hope for that part of downtown and possibly a catalyst for future development. Then came a snag.

A major legal hurdle involved the deed restriction and lien on the Schwind building, which was imploded as part of the development plan. HUD had imposed the restriction after funding a previous owner’s plan to put low-income housing there.

Records show the Schwind had a rough history. The city originally acquired the building from HUD in 2003 after the owner defaulted on a HUD-insured mortgage. The city transferred the building to Rain & Associates in July 2004, but the building then went into foreclosure and was sold in 2007 through a foreclosure sale to the Schwind Building Restoration Project. The city re-acquired the building in August 2013 as part of the Student Suites project.

The “snag” was fully known and ignored by the city and by Student Suites. This is what we normal working stiffs call incompetence. That Dickstein failed the Wayne Avenue Kroger – with no contract with a tenant before expending over $4 million to aggregate a 12 acre parcel, using multiple rounds of real estate options, blighting the neighborhood wholesale, and spending enormous sums on appraisals, and negotiations should have been the end of her and Sorrell.

Bennish didn’t talk to Rain. The Schwind Building Restoration Project was when Bob Schiffler took over the project. Schiffler had successfully and beautifully done the old Chemineer building at the corner of Fourth and Main- but, soon after they transferred the property to him- PNC took over our beloved local lender, National City Bank- and called his notes- forcing him to sell his beautiful mansion on Oakwood avenue and regroup. The Schwind was ancillary damage.

The education of Aaron Sorrell and Shelley Dickstein at taxpayer expense is getting expensive. Bennish gets this beautiful piece in:

Sorrell acknowledges that the lien and deed restriction were raised by Student Suites as a hurdle to financing, but he said the developer redesigned the project to make the Schwind site part of a second phase that would kick in when the lien was removed.

“We’ll take responsibility for the HUD lien,” Sorrell said. “But the developer has struggled to find financing.”

Dickstein too acknowledged that the city made mistakes. “Looking in the rear view mirror, the project moved forward without financing in place,” she said. “In hindsight, we would change things.”

Maybe the reason the developer has trouble finding financing is because it’s really hard to do much in Dayton or even Montgomery County, due to it having the second highest tax burden in the state? Add to that, the additional tax to support the Downtown Dayton Partnership which gets away with no blame on this mess. Lenders aren’t bullish on doing any renovations in Dayton- or the use of Historic Tax credits to finance them- not a single one has worked since the Cannery- and that went into foreclosure as well- despite a very high rental occupancy rate. (Rain was one of the initial developers in that project- but left early when it was pretty clear that his partners, Beth Duke and Dave Williams had a different vision. Williams, by the way, after flopping a big project in Clayton, got hired by CityWide).

Before he died, Alan Rinzler once told me that he owned the only building in the central business district (the Talbot Tower) that hadn’t been foreclosed on). This is how damaged the Downtown real estate market is.

Considering the city has been going to town issuing tickets to home owners in South Park for peeling paint (I completed painting 3 of my houses this summer)  it’s crazy that this boondoggle hasn’t brought the wrath of Nan onto someone (I’m pretty sure my neighbors are paying for my sins).

A contract between Student Suites and the city required Student Suites to provide the city “with a fully executed copy of a payment and performance bond issued by a surety authorized to do business in Ohio and acceptable to the city … which bond will guarantee completion of the developer’s obligations under this agreement and payment in full of all contractors, material suppliers and others who contribute to the design and construction of the project.”

Student Suites has not provided proof of the performance bond, Sorrell said, although it did pay to insure the demolition activities.

The city’s Housing Inspection Division last year issued a violation to Students Suites ordering the LLC to remove trash and debris from the area. The city says there was no response to the order, which was sent by registered mail to Student Suites’ Independence, Mo., offices.

Whoa, wait- the demolition permit was issued before the proof of performance bond was filed on a project this big? And Sorrell still has a job?

The final chilling end to Bennish’s piece, suggest more of our tax dollars will go to prop up this clusterduck:

Dayton officials are now working to see how they can at least secure the building from the weather before winter arrives.

“We are very concerned about getting it done in the next month or so,” Dickstein said. “With the freeze and rain there is exposure on the historic building. It’s an important project and we want to see it be successful.”

If no one comes to the table, Dickstein said, “We will explore our abilities to move forward with enforcement action on the historic building and move forward to preserve the building and remove the blight and fill in the hole in the ground.”

A good start would be firing Sorrell and Dickstein, and then liquidating CityWide Development to pay for the fixes, and then dismantle the Downtown Dayton Partnership and start returning the tax to the property owners. Those who want the common area maintenance performed by the “Ambassadors” (minimum wage workers in green shirts hired by an out-of-state firm)  can band together to hire their own street sweepers.

Then, maybe, we can learn to leave the development to the private sector and concentrate on providing basic city services like plowing snow and collecting leaves, and hanging basketball nets on city courts.