Debt Dispute Halts Kresge Redo

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by Melissa Bailey | Dec 3, 2009 3:59 pm

(8) Comments | Commenting has been closed | E-mail the Author

Posted to: Downtown

Paul Denz has a building permit, three new lawsuits, and a plan to fix up a building damaged by a fire—but he said the city refuses to get out of the way.

In three new suits filed in Superior Court, Denz seeks to break free from a $1.85 million lien, which the city slapped on his downtown properties to recoup demolition costs after a historic 2007 fire. Denz opposed the demolition of buildings at 834-836 Chapel Streets, which comprise the bulk of the block between Center and Chapel Streets, home to the former Kresge department store. He has been fighting the city in court over who should pay the tab for the tear-down.

The city’s lien stands in the way of his plans to renovate the shell of 91 Church St. (pictured above), Denz said this week. The city demolished the back half of the building after the fire, which started at the Brass Monkey bar on Center Street.

Denz has city approval to renovate 91 Church with street-side retail and four apartments. He hired architects and a contractor to undertake the project, and he’s ready to put $1,250,000 into the building to make the project happen, he said. Click here to take a look at his architectural plans.

“I’m ready to go,” said Denz in a phone interview this week.

He even has two building permits to start work. The first allowed him to spend $40,000 to finish demolishing the back of the building, which the city had half-knocked down. The second would allow him to fix the roof and build the back wall again. But he had to stop the work.

Denz said as long as he’s trapped by the city’s lien, he can’t get a bank loan to finance the project.

The legal battle over who will pay the lien has hit a stalemate, both sides have indicated.

A New Offer

After negotiations stalled, Denz came up with a new plan. He wrangled $1.9 million in insurance proceeds and put the money into escrow, to show the city that the money’s ready if they win the suit. He said he hoped that after that gesture, the city would release him from the lien so he could start work at 91 Church.

The city didn’t accept his offer. It refused to release the lien, Denz said. Mayoral spokeswoman Jessica Mayorga said the city has no comment at this time.

Denz said the result is a decrepit building in the heart of downtown.

“The neighborhood looks like crap. My building looks terrible,” he said.

People who comment on the Independent “complain about me being a crummy landlord,” he said, but “it’s not me. ... They should redirect their wrath to the city.”

Denz is currently using the fire-ravaged area as a surface parking lot. He said the lot will likely remain that way for three to five years, as he waits for the lawsuits to be resolved, and as he monitors the success of the nearby 360 State apartment tower to test the city’s appetite for new downtown apartments.

More Suits

Meanwhile, the city has ramped up its efforts to collect on the lien. On Sept. 1, it filed suit in Superior Court seeking to collect on $1.9 million plus legal fees.

Denz replied with an Oct. 20 suit reiterating his claim that the damage to his buildings was due to the city’s negligence—both in overlooking fire code violations at the Brass Monkey, and in tearing down Denz’s buildings without proving there was “imminent danger.”

On Nov. 17, Denz unleashed another two lawsuits against city-hired contractors Laydon Industries and Abcon Environmental Inc., charging that they improperly inflated the costs of the demolition, and “over-demolished” the buildings.

Mark Sergi, owner of Abcon, flatly denied any improprieties. The whole job was monitored by an independent hygienist firm called Payne Environmental, he said, and everything was done properly.

Laydon officials couldn’t be reached.

Reached Thursday, city building director Andy Rizzo said he welcomes the new development at 91 Church.

“We have no roadblocks up,” Rizzo said. “I’m ready to work with his contractor whenever they’re ready.”

Past stories on the Kresge/Grant fire:

• Head Down To Kresge’s—To Park
• Denz: City Polluted Kresge Site
• City: We Didn’t Start The Fire
• Fire Damage Totals $10M

Comments

posted by: Jon Doe on December 3, 2009 7:25pm

King Johnny wants this Land for hos friends, Thats why the city stand in the way.

posted by: Ellis Copeland on December 3, 2009 7:33pm

Again you have missed the truly critical question. What we need to know is the identity of the person to whom Johnny Boy intends to sell this land in a sweetheart deal. Of course the city is going to fight until this poor guy finally gives up and walks away

posted by: City Hall Watch on December 3, 2009 10:36pm

Denz is likely to prevail. Taxpayers will pay up again just like we did when the city also damaged and demolished the building next to Denz. This is a waste of time and money. For once Mayorga was right to say nothing. Their actions show their disdain for taxpayers as if we needed any further reminders than DeStefano’s embarassing comments during the day of the fire and immediately afterward when among other people, he hired his favorite railroad company to truck the debris away.

posted by: Anon on December 4, 2009 10:45am

This City needs jobs and taxes, not personality wars. The city is shooting itself in the foot if they are holding the development up. Any benefit from the lawsuit is greatly outweighed by the benefit of moving this development forward. Roadblocks should be dropped immediately.

posted by: JP on December 4, 2009 12:16pm

Anon what are you taking about its 2 million dollars or 4 stuido apartments and a 2000 sq ft retail space. The block has plenty of open retail so I hardley think its worth giving up 2 millon for 4 tiney apartments. Also Id just like to add that this place looked awful before the fire so nothing has really changed.

posted by: curious on December 4, 2009 12:21pm

Why are the owner and city fighting over who pays the demolition cost, shouldn’t it be the insurance company? “He wrangled $1.9 million in insurance proceeds..”. What was that supposed to cover? From the viewpoint of the insurance company, was that supposed to cover the demolition, or other things such as the building itself/lost revenue/etc?

posted by: KD on December 4, 2009 2:58pm

After looking at the proposal for the new Chapel Street storefront (page 5 of the drawings) I think I might prefer the ruin. Can’t we hope for a renovation that will at least come close to matching the quality of the original?

posted by: jawbone on December 4, 2009 4:10pm

KD,
I just took a look at the .pdf of the architectural plans too. The rear elevation has EIFS walls and trim as the principal material. EIFS is also known at Dryvit also known as Styrofoam. Nice…not. Although the rear is thankfully facing a parking lot.
The front elevation drawings are suspiciously lacking any information about how the owner plans to deal with the front facade material that would require restoration. My memory is that this building’s front facade is brick and terracotta. Its quite a lovely building, hope he isn’t planning on a Styrofoam face lift.

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