Apartments Coming—& Parking Lot Stays

Melissa Bailey PhotoDeveloper Paul Denz will set to work “very soon” on turning this dilapidated Church Street store into apartments and retail, now that he has struck a deal with the city over who will pay for the demolition costs in the wake of a historic fire that ravaged that downtown block.

Denz, principal of Mid Block Development, has been locked in a legal battle with the city since December 2007, when a three-alarm fire tore through a 9th Square block, and the city took down several of Denz’s properties that were once home to the S.S. Kresge Co. department store.

This week Denz struck a deal with the city and five other parties resolving several suits and countersuits, releasing him from a $1.85 million demolition lien that had strangled development on over 4,000 square feet of prime retail space. Denz’s properties at 29 Center St., 834-846 Chapel St. and the back wall of 91 Church St. form a “+” sign in the center of the block bound by Chapel, Orange, Center and Church streets.

On Thursday, Denz said he plans move ahead with a long-delayed project to rehabilitate a rundown storefront at 91 Church St. while keeping the rest of the space as a surface parking lot. While the properties were under the demolition lien, he said, it was impossible for his company to get financing to build anything there.

The Church Street building (at center in photo in the top of this story), the former entrance to the Kresge department store, remains an empty shell. The back wall is still missing from when the city tore it down. Passersby on Church Street can see right through the building into the parking lot.

Denz has long sought to add a third story to the building, which most recently held the New Haven Variety Store, and convert it into a mixed-use site. He plans to create two apartments on each of the second and third stories, and a commercial tenant on the ground floor.

Denz said his company has a pending application for historic tax credits to fix up the facade, keeping its character.

Denz said after checks change hands from the settlement, he plans to get to work “very shortly” on fixing up 91 Church. That means putting up a rear wall, fixing the roof, enclosing the space to the weather, and doing some facade work.

“Then I’m looking for tenants,” Denz said. “I really don’t have any tenants for the commercial.” He said he had one a year ago, but the tenant is “long gone” by now.

As for the surface parking lot?

It will remain that way, for now.

Denz installed the lot in 2009 as a bitter battle with the city showed no sign of resolution.

Denz had a vision for building offices, apartments, and stores on the lot, using the former Hanh family jewelry store lot as a park.

“Those plans have gathered a lot of dust over the years, and they need to be dusted off and revisited,” Denz said Thursday. “Today is kind of the first day to really start looking at it again.”

According to the settlement signed this week, Denz agreed to pay $1.5 million of the $1.85 million lien, as well as $179,294 in taxes and $3,337 in interest earned on the money he held in escrow to pay for the lien. Denz in turn will be paid $83,000 from four subcontractors involved in the site, and $25,000 from the Brass Monkey bar, where the fire started.

Mid Block Settlement/ 9th Square Fire

In all, the city was able to recoup about 80 percent of the money it spent on demolishing Denz’s properties.

“Given that, it’s a good result,” said Victor Bolden, City Hall’s top lawyer, Wednesday. Bolden worked on the case along with Joseph Williams of the private law firm Shipman and Goodwin. Bolden said he did not know the cost of outside counsel, but the result was worth fighting for: “The city did incur significant demolition costs, and we needed to recoup those.”

The city did agree to eat the cost of tearing down another affected building, the former Hahn family jewelry store at 848 Chapel St. Like Denz, Shang-Jin Hahn sued the city for tearing her building down without giving her enough time to save it. The city settled the suit: It bought her property for $700,000 and waived $500,000 in demolition costs, costing the city $1.2 million.

While Denz didn’t fare as well as the Hahns in his settlement, he said he’s ready to move forward.

“Am I thrilled about it? No. But it’s over, and I can live with it,” Denz said. “And at this point I’d like to move on and do something with the property.”

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posted by: meta on June 17, 2011  3:34pm

as i walked by the parking lot this morning, it was apparent that the parking lot had not installed any storm water management as the torrential rain flooded part of the parking lot and was washing the sidewalk. hardcore.

posted by: Ellis Copeland on June 18, 2011  1:51am

The city should not have gotten a cent. What this administration has done in this case is unconscionable and the city should be paying Denz the value of the building.  In fact Johnny Boy should be personally liable.

On the plus side Mr. Denz keeps his property and hopefully something useful will soon be there.  As for storm water issues: show me ONE storm drain on ANY street in the 9 squares.  Stop covering for Johnny Boy’s ineptitude.

posted by: Steve B2 on June 18, 2011  2:17pm

Denz lost because he had no case.  The delay caused by his lawsuit is his fault. 

He rented his old building out to a nightclub that caught fire, which then burned much of that city block to the ground.  The burned buildings were unsafe and so the city correctly ordered their demolition.  It would have been an unconscionable risk to public safety to do otherwise.  Under the law, he has to pay for the cost of tearing down his hazardous buildings.  By the way, his property is a much more valuable development prospect in the long run without those buildings on the lot.

So, on top of the economic gain of having the (historic) old buildings on his property legally cleared away, he wanted the city to pay for the demolition.  Outrageous.  He lost (i.e. settled on nearly the city’s terms) for good reason.

The other neighbors were pure victims and I am glad that they are getting some compensation from someone; better that it had come from Denz, whose property caused the problems. 

(I’m not the other Steve B)

posted by: Jp on June 18, 2011  5:49pm

There is a storm drain in front of Kelly’s on crown and temple