News  April16, 2021 By RickMcCrabb

Records: 

Middletown could payManchester Inn owner $161K settlement to regain ownership

TheCity of Middletown may own two downtown properties again if citycouncil approves paying the owner a settlement agreement, accordingto county court and city documents reviewed by the Journal-News.The city apparently entered into a contractwhich left the city open to the ensuing lawsuit without anyprotection and giving ALLrights to the purchaser. It seems our law department needs to bereeducated. If you recall, the city has sold other properties for $1and subsequently repurchased at tax payer cost (outof the General Slush Fund which contains all monies including StormSewer, Auto and Gas Tax receipts from the state forstreet maintenance, etc.).

In2014, Grau’s company purchased each building for $1 from the cityas part of a redevelopment deal. Until December 2020, Grau wasunsuccessful in receiving the state historic preservation tax creditsin previous rounds. Both buildings have been vacant for several yearsand have been the target of break-ins and vandalism.Thecity law department was or should have been aware that The HistoricPreservation Tax Credit is limited in numberto a few properties and the reason that Grau was unable to receive itwas that number had already been reached or was in process for otherproperty. Fraud?

Aprevious Journal article excerpt states:

Editor’sNote: Thisstory first published on Dec. 13, 2018.

Cincinnati-basedattorney Trout said Grau’s application and term sheet for thecurrent round of tax credit awards would have scored a 92 out of 100even without the $500,000 funding from Downtown Middletown, Inc.which was pledged in round 19, thus qualifying the project for theOhio State Historic Tax Credit. Trout said each time the tax creditsare delayed, the deadlines are automatically extended equal to theperiod of delay beyond 30 days. Healso claimed the city breached the contract because it refused toprovide Grau the necessary letter of support for Ohio State HistoricTax Credits for the September 2018 round of applications that weredue Oct. 1. Troutsaid the city’s refusal to provide a signed letter of support“rendered the application insufficient, incomplete, and was unableto be submitted.”Because of that, the two-year period has not started or expired untilthe city supports the tax credits application. Nowonder the city was libel. Howmany other deals have been done like this and how much more is thecity paying off in law suits andsettlements?Shall thecity law department continuethisillegality adnauseum?

Backto April 16, 2021 excerpt: Ifthe emergency legislation is approved, the city will pay ownerWilliam Grau $161,824.60 that constitutes reimbursement of expensesfor his eight years of ownership of the buildings, according to citydocuments. Grauagreed to develop the buildings into a hotel and brewery/distilleryand restaurant. The development agreement called for the project tobe completed within two years, by late 2016. When no development wasvisible by October 2018, the city notified Grau of its intent toexercise a clause in the development agreement to take back thebuildings under the legal action of reversion.

Twomonths later, Grau filed legal action against the city to maintainownership of the buildings and the issue has been in the court systemever since. Thenlast month, ButlerCounty Common Pleas Court Judge Michael OsterJr. found there were no material issues of fact in the case and thecity was granted ownership of the buildings. Thecity and Grau negotiated a settlement, the city said. These expenses“broadly constitute” work done to the buildings, studies doneregarding the feasibility of development, applications andprofessional services regarding the tax credits needed fordevelopment, tax payments, insurance, utilities and security measuresfor the buildings, the city said.

Ifthe city had owned the buildings for the last eight years, it wouldhave incurred costs to maintain, secure and market them, according toa staff report.Which the city notoriously neglects to do,check out the old Carnegie Library 0n 1^stAve. A truly historic building now in unrecoverable condition. Nocity funds available totear it down?

Citystaff is recommending the settlement agreement as proposed after areview of all expenses requested, saying the “reasonable settlementamount” limits the additional monies that will be spent on attorneyfees and potential for the court to order a higher settlement amount.Oh yes, close the barn door after the horseis gone. And the city will own 2buildings which maybe demolished at a cost of perhaps millions. The regular citydemolition buddies will eat that up.