Fire Blocks plan to reshape downtown Dayton faces growing pains

The rehab projects concentrated along the 100 block of East Third Street have taken longer than anticipated, said Scott Gibson, CEO of the Ellway Group LLC, which is developing the area. That’s because the overall vision for the district has evolved and grown in scope and the financing has dramatically changed, he said.

The Fire Blocks District now is a $70 million to $100 million multi-phase development that will create a hub downtown connecting Water Street, Webster Station, the Oregon Historic District and the Main Street corridor, Gibson said.

RELATED: Investors intend to renew ‘Fire Block’ district in downtown

The walkable district will offer distinctive apartments, condos, Airbnb housing, office spaces and eating and dining options, as well as a boutique hotel, bodega, a bike shop, a coffee house, Gibson said, and will be an employment center where at least 500 people work.

“This has taken a really long time, and we recognize that and understand that people are anxious or frustrated, and we are too,” he said. “But we also know that we have to do this the right way … we think this is the best plan, long-term and mid-term for the project’s viability and to have the greatest impact on Dayton.”

Gibson and the Ellway Group continue to buy commercial properties in Dayton as redevelopment of East Third Street proceeds slowly.

Impatience with demolition work and headaches with facility maintenance is why Fidelity Lawyers Title Agency decided to move out of a building in the Fire Blocks owned by the Ellway Group, said Jim Hedrick, a partner with Hedrick & Jordan and majority owner of the title agency.

RELATED: Fire Blocks group gobbles up Third Street real estate

Since early 2015, members of the Ellway Group have spent more than $3 million acquiring about nine buildings primarily downtown, and it owns or controls the bulk of the 100 block of East Third Street, as well as a variety of nearby commercial properties.

The group says it has spent about $2 million on development, construction and carrying costs. Gibson, Elliot Katz and Greg McCluskey are the main partners.

The group owns about 1 million square feet of space in the Fire Blocks District, which it defines as the area bordered by St. Clair and Jefferson streets and Second and Fourth streets.

The Ellway Group owns the Elks building (100 E. Third St.), the David Building (115 E. Third St.), the 124 E. Third St. building, the Price Stores building (52 S. Jefferson), the DP&L building (18 S. Jefferson St.) and it controls the Kimmel building (140 E. Third St.).

The group also bought the parking lots behind the St. Clair Lofts and the Price Stores building. The group recently purchased two buildings farther east on Third Street in Webster Station and are on track to buy a couple more properties in the greater downtown area.

At one time, the Ellway Group planned to renovate one office building and convert another into housing with some first floor business, Gibson said.

The group now envisions Fire Blocks becoming the amenity center of downtown, which Gibson says would solidify the urban living and working experience.

RELATED: Downtown Dayton’s Fire Blocks gets new retail tenant

As the group acquired more buildings and the size of the overall plan grew, the way it would be funded also changed and so did the timetables for completion, developers said.

Gibson told this news organization in March 2015 that the first living spaces in the Fire Blocks would be available potentially by the end of the year. So far, the group has not opened any new housing.

Other project deadlines the group shared have come and gone.

In December, Katz told a member of the city of Dayton’s planning department that a restaurant in the Elks building, called El Sueño, would likely be open by April, and the Century Bar expansion would open in a few months, according to an email obtained by this newspaper.

Katz also wrote that a bike shop and coffee bar in the Kimmel building expected to open by April.

Gibson said the Ellway Group is still working to finalize the details of the coffee and bike shop; El Sueño hopefully will open late in the year, and the Century Bar expansion is forthcoming.

The Elks building is mostly gutted at this point, set to be the first new housing to open in the district, offering 22 apartments, Gibson said. Work to create 68 apartments in the David building needs to be done by the end of 2018, he said.

Gibson said his group overestimated how quickly the projects would happen, but a primary focus is finding exactly the right mix of uses and tenants.

“My first big mistake was I think I ran too hard, too fast, with what we were doing and shared too much about a plan that we thought was fully matured, but it wasn’t,” Gibson said.

RELATED: Fire Blocks wins $4.5M in historic tax credits

Gibson said he understands that some question why he continues to buy properties before completing the initial stages of Fire Blocks.

But, he said, some acquisitions are to prevent nearby properties from being used in ways that could hurt the value of his development.

Gibson refers to his real estate strategy as “forced appreciation,” which he says will allow him to set the price per square foot in his spaces once the district starts to transform.

Gibson says he has about $30 million to $35 million of the funding committed for Fire Blocks and he’s close to securing other financing.

“This market is about to take off and get extremely competitive,” he said. “One bad project hurts everyone else’s viability.”

RELATED: Price Stores building in downtown sold to investor

In addition to changing plans and financing, Gibson said his group encountered some issues with a former contractor, and their companies have since severed ties.

A representative of Taco Pants, the hospitality group working on El Sueño, also said the contractor caused delays with their project, according to correspondence with the city’s building department.

The group also encountered some friction with Fidelity Lawyers Title Agency, a tenant of the Elks building at 100 E. Third St.

Fidelity moved out of Fire Blocks and into the Key Bank building earlier this year before the lease expired.

The agency decided to relocate because the building’s one elevator was often out of service for as long as a week, demolition work on the interior of the building caused a dusty mess and there were water intrusion and HVAC problems, said Hedrick, the agency’s majority partner.

“The level of maintenance began to degrade to the point where it was not feasible to continue to operate a business in that environment,” he said.

Gibson said, “It is true the demo process caused issues for them as a tenant … They were very patient with the process, and we greatly appreciated their patience with work whilst they were a tenant with us.”

Hedrick said he is rooting for Fire Blocks to succeed but is worried that the plans may be tough to accomplish.

“If they can do everything they say they’re going to do, it would be good for Dayton,” he said. “I wish them well.”

The areas around Fire Blocks are seeing rejuvenation. The new $64 million Dayton Metro Library on the 200 block of East Third St. opens in August.

The Levitt Pavilion Dayton, a state-of-the-art amphitheater planned for Dave Hall Plaza by South Jefferson and East Fourth streets, is expected to open next year. The pavilion will host 50 free shows each year, likely drawing 100,000 to 120,000 visitors downtown, which would benefit nearby retail and food and beverage businesses and could increase the appeal of housing in the area, officials said.

Fire Blocks has grown significantly from the original concept, and the Ellway group has the vision to match, said Jason Woodard, principal of Woodard Development, which is part of the team behind the Water Street District across from Fifth Third Field.

“Projects of this size are never easy to execute but Scott, Elliott and their team have a ton of energy and are on their way to making this a significant restaurant and entertainment destination for the region,” Woodard said.