'Nuisance’ Arcade costing taxpayers

Arcade timeline

One of five buildings that comprise Dayton's historic downtown arcade has been declared a public nuisance by city building inspectors, and the glazing that holds windows in place in the 10-story tower continues to fail.

So the city has blocked off the sidewalk along the 1908-era Commercial Building at Fourth and Ludlow streets  to protect pedestrians from an intermittent shower of quarter-inch thick shards of falling glass.

“When the wind blows, Fourth Street is like a wind tunnel and you can see the windows rattling,” said Arch Little, a security guard for the 40 W. Fourth Street Center building. “Those windows are dangerous.”

The city of Dayton estimates it will cost $120,000 to secure the windows.

Optimism rose for the Arcade in 2009 when two men from Wisconsin made an overnight dash to Dayton to buy the historic property at a Montgomery County Sheriff’s sale. Now, city officials are concerned about the safety of the buildings and the blighted hole the complex has carved out of Dayton’s central business district.

Meanwhile, property taxes are mounting and no one, at this point, knows if the once grand complex with its ornate glass rotunda will survive.

“If we could find a tenant to occupy 30 percent of the space, we’d start work tomorrow,” said Gunther Berg, a partner in Dayton Arcade LLC, owner of the complex. “We need to have something tangible in our hands.”

Kevin Powell, Dayton’s acting division manager of housing inspection, said the city plans to hire a contractor to re-glaze the Commercial Building windows, but the work can’t be done until the temperature consistently is above 40 degrees, or the compound won’t hold. Building inspection had no complaints against other Arcade buildings.

“It’s important to understand that the city never wants to take over private property, but the safety of the citizens comes first,” Powell said.

The nuisance declaration means owners of the Arcade, Berg and Wendell Sturtz aren’t allowed inside the Commercial Building without city permission. They have full access to other parts of the Arcade.

Public funds initially will pay for the re-glazing work, but ultimately, the bill will be sent to the owners, Powell said. If they don’t pay it, the fee will be certified onto their property tax bill, which currently is $272,199 in arrears.

“We never had the intention of making (the Arcade buildings) worse,” Berg said Tuesday in an exclusive interview with the Dayton Daily News. “I am really sorry for that. That is something that bothers me.”

Berg said he has spent two years and nearly $300,000 — on architect and travel expenses — in an effort to find tenants for the turn-of-the-century complex. He has a meeting scheduled in December with another one.

He has assembled a restoration team that includes Baltimore based developer, Cross Street Partners and Peter Emmons, chief executive officer of Structural Group. The team will rethink its strategy, if a tenant solution isn’t identified by the end of January, Berg said.

“Our intention, if we cannot make the Arcade right, we will make it safe, then we will put it back to sleep,” Berg said. “You will not find a better team to develop the Arcade. The one piece that is missing is an anchor tenant.”

The Arcade opened in 1904 as a farmer’s market, and in later years also included apartments, retail businesses and restaurants. Berg said city officials have pushed for development of low-income housing in the complex and two investors showed interest in that type of reuse.

“If that’s what the city wants in the Arcade, then we’re not the right partners to restore it,” Berg said. “The structure of the arcade was not made for housing.

From a design perspective, it would not work. We could collect state and federal subsidies and do the job, but the Arcade wouldn’t be brought back to its old glory. We cannot start thinking about a cheap solution.”

Berg also said the guaranteed lower rents would negatively impact the long-term sustainability of the project.

Meanwhile, the buildings continue to age and the delinquent taxes grow.

Berg said he got estimates of $30,000 to $50,000 to board the Commercial Building windows early in the year, but delayed the work because he hoped restoration would be underway by now.

“I feel extremely bad about the windows, but I think someone is trying to take advantage of us,” said Berg, referring to the city’s glazing estimate. “If the city contacts us and tells us we have to glaze the windows, we will do it, but not for $120,000."

Records obtained by the Dayton Daily News show the city’s Department of Building Services sent Berg letters on May 5 and Aug. 31, regarding the windows.

“I am not happy about communication with the city, but it is what it is,” Berg said.

“Can we not sit down and talk? Is it not enough action to spend $300,000? We truly believe in this project. I don’t understand why people complain. Don’t complain, help us.”

Montgomery County Treasurer Carolyn Rice said she planned to include the Arcade in a tax lien sale to recoup the delinquent property taxes, until Berg agreed in June to a three-year payment plan. The deal called for payments of $12,798 per month, but Berg has not kept the agreement and no payments have been made.

“With each passing day, the problems with that property grow,” Rice said. “We have been as flexible as we can with him.”

Rice said placing the property in a tax lien sale requires finding a willing buyer to put up the cash to pay off the taxes. The only other option is foreclosure.

If Montgomery County forecloses, the property would be offered at sheriff’s sale at least twice at a price that includes the delinquent taxes and court costs. That’s how Dayton Arcade LLC acquired the complex in 2009 for the minimum bid of $615,106.

If there is no bidder, the property goes up for sale twice again for the minimum bid of court costs. If a buyer still doesn’t step forward, the property would be forfeited to the state.

“Having Gunther Berg showing interest in the property is the only glimmer of hope,” Rice said.

City officials said at this point demolition of the complex is not considered an option.

Downtown employees and residents, on Monday, voiced concerns about the hazard crated by the Commercial Building windows. They also had mixed feeling about the Arcade’s future.

“I’m glad to see the city is going to do something about the windows,” Michael Reed, 47, of Dayton said Monday. “On the other hand, what’s going to happen to the building if there are no businesses to move into it.”

Shalanna Bell, 40, of Dayton, also said she’s pleased the city is taking action. The expense isn’t worth a passerby getting hurt, she said.

“I don’t think the building should be torn down. I do think it should be fixed, at least to make it safe,” Bell said.

For downtown resident Rose Darrah, 66, who once sold magazines in the Arcade, the deterioration of the Commercial Building is a sad turn of events.

“Unfortunately, with the condition it’s in, it might be safer to take it down,” she said.

In the late '40s and very early '50s, Beerman Realty had its offices in upper floors of the Commercial building, where some of Dayton’s first suburban shopping centers were planned.

Contact this reporter at 937-225-2362.