Buy back Manchester Inn/Sonshine

News  April 16, 2021 By Rick McCrabb

Records: 

Middletown could pay Manchester Inn owner $161K settlement to regain ownership

The City of Middletown may own two downtown properties again if city council approves paying the owner a settlement agreement, according to county court and city documents reviewed by the Journal-News. The city apparently entered into a contract which left the city open to the ensuing lawsuit without any protection and giving ALL rights to the purchaser. It seems our law department needs to be reeducated. If you recall, the city has sold other properties for $1 and subsequently repurchased at tax payer cost (out of the General Slush Fund which contains all monies including Storm Sewer, Auto and Gas Tax receipts from the state for street maintenance, etc.).

In 2014, Grau’s company purchased each building for $1 from the city as part of a redevelopment deal. Until December 2020, Grau was unsuccessful in receiving the state historic preservation tax credits in previous rounds. Both buildings have been vacant for several years and have been the target of break-ins and vandalism. The city law department was or should have been aware that The Historic Preservation Tax Credit is limited in number to a few properties and the reason that Grau was unable to receive it was that number had already been reached or was in process for other property. Fraud?

A previous Journal article excerpt states:

Editor’s Note: This story first published on Dec. 13, 2018.

Cincinnati-based attorney Trout said Grau’s application and term sheet for the current round of tax credit awards would have scored a 92 out of 100 even without the $500,000 funding from Downtown Middletown, Inc. which was pledged in round 19, thus qualifying the project for the Ohio State Historic Tax Credit. Trout said each time the tax credits are delayed, the deadlines are automatically extended equal to the period of delay beyond 30 days. He also claimed the city breached the contract because it refused to provide Grau the necessary letter of support for Ohio State Historic Tax Credits for the September 2018 round of applications that were due Oct. 1. Trout said the city’s refusal to provide a signed letter of support “rendered the application insufficient, incomplete, and was unable to be submitted.” Because of that, the two-year period has not started or expired until the city supports the tax credits application. No wonder the city was libel. How many other deals have been done like this and how much more is the city paying off in law suits and settlements? Shall the city law department continue this illegality ad nauseum?

Back to April 16, 2021 excerpt: If the emergency legislation is approved, the city will pay owner William Grau $161,824.60 that constitutes reimbursement of expenses for his eight years of ownership of the buildings, according to city documents. Grau agreed to develop the buildings into a hotel and brewery/distillery and restaurant. The development agreement called for the project to be completed within two years, by late 2016. When no development was visible by October 2018, the city notified Grau of its intent to exercise a clause in the development agreement to take back the buildings under the legal action of reversion.

Two months later, Grau filed legal action against the city to maintain ownership of the buildings and the issue has been in the court system ever since. Then last month, Butler County Common Pleas Court Judge Michael Oster Jr. found there were no material issues of fact in the case and the city was granted ownership of the buildings. The city and Grau negotiated a settlement, the city said. These expenses “broadly constitute” work done to the buildings, studies done regarding the feasibility of development, applications and professional services regarding the tax credits needed for development, tax payments, insurance, utilities and security measures for the buildings, the city said.

If the city had owned the buildings for the last eight years, it would have incurred costs to maintain, secure and market them, according to a staff report. Which the city notoriously neglects to do, check out the old Carnegie Library 0n 1^st Ave. A truly historic building now in unrecoverable condition. No city funds available to tear it down?

City staff is recommending the settlement agreement as proposed after a review of all expenses requested, saying the “reasonable settlement amount” limits the additional monies that will be spent on attorney fees and potential for the court to order a higher settlement amount. Oh yes, close the barn door after the horse is gone. And the city will own 2 buildings which may be demolished at a cost of perhaps millions. The regular city demolition buddies will eat that up.