The deal could work like this:
Student Suites LLC would deed the two-acre site to Rauch, the demolition contractor who placed mechanic’s liens on the property and sued Student Suites alleging the developer owes him nearly $1 million. In return, Rauch would drop the lawsuit he filed that seeks to recover unpaid demolition costs.
Student Suites had attempted to develop the property into new student housing, but the $18 million project ran aground over a number of problems, including a long-standing federal lien on a small portion of the property that spooked lenders evaluating the proposed 350-unit housing complex.
With deed in hand, Rauch would sign over the property to the city of Dayton, which would take ownership of of it except the historic Dayton Daily News building. The city aims to place the property in the Montgomery County Land Bank, a move that would eliminate overdue property taxes and keep it tax free until another developer takes on a project there.
Rauch said he would prefer that Dayton History assume ownership of the Daily News building and decide on its refurbishment and reuse. Brady Kress, Dayton History President and CEO, said his organization is interested in discussing the issue.
“Absolutely, we are interested in seeing that what remains of the oldest part of the building is preserved or adaptively reused and remains as one of the landmarks in downtown Dayton,” Kress said. “Whether we are involved is premature to say. We are honored Steve would think of us in regard to this generous gift.”
In return for the property, the city would pay Rauch to complete the demolition job and fill in the gaping holes left in the ground when his company departed the site, making it ready for new development.
Dayton City Manager Shelley Dickstein said the city is considering paying Rauch around $800,000 — which amounts to $500,000 for the property and $300,000 to complete the demolition and make the site development ready.
Attorney Greg Page, who is representing Rauch, said discussions are ongoing about finalizing the deal. He said a statement of terms from the city of Dayton still needs to be completed and forwarded to him.
The deal would give the city more control over a prime piece of real estate just one block from City Hall. Student Suites would no longer have any ties to the project.
“Student Suites LLC Dayton has agreed to provide Rauch with a deed in lieu of foreclosure and in response to the lawsuit,” Page said. “They are surrendering the real estate in exchange for the release of the lien and dismissal of the lawsuit. A settlement agreement has been exchanged between the parties. It is not in its final form, but it is close to its final form.”
A demolition contract between Student Suites Dayton LLC and Steve R. Rauch Inc. specified a payment of $1.292 million. Rauch said he stopped working on the project when the billing cost for his work hit $869,000 and he still hadn’t been paid.
Rauch said he’s ready to get the deal done. “Everybody’s goal is to see it cleaned up and look attractive again,” he said.
Dickstein said she hopes the deal can conclude in two weeks, with the site preparation work completed by Aug. 31.
“We want to get it in a development position,” she said. “There’s a whole lot of activity in development right now.”
She called the site “a blighted eyesore in our downtown” and said it is in the city’s interest to get full control of the site so that it can be readied for development.
The city owns a .13-acre parcel where the Schwind building once stood on the northeastern corner of the site and has access to a closed alleyway that could be reopened. Parking has been mentioned as one possible reuse for the property.
The site is the birthplace of the Dayton Daily News. The original newspaper building at Fourth and Ludlow streets — built in 1908 and listed on the National Register of Historic Places — still stands on the southeast corner of the parcel.
As part of the 2013 sale of the property to Student Suites, Cox Media Group Ohio — the division that operates Cox’s Ohio media properties, including the Dayton Daily News — provided $1 million to the LLC toward preservation of the newspaper building and redevelopment of the site.
The city also sent $938,591 to the LLC for expenses, and incurred other costs through its ownership of the property that was the site of the Schwind building, which was demolished.
The fate of the entire $2 million in funding is unclear, although Dayton Community Development Director Aaron Sorrell said Student Suites told the city that funding went toward redesigning the project to work around the federal lien on the property.
Said Dayton Mayor Nan Whaley: “Clearly we want to get the site cleaned up and we are working to get that to happen in the next two months.”
Student Suites Inc. of Independence, Mo., the parent company of the LLC, didn’t respond to a request for comment.
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