“I don’t have any bad intentions, but I look at the $615,000 sheriff’s sale price and now they are going to spend $100 million on it,” he said. “It just seems like a lack of equity or fairness in this.”
The original investors will be paid when the development partnership closes on the project and purchases the real estate, said Dave Williams, senior director of development with Cross Street Partners, one of the project’s lead developers.
“We want to thank you for saving the arcade. It’s coming when we close,” he said.
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In 2009, Wisconsin residents Gunther Berg and Wendell Strutz formed a company called Dayton Arcade LLC that bought five arcade buildings, paying about $615,000 at sheriff’s auction.
Berg and Strutz said they raised the money from a variety of investors who believed in the project.
They announced plans to rehab the arcade into a mixed-use development, with hopes to reopen a few years later. The property has sat vacant since 1991.
But the proposal didn’t progress and delinquent taxes piled up.
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The next major arcade announcement came in 2015, when the city of Dayton concluded, following a feasibility study, that the complex could be saved and restored.
Not long after, Maryland-firm Cross Street Partners revealed it planned to acquire the complex to turn into a variety of uses, including housing, offices and public space.
At the time, Cross Street Partners Principal Josh Parker told this newspaper that Berg’s group of investors would be “made whole” as part of the purchase deal.
He said the investors deserved to get their principal investments back.
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Berg, Strutz and the investors who chipped in deserve credit for putting the arcade on the path to revitalization, said Williams, with Cross Street.
Williams said it’s possible the group saved the arcade from the wrecking ball.
The developer still fully intends to repay the original investors when the project reaches a closing, which is expected before the end of the year, Williams said.
“Everybody sees all these articles about the arcade getting this and the arcade getting that, but it doesn’t become real until we have closed on all the details to make this project 100 percent,” he said.
The arcade project has run into setbacks, including Miller-Valentine Group’s withdrawal as one of the lead development partners. Miller-Valentine, which was in charge of the housing components of the project, has been replaced by St. Louis-based McCormack Baron Salazar.
But Heins said he never imagined it would take so long to get his money back. He said he would have earned a lot more by now on other kinds of investments.
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Heins says he and the other investors were naive because they never dreamed it would cost $100 million to redo the arcade. But he said he contributed to the arcade when he was in better financial shape.
Heins said he’s heard for too long that he’ll be repaid soon.
“They keep saying, ‘It’s just around the corner. It’s just around the corner.’ But that’s been the refrain for the last 18 months,” he said.
Heins says he’s also concerned because he has not received paperwork with details about the purchase proposal and other financial information.
Berg told this newspaper that the redevelopment of the arcade is a positive story and Heins will get his money back after the real estate purchase.
“There’s no doubt about that — it will happen,” he said.