Continuing coverage
The Dayton Daily News has provided in-depth coverage of the Dayton Arcade’s ownership by two Wisconsin developers, including their purchase of the building at a tax sale in 2009, development plans that never materialized, hundreds of thousands of dollars in unpaid taxes on the complex and the city of Dayton’s recent efforts to revive the historic buildings.
We will stay on this story and continue to bring you updates as they develop.
The Dayton Arcade, long a symbol of urban decline, is on the road to salvation because its future rests in the capable hands of the nation's premier urban development specialist, said Gunther Berg, the property's most recent owner.
Dayton Arcade LLC is under contract to sell the Arcade to a development partnership between Maryland-based Cross Street Partners and Dayton-based Miller-Valentine Group, officials said. The city of Dayton is part of the partnership.
Berg, who purchased the Arcade with a business partner in 2009, said Bill Struever of Cross Street Partners is a visionary who has an incredible track record of successful urban renewal projects.
In an interview with this newspaper, Berg said he bought the Arcade with the goal of saving and restoring the historic property and Struever has the right experience and the right ideas to make that happen.
“We have accomplished our mission, and the Arcade should be saved right now,” Berg said. “If they can’t do it, nobody can do it.”
The first phase of the Arcade redevelopment proposal is to create affordable housing geared toward artists and creative types, which officials said could make the property a hub of cultural and artistic activity.
The artist housing concept has helped rehabilitate old vacant buildings and rejuvenate struggling areas in a variety of U.S. communities, including Hamilton.
“It’s a well accepted, well proven methodology on how to use it, and it creates some real dynamic opportunities,” said Dave Williams, director of market rate housing for CityWide Development Corp., which is assisting the Arcade developers.
Berg and Wendell Strutz of Wisconsin bought the Arcade complex at a 2009 tax lien sale.
They were the only bidders and paid more than $615,000 in back taxes for the property. Dayton Arcade LLC took ownership of the complex.
Berg and Strutz announced ambitious plans to restore the Arcade to create housing, offices, restaurants and commercial spaces. But those plans never yielded tangible results.
The Arcade owes $522,727 in taxes, including $407,784 in delinquent taxes, according to Montgomery County records
Berg blames the economic recession for his group’s inability to secure financing to move forward.
He said Dayton was reeling from the closure of the GM plant in Moraine and the relocation of NCR’s headquarters to Atlanta, as well as other hardships related to the languishing economy.
Struever said his development group is under contract to purchase the Arcade, which could be finalized early next year if the project secures the necessary tax incentives.
Cross Street Partners, in conjunction with Miller-Valentine Group, proposes constructing about 60 affordable apartments and common programming spaces for creative workers and artists. The roughly $12 million to $15 million project would rehabilitate the Arcade’s five-story apartment building and 10-story commercial building on West Fourth Street.
Cross Street Partners would be the master developer of all of the Arcade’s seven buildings, with possible future projects including more affordable housing, market-rate housing, a boutique hotel and hospitality and restaurant spaces.
Berg: ‘Our group saved Arcade’
Berg said he helped arrange for developers to visit and tour the Arcade, including Struever, who first came to Dayton several years ago and has made multiple return visits. Berg said he always hoped Struever’s firm would take on the project.
Over the years, Berg said he has received a lot of heat and criticism from community members about the perceived lack of progress in redeveloping the complex.
But Berg said the Arcade is an extremely challenging undertaking and finding the right developer was not easy, especially since economic investment and property development ground to a halt during the downturn.
Berg insists this is the best possible outcome for the Arcade because Struever is the preeminent urban developer in the nation and he’s assembled an unrivaled development team.
“Our group saved the Arcade — that’s the truth,” Berg said. “I really wish it would have been faster, but how do you do that when all the surroundings are not right for it?”
The Arcade’s future is looking brighter today. But at times, the outlook was bleak.
The Arcade — once the centerpiece of downtown — has been a drag on the central business district for years, especially after its indoor shopping area closed in 1992, local officials said.
The Arcade, under Berg's ownership, continued to deteriorate and its commercial building, at Fourth and Ludlow streets, was declared a nuisance by city inspectors in 2013.
The Arcade ranks among the top 10 properties in the county that owe the most delinquent taxes, said Paul Robinson, chief deputy treasurer.
The city last year approved spending $700,000 for repairs to the Arcade to prevent further deterioration related to weather and water intrusion that could greatly increase rehabilitation costs.
A new hope
Berg was well intentioned and had good ideas to revive the Arcade but could not make them work, said John Gower, Dayton’s urban design coordinator.
But today, he said, there are more capital tools and tax incentives available to help reduce the costs of adaptive-reuse projects.
People increasingly want to live and work in urban centers, and affordable housing projects for artists and creative workers specifically have been economic catalysts in communities across the nation, he said.
Gower, who on multiple occasions has visited the Artspace Hamilton Lofts, said that innovative model for affordable housing could kick off development of the Arcade and stimulate investment.
The Artspace Hamilton Lofts, which first started accepting tenants in May, offers 42 apartment units for artists and creative workers, as well as work spaces and galleries.
The Lofts are part of a network of more than 35 affordable arts facilities across the country connected to Artspace, a nonprofit in Minnesota that helps create places for artists and their families to live and work.
The Lofts are geared for the “starving artist” types — people pursuing their creative passions but who typically must work in other fields to make ends meet, said Holly Cole, property manager of the Artspace Hamilton Lofts.
Living together allows the artists to network and collaborate, and residents tend to feed off each other’s energy and ideas, she said.
“You can be a graphic designer and meet someone in the elevator who is a musician and who is looking for someone to create their CD cover ,” she said.
The historic building, located on High Street in the heart of downtown Hamilton, provides unique and compelling spaces that appeal to creative types, including high ceilings, exposed duct work and industrial aesthetics, she said.
The building also has galleries and spaces for tenants to show their work and host special programming, including public events.
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