Historic building developer shut out for state historic tax credits while legal action continues with Middletown

The Manchester Inn in Middletown has sat empty for years. The developer, William Grau, was unsuccessful in the latest round of Ohio State Historic Tax Credits awards but will be applying in the next round. Grau and the city of Middletown are in a legal battle over the ownership after the city invoked a reverter clause in 2018. NICK GRAHAM / STAFF
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The Manchester Inn in Middletown has sat empty for years. The developer, William Grau, was unsuccessful in the latest round of Ohio State Historic Tax Credits awards but will be applying in the next round. Grau and the city of Middletown are in a legal battle over the ownership after the city invoked a reverter clause in 2018. NICK GRAHAM / STAFF

The developer of the Manchester Hotel and the adjacent Snider Ford/Sonshine Building in downtown Middletown came up short again for an Ohio Historic Tax Credit program.

William Grau of Historic Urban Development submitted an application to the Ohio Development Services Agency for the state historic tax credit. Grau’s project was not among the 28 that shared in the $31.2 million that was awarded on Aug. 5.

Grau has submitted his intent for the next round of applications to ODSA, according to his Cincinnati-based attorney, Rick Hamilton.

According to the State Historic Preservation Office, Grau completed a submission on the proposed work for the nearly 98-year-old hotel for federal historic tax credits in February 2020.

The Manchester Hotel was listed on the National Register of Historic Places in 2014, according to SHPO.

ExploreManchester developer hopes a settlement with Middletown to move forward

Grau has submitted three state historic tax credits applications for the Manchester Hotel/Snider Building project, according to Todd Walker, Ohio Development Services Agency spokesman.

Hamilton said the project for a boutique hotel and microbrewery needs the state historic tax credit to complete its financing package to move forward.

The project was put on hold due to pending litigation in Butler County Common Pleas Court between Grau and the city of Middletown. Grau sued the city and city officials for invoking the reverter clause in the 2014 purchase agreement to redevelop the buildings.

ExploreMiddletown, developer to enter mediation in dispute over buildings the city sold for $1

Grau’s company purchased each building for $1 as part of a redevelopment deal. The city says the project should have been completed, opting to revoke the redevelopment agreement. Both buildings have been vacant for several years and have been the target of break-ins and vandalism.

The city and Grau are continuing negotiations and will be in court for a hearing on Sept. 8.

“We are having ongoing negotiations regarding the lawsuit and settlement,” said Susan Cohen, Middletown’s administrative services director. “It’s not appropriate to comment on this right now.”

She said the city provided Grau a letter of support when he submitted his latest application.

ExploreMiddletown could once again own the former Manchester Inn — which they sold 4 years ago for $1

Hearings and mediation sessions have been held since the case was filed in December 2018. The city gave a 60-day notice on Oct. 4, 2018 that it was exercising the reverter clause in the agreement.

“We’ve asked for a meeting with the new city manager (Jim Palenick) and the mayor (Nicole Condrey) to see if there is a change in the city’s perspective on how to move forward on this case,” Hamilton said. “We have not received a response.”

The city filed a motion for summary judgment in its favor on July 28 saying there has been a material breach of contract and substantial nonperformance on Grau’s part. The city contends that Grau missed deadlines for multiple years.

Hamilton said a reply to the city’s motion for a summary judgment as well as a cross-motion seeking summary judgment was expected to be filed on Tuesday .

Pending the outcome of court’s decision or if an agreement cannot be reached, the case will go to a four-day bench trial starting Oct. 6.

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