The future of the Manchester Inn building has been vacant for years and the the city of Middletown has notified an Illinois developer that they are proceeding with plans to reacquire the Manchester Inn and Sonshine Buildings through a default/reverter clause in the development agreement.

Middletown’s fight to reclaim a historic downtown property continues with coming hearing

The city sold the buildings to Illinois-based William Grau of Historic Urban Development in May 2014 for $1. It claims Grau has failed to make enough progress toward redeveloping the buildings, and it started action to reclaim them in December.

MORE: Middletown to use reverter clause to take back Manchester

Grau said he was going to invest about $10 million to redevelop the Manchester as a boutique hotel and the Snider Ford building into a microbrew and pub.

The improvements to the Manchester Hotel were to be completed by Nov. 15, 2016 and the Snider Building was to be brought in compliance with applicable state and local building, zoning, and building maintenance codes within 24 months of closing, according to a letter the city sent Grau in October.

MORE: Developer: Middletown brewery, hotel on hold

As of Oct. 4, neither deadline has been met, according to the city’s letter. In that letter, the city gave Grau 60 days to complete the contract obligations and was told to have all personal property removed from the 96-year-old building by Dec. 4.

In his Dec. 18 complaint, Taylor Trout, Grau’s attorney, claimed interior demolition work commenced on June 20, 2018 and the timeline for completion had been extended. He said they desired to resolve the matter outside of litigation and also claimed that “(T)he City’s actions are brazen, in bad faith, unsupported by any existing fact, and cannot be countenanced.”

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Butler County Common Pleas Judge Michael Oster issued a temporary restraining order that was filed Jan. 3, and a hearingis scheduled for Feb. 8.

In the temporary restraining order issued by Oster, Grau was orderedto obtain general liability insurance for the properties and reinstall secure fencing in the areas that previously existed around the Snider Building by Dec. 23. The court was notified that these requirements had been completed by Dec. 24.

MORE: Sale of Manchester Inn finalized

“No one is supposed to be entering the property, making any alterations of any kind, or encumbering the buildings in any matter. This should keep everything as it is until the matter is fully litigated,” said Susan Cohen, city director of administrative services.

Neither Grau nor Trout were available for comment late this week.

MORE: Manchester hotel nominated for National Register of Historic Places

Trout sent the city a letter on Dec. 3 that said the city’s right to reclaim the properties “extinguished” when Grau began demolition of the interior of the Manchester on June 29, and the demolition work was underway into December.

He also said that each time tax credits for the project are delayed, the deadlines are to be extended. Trout 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.

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Trout also claimed the city:

  • Did not cause the Manchester Hotel and Snider buildings to be listed on the National Register of Historic Places.
  • Blocked Grau from obtaining New Market Tax Credits that caused additional significant delay.
  • Failed to provide 20 years of tax abatements but has only approved 12 years and has not approved the remaining eight years;
  • Did not commit up to $25,000 for streetscaping improvements around the buildings;
  • Had not reimbursed Grau’s company $557.23 for building permits.

City officials said Grau’s applications for state historic tax credits have failed several times, that he did not apply in April 2018 and that it didn’t believe he was planning to apply in September 2018. After he changed his mind and requested a letter of support from the city the night before the deadline, the city declined.

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