Sunday, February 24, 2008

Ameritrust/Breuer Tower: Its Fate In Question, Again

Previously, I’ve written in this blog about the Breuer Tower (AKA The Ameritrust Tower) and its architectural significance and ownership status. (The blog entries can be found here and here.)

Recent events again put the fate of the Ameritrust/Breuer Tower in question. The Cleveland Plain Dealer reports that the city has rejected K & D’s offer to buy the property. The Plain Dealer states that if the county does not get a bid within their deadline, the plan to tear down the building could proceed. Here’s the Plain Dealer’s report:

“Cuyahoga County rejects K&D Group bid for Ameritrust tower
Saturday, February 23, 2008
Joe Guillen and Michelle Jarboe Plain Dealer Reporters

Cuyahoga County has rejected a developer's offer to buy the downtown Ameritrust property, jeopardizing a vision for a $200 million complex of hotel rooms, residences, new office space and stores.

County commissioners will reopen bidding for the property next week but won't reduce their $35 million asking price for the buildings at East Ninth Street and Euclid Avenue.

Last month, the K&D Group, a Willoughby-based owner and manager of apartments, emerged as the only interested buyer. The company planned to put down $20 million, with the balance paid through a $15 million loan from the county.

In its conditions of sale, the county asked for all $35 million when the deal closed.

After weeks of review by the county's legal counsel, Cuyahoga County Commissioner Tim Hagan said on Friday that K&D's bid was "noncompliant."

"The $35 million we wanted was more of an if-come than a reality," Hagan said of the offer.

"We didn't feel comfortable about where the $15 million was coming from."

Reached Friday, K&D's chief executive officer declined to comment on terms of the bid or reasons it was rejected.

"We submitted a bid that we felt we could do. We looked at it as a real estate deal," Doug Price said.

"We gave it our best shot."

The developer's bid raised red flags almost immediately, as K&D's offer included a check for $250,000 - only half the required deposit.

In the wake of the subprime mortgage meltdown, banks have tightened lending, and securing money for such a major project isn't simple, Price said.

The lending climate not only affected K&D's bid but also will factor into a follow-up offer - if the developer makes one.

Price said any future salvo from K&D would depend on what the county asks for in the second round of bidding.

Commissioners officially plan to put the property back on the market at their meeting next week. A new set of sale conditions hasn't been completed.

The county is expected to consider offers in which buyers will not have to pay the full sale amount when the deal closes, Hagan said.

Prospective buyers will have 30 days to hand in bids. Hagan said he is hopeful the county will get a new bid.

If not, the county will proceed with its controversial plan to tear down the Ameritrust tower and build an administration building on the site.

The county bought the property in 2005 for $29 million, including $5 million for a parking garage.

In addition to money spent buying the property, commissioners have approved more than $33 million in contracts to build the administration complex. The county has spent $8.8 million of that money.

Work was suspended late last year when the county decided to sell.

Bay Village Mayor Deborah Sutherland - a Republican running this year for a commissioners seat - has been a regular critic of the project.

Sutherland said the breakdown of the deal isn't surprising.

"Look at how the commissioners have handled the project to this point," she said.

Commissioner Peter Lawson Jones said he expects the county will reach a deal with K&D.

"It's our intention to immediately go back out with another bid that gives greater latitude to K&D and other developers," he said.

Lou Frangos, a downtown property owner who partnered with K&D on the bid, remains enthusiastic about revamping properties including the Ameritrust Tower, designed by noted Bauhaus architect Marcel Breuer.

If K&D bows out, the Frangos Group still would be interested in the complex.

"Since we've turned in this bid," Frangos said, "I think each of us has had a tremendous amount of interest from investors outside of the city wanting to participate. And I'm still very excited about it." “

The article from the Plain Dealer can be found here.

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