Empty East End building sale could be on track
CHARLESTON, W.Va. -- Four and a half years after Charleston Urban Renewal Authority board members began urging the owners of a vacant but key East End building to fix up their property, and 2 1/2 years after they started condemnation proceedings to buy it, their efforts finally may be paying off.
A court-appointed bankruptcy trustee said last week he may be willing to sell to CURA the two-story commercial building at 1601 Washington St. E. The property has been tied up in federal bankruptcy court since late 2011, when its owners filed for Chapter 11 bankruptcy protection.
Tom Fluharty, a bankruptcy lawyer from Clarksburg, said he was named trustee to the case about three weeks ago by Debra Wertman, the U.S. trustee for West Virginia. About a week ago he met with Deborah Dandy Michaux and her husband, Jay, and toured some of the properties owned by the Dandy Family Trusts. Deborah Michaux is the daughter of the William Dandy, a real-estate entrepreneur who set up the trusts before his death in 1998.
"We discussed a couple of options," Fluharty said. "They have a couple of fairly valuable properties. They have some income." A building in Clarksburg is shared by a Texas Roadhouse restaurant and a video gambling parlor, he said.
But the trusts were in debt -- nearly $1 million worth, including a loan of about $800,000 from Huntington Bank. The Michauxs had been trying to refinance the debt, without success, Fluharty said.
So in late 2011, Huntington Bank held a foreclosure auction on some of the most valuable properties. Shortly afterward, the trusts filed for bankruptcy protection.
"They filed bankruptcy to stop the auction," Fluharty said. "When you file bankruptcy, it creates an automatic stay."
Meanwhile, CURA board members had been trying to get the Michauxs to renovate their building in the East End. Located at the southwest corner of Elizabeth and Washington streets across from the Bluegrass Kitchen, the vacant property was a sore spot in an otherwise blossoming area.
In early 2009, board members invoked an obscure section of its East End Community Renewal Plan that allows them to give owners of a few "key" properties six months notice to fix them up. If they don't comply, CURA can use its power of eminent domain to buy the property.
Board members used the process once before, with mixed results. After extended negotiations, owner Philip Chin agreed to renovate the former New China restaurant building across Elizabeth Street from the Michaux/Dandy site. But the property is still vacant; several businesses backed away after announcing plans for the storefront.
Former CURA Director Pat Brown met with Jay Michaux several times and, after nothing happened, he offered to buy the building for its appraised price of $65,000. The Michauxs refused. In January 2011, board members voted to start condemnation proceedings.
Like the auction, condemnation proceedings stopped when the Dandy trusts went into bankruptcy. While it's not clear whether they would resume now, Fluharty said he might offer to sell the building directly to CURA. He said the Michauxs gave him all the documents related to the case last week.
"[The Michauxs] are still trying to obtain financing," he said. "That may happen. If not, I'll have to sell some property."
The prices bid for the sites offered during the aborted 2011 auction plus the value of the "CURA" property at 1601 Washington St. E. would more than pay off the outstanding debt, Fluharty said.
"I don't think there is any secured debt on the CURA property, so it could be sold," he said.
"Looking at [the Michauxs'] finances, they have good cash flow. I may sell the CURA property and the money could be used to improve some of their rental property -- a new roof. It's a little early to say exactly what I'll do."
Fluharty said he plans to contact CURA soon to discuss the situation.
CURA Director Jim Edwards said his lawyers plan to do the same.
"As soon as we learned a trustee had been appointed, we asked our legal counsel to get in touch with him," Edwards said.
"Our board is anxious to acquire the property. Its condition and appearance is detrimental to that part of the East End, and its redevelopment would have a huge impact on the area."
Reach Jim Balow at email@example.com or 304-348-5102.