OWOSSO — Emergency repairs on the condemned Matthews Building will begin soon, a representative of the building owner told Owosso City Council members Monday during a virtual meeting.
“We’ll definitely be starting next week. Obviously, several emergency repairs are needed,” business consultant John Hambrick said on behalf of his client, building owner Nemer Haddad. “This is really weighing on the developer (Haddad). He wants to make good on his promise (to make the repairs).”
Haddad and city officials have been battling for months over securing the safety of the building, located at 300 W. Main St. The structure has a collapsed roof, unsecured entries and windows, and many other deficiencies that are so serious the city recently closed part of a walking trail next to the building out of a stated concern about endangering the public.
As an ongoing legal action by the city plays out in 66th District Court over code enforcement violations, Hambrick said Haddad has not proceeded with repairs because they would interfere with his ability to obtain government funding for his planned building renovation.
To avoid losing government funding, Hambrick said Haddad first must obtain an obsolete property rehabilitation exemption certificate for the building, a move council members approved unanimously Monday. The certificate not only serves as the foundation for Haddad’s plan to apply for funding, it entitles him to a tax abatement totaling $561,133 over a period of 12 years.
Mayor Pro Tem Sue Osika pressed Hambrick on when the city could expect emergency repairs to take place. Council member Dan Law asked when the building rehabilitation is scheduled to begin.
“It’s a thorn in everybody’s side,” Law said. “I would love to see it get going.”
Hambrick said the project has been delayed partly due to COVID-19 restrictions, but expects to complete the rehabilitation by the deadline identified in the application for the certificate by Owosso REI Group, Haddad’s company, September 2021.
He apologized for Haddad’s absence from a council meeting last month, causing the public hearing on the obsolete property rehabilitation certificate to be postponed.
An additional challenge, he said, is the severely dilapidated condition of part of the building, which is divided into three sections — one along the river, a middle structure and the westernmost section, located on the corner of Main and Water streets.
“The ‘river building’ is a big issue,” Hambrick said. “Since (Haddad) bought the building, it continues to disintegrate and the cost of saving it is very significant. We may just get rid of it and the middle building. The cost to build it new would be very much less than the cost to save what’s there.”
He said the building is currently so unsafe that Haddad cannot even permit the contractors he’s working with to enter.
Haddad’s development plan — the same one as put forth earlier by the previous owner, real estate broker Randy Woodworth — is to transform the 31,000-square-foot facility into retail, commercial and office space, and 17 upper-floor apartments, at an estimated cost of $8 million.
He said the project will create 25-40 temporary construction jobs and a potential of 70 jobs when the renovation is complete and occupied by tenants. However, the three prospective tenants he has lined up so far are restaurants that might drop out because of COVID-19 restrictions, he suggested.
In addition, if some building sections are torn down but not rebuilt, the original project will be scaled back to some extent. Hambrick said he doesn’t believe demolition of part of the structure will squash Haddad’s government financing deal.
Council member Janae Fear asked if a pared-down project could affect the amount of tax abatements granted by the city.
“It’s such a large and costly project, I would be surprised if we had to redo (the abatement),” City Manager Nathan Henne said.
The Matthews Building, which has sat vacant since 2015, has long been targeted for redevelopment. When Haddad purchased it last year, he planned to install a marijuana retail store but then found out his state-financing deal was off because a marijuana-related business was involved.
Last October, city officials entered into an agreement with Haddad in which he promised to either rehabilitate or demolish the building within 36 months. Under the agreement, Haddad guaranteed one of three outcomes:
n Rehabilitate the Matthews Building in partnership with the city, Michigan Economic Development Corporation by resurrecting plans for a “capital stack” of financing that included previously awarded city abatements, MEDC grant dollars and private investment; or
n If the capital stack doesn’t work out, bring the building up to code by making necessary repairs; or
n If the capital stack doesn’t work out, demolish the building in accordance with the city’s building code.
The parties also agreed the building would continue to be subject to code enforcement. In return, the city agreed to allow the new owner to relocate his planned marijuana provisioning center to a different building, within local zoning regulations.
The Matthews Building has been either empty or underutilized for decades. About five years ago, local developer Randy Woodworth and partners purchased the building with a plan to renovate the space into 20 or so high-end apartments, and office and retail space. The section of the building that abuts the river, formerly a brewery, was to have been redeveloped into a brew pub.
In January 2019, Woodworth announced a scaled-back plan to develop the building section along the river into a restaurant, saying the cost to rehab the building was significantly more than the grant dollars lined up, making the project financially unfeasible. Before moving forward with the new plan, Woodworth sold the structure to Haddad.