Saving Staats will take millions, supporters say
CHARLESTON, W.Va. -- It will take millions of dollars, plenty of time and probably an anchor tenant to save the historic Staats Hospital building, supporters say, even with Brooks McCabe leading the redevelopment team.
And that assumes the out-of-state company that bought the property at a tax auction two years ago is willing to sell it at a reasonable price. If not, all bets are off.
Last week, West Side Main Street announced plans to buy and renovate the troubled Staats building. The group's nonprofit West Side Development Corp. is teaming up with McCabe on the project, WSMS President Josie Counts said, and hopes to buy the property by the end of the year.
"I've been working with them for some time," McCabe said. "They are trying to put this thing together. It's clearly important for the West Side. It's a major building but a difficult building for many reasons.
"Environmental issues need to be looked at," he said. "Assembling the property needs to be looked at. I said I'd work with them to try to make it work.
"We've looked at the property several times over the years, myself and my partners at West Virginia Commercial. There's a lot that has to happen. It's not going to happen tomorrow."
History buffs and West Siders watched for years with alarm as the Staats building fell into disrepair under its previous owner, Dr. Adla Adi of St. Francis West HealthCare.
Designed in 1922 by John Norman, believed to be the state's first registered African-American architect, the building was the hub of the bustling Elk City neighborhood. It was home to the Grand Theater, an A&P grocery store and Kelley's Department Store, as well as a hospital.
But Adi filled the upper floors, including the former Knights of Pythias lodge on the fourth floor, with piles of debris and ignored routine maintenance like a leaky roof. He tried to tear down the hospital in 2003 and build a new clinic, but was thwarted by historic preservationists.
The property has been vacant since late 2010, after Adi declared bankruptcy and moved to Florida.
Soon afterward, West Side Main Street and its former director, Pat McGill, began efforts to save the building. McGill obtained a $5,000 federal brownfields grant, which she planned to use for a redevelopment feasibility study.
With the blessing of investor Larry Kopelman, who held a deed of trust on the property after lending Adi money years ago, several developers checked it out. None followed up, though.
The first hurdle for WSMS is buying the property -- three separate parcels -- now owned by two different parties.
"My company [Genesis Capital] had a deed of trust on three lots: the Staats building; a building beside Staats, an addition in the '50s; and the parking lot in back," Kopelman said.
"Dr. Adi approached my partner and I. We took the building as collateral for a business expansion. He wanted to go into an additional medical practice, add some rooms for dermabrasion. We thought that was a good idea. It turned out that didn't work."
Adi stopped making loan payments, Kopelman said. "He went into default, went bankrupt. The company he owned the property under also went into bankruptcy.
Kopelman won't say how much money he lost. "We can't sue Dr. Adi. He went bankrupt. We can't sue his company. It went bankrupt. Bankruptcies are tough on lenders."
Adi also fell behind on his property taxes. In November 2010, the properties were sold for back taxes.
"We had to either pay the taxes or lose the building for taxes," Kopelman said. "My partner and I decided we didn't have a desire to own the Staats building, so we did not foreclose on the Staats building or the addition. But we did foreclose on the parking lot, and now we own it."
A company called E.B. Dorev Holdings Inc. of Altamonte Springs, Fla., successfully claimed the buildings, courthouse records show. Two deeds, filed April 10 of this year, show the company bought the main building for $6,440 and the one-story addition for $3,962. In both cases, the company paid two years of taxes plus interest and fees.
Attempts to reach E.B. Dorev Holdings were unsuccessful. An Internet search shows the company, now registered in West Virginia under the name American Pride Properties, has bought property in other states at tax sales.
Kopelman said his company completed the purchase of the rear parking lot in August after paying off back taxes. It cost $40,000 to clear the title, he said. "So the new owner is Genesis Capital."
He'd be glad to sell it, however.
"If there's a developer that wants to do something with it, we'd gladly negotiate with them for the sale of that lot. We're trying to recoup whatever we can from it."
Counts, the WSMS president and a senior commercial portfolio manager with Huntington Banks, said Main Street would likely form a limited liability corporation for the project.
"We would like to form one with Brooks and our development corporation," she said. "I know the LLC would like to purchase the property," she said. "We have [legal] counsel and our counsel is negotiating."
Price could be an obstacle. "If a seller comes to us and says they want $2 million, that's not worth our time."
According to the Kanawha County Assessor's Office, the hospital building is currently valued at $213,600 and its addition at $125,300.
"The hospital building had been valued for storage for many years, and there's some asbestos," said Steve Duffield, supervisor of appraisals. "There's this cloud hanging over it ... obviously it lowers the value of the property."
Lawyer Sarah McCarty of Steptoe & Johnson said she's been negotiating with American Pride/EB Dorev for several months.
"What they've told me is they are in the process of a quiet title action," she said Thursday. Once the title is clear, the company would be able to sell the property. "They expressed an interest in negotiating a sale."
McCarty said she asked the company to name a ballpark price and is waiting for an answer.
If a deal can be reached, hopefully by the end of the year, American Pride will need another three to six months to clear the title to the property, Counts said. During that time, WSMS would start looking for funding sources and deciding exactly what to do with the property.
The $5,000 brownfields grant was reallocated toward legal expenses, she said, but WSMS hopes to get even more EPA money and a grant from the State Historic Preservation Office. That could help with environmental cleanup and planning.
Clean up, tear down, rebuild
McCabe already has some ideas on what the project involves.
"You'd have to clean up the environmental issues," he said. "There's a number of unidentified chemicals left over from the hospital, plus asbestos and lead paint issues.
"To make it functionally efficient you'd have to extend on the back side of the building -- some demolition, some new construction. That rear property [the parking lot] is critical to the development of the building.
"I think it's ideal for some type of corporate entity to put in a business presence on the rear. That would help to show everybody that the city is more than downtown. You're already starting to see it."
The Washington Street façade would be maintained and restored, McCabe said.
"Put small retail businesses on the first floor of Washington Street, boutiques, that would start to rebuild Washington Street. Then you could re-face the building on the back and use that as the entrance to the business, the Lee Street side, so driving down Lee Street you see a brand new building.
"I think you hit a home run. You build a sense of place, of arrival."
No one was willing to estimate the cost of such a project, but all agreed it would be in the millions.
"In the environment we have today, it's impossible to do without a major tenant," McCabe said.
State and federal historic preservation tax credits, which can cover 30 percent of qualifying expenses, are also critical, he said. "In my mind, the building could not be saved without the use of historic tax credits.
"One of the reasons we came forward is because Josie Counts is a commercial banker and president of West Side Main Street. She knows what it takes."
Counts said a 2010 market study showed the West Side could use a coffee shop and more restaurants.
"And some Class A office space. We really don't have any Class A office space on the West Side." An anchor tenant, preferably with a long-term lease, would be ideal, she said.
"It's right next to the interstate. Maybe a business from out of state that needs a sales office."
West Side Main Street gets some of its funding from the city of Charleston, she said. "We look at that as a partnership. It doesn't make any revenues for them. This is a return on investment for them."
Kopelman said he's encouraged. "It will be great for the West Side."
Reach Jim Balow at email@example.com or 304-348-5102.