Wauseon must make changes to keep grant

9/12/2009

WAUSEON - A $500,000 state grant to assist with rebuilding a burned-out section of downtown Wauseon will evaporate unless Charles Bryan, the developer who has been charged with starting the fire, is removed from the project.

In a letter yesterday to Mayor Jerry Dehnbostel, an Ohio Department of Development official said that considering the legal circumstances, it's unlikely the developers - Mr. Bryan and his wife, Jennifer - have the wherewithal to complete the project on time or to operate a business effectively.

Mr. Bryan was indicted Aug. 18 on 14 counts of arson and insurance fraud, with 12 of the charges related to the April, 2007, multimillion-dollar blaze that destroyed several businesses along North Fulton Street. He also was indicted on charges stemming from a small fire in his restaurant, Doc Holliday's, in January, 2007. Shortly after the April fire, investigators ruled it had been intentionally set inside Mr. Bryan's restaurant.

A few months after the blaze, the Bryans formed Wauseon Downtown Development Co. LLC with plans to build a restaurant and some retail space. Delays occurred after various investors dropped out, but in May, the city agreed to distribute the $500,000 in state grant funds to the Bryans' development company for the $700,000 project.

The letter issued yesterday follows a meeting Aug. 31 in Columbus between Wauseon officials and the Ohio Department of Development to discuss the future of the project in light of Mr. Bryan's indictment.

According to the letter, Wauseon can retain the grant if the city selects a new development team, which cannot include Wauseon Downtown Development or related parties, with demonstrated financial capacity and experience to complete and operate the project; enters into a legally binding agreement with the new team to complete the project, and provides the Ohio Department of Development with documentation that the new team has legal control of the project site.

The letter, written by Michael Hiler, office chief of the Ohio Department of Development's Office of Housing and Community Partnerships, says that if the city fails to meet the conditions by Jan. 31, 2010, the grant agreement will be canceled.

Mayor Dehnbostel said yesterday the Ohio Department of Development's decision about the grant "does not surprise me. I understand their concern."

However, the mayor said he's confident the city will find someone to take over the project and that an agreement with the Bryans can be reached to sell the property to a new purchaser.

The mayor declined to identify possible buyers, but said at least two current restaurant owners are interested in the property. Their interest, though, is tied to the state money.

The city will need to put the project on a fast track to keep the $500,000 grant.

Although the project completion date for the grant is Jan. 31, 2010, the city could request an extension of the grant agreement before Dec. 31, 2009, providing progress is being made toward complying with the conditions outlined in the letter.

Mr. Dehnbostel said it makes him feel good the state isn't pulling money immediately from the project. He said "we will do what we have to do to keep this going."

Wauseon Downtown Development has money wrapped up in the project, the mayor said, and so does the city.

The city has paid $143,900 to the developer for project expenses. If the project moves forward, the city is to be reimbursed through the grant.

Jon Schamp, the city's finance director, said the city hasn't submitted paperwork for reimbursement, but hopes the state, no matter the outcome of the project, will reimburse the city. Wauseon dispersed the money to Mr. Bryan's company in good faith, based on the grant agreement, Mr. Schamp said.

Two payments were made to the development company, including one on the day before Mr. Bryan was indicted, Mr. Schamp said.

"I feel the city is somewhat caught in the middle. We expended funds before there was any doubt of criminality or completion of the project. I still have hopes we will be reimbursed," he said.

Half of the developer's $200,000 for the project is in an escrow account, said Mr. Schamp, and if the city ends up with that $100,000, it would minimize the loss in case the state doesn't reimburse Wauseon.

The $143,900 was allocated from Wauseon's capital project budget of about $2 million this year, Mr. Schamp said. He said he hasn't seen any activity at the construction site in recent days.

The Bryans did not return a telephone call seeking comment.

When asked about the possibility of the department of development's reimbursing the city for the $143,900, Bill Graves, director of the department of development's community development division, said he didn't know if he could answer that. He said he wasn't aware that the city had already paid the developer.

However, he said, "we are going to be hard and firm" on the conditions outlined in the letter to Mr. Dehnbostel. The department of development has said to the city "if you do these three things we will authorize the city to receive all of the money, which is $500,000," Mr. Graves said.

Contact Janet Romaker at:

jromaker@theblade.com

or 419-724-6006.