Historic buildings still in limbo

The most recent plan to purchase the historic Rookery and Mohawk buildings in downtown Spokane has been put on hold.

Spokane developer Ron Wells, who has proposed three separate deals to buy the buildings and the majority of the city block they stand on, said one of his major investors has backed out, and the owner of the property has once again raised his price.

In June, Wells said he had a verbal agreement to purchase the property for $5.3 million from longtime owner Wendell Reugh. Wells said Reugh is now asking $5.5 million.

“I’ve had signed agreements in front of him that he said that he would sign, and then he would change something,” Wells said, declining to disclose details of the agreements.

Steve Gill, Reugh’s property manager, did not return phone calls seeking comment.

Reugh obtained a permit to demolish the buildings in spring 2003 after offering the property for more than two years at $4.5 million. He has said he will replace them with a surface parking lot unless a buyer is found.

Last fall, Reugh tore down the 1890 Merton building and several other buildings located on Sprague Avenue.

Wells’ initial offer, in June 2003, was to pay $4.4 million for the one-acre site, bound by Riverside, Sprague, Howard and Stevens. Other developers, including Los Angeles firm Renaissance Community Fund LLC and Rob Brewster, of Spokane, have also made offers for the property.

Wells said he remains optimistic that he will find another investor to help with the purchase.

In an Aug. 4 e-mail to city officials thanking them for their help on the project, obtained by The Spokesman-Review, Wells said CRG Real Estate investment services in New York is “seriously looking” at the buildings.

He said in the e-mail that CRG told him it will take 45 to 60 days to make a decision, although Gill told him Reugh won’t wait that long to raze the buildings. Nevertheless, Wells is meeting with CRG on Aug. 29 and said he hopes to close a deal with Reugh that day if he can reach an agreement with the New York company.

In the e-mail, he named Joel Diamond, owner of Seattle-based Diamond Parking, as one of the project’s investors but otherwise noted a lack of local investment. In a later interview, he declined to name other investors in the project.

“The perception about the value of Spokane’s downtown is better from L.A., San Fran, and New York than from a lot of people in Spokane,” Wells said.

He said he doubts Reugh will tear down the Rookery, built in 1934, and Mohawk, built in 1915, before the end of the month. Wells added that he intends to keep trying to put together a deal up until the time demolition starts.

“Once he starts to tear the buildings down, I have zero interest in it,” he said of the property.

Wells said he had planned to turn the first floor of the three-story Rookery building into an 11,000-square-foot grocery store and use the upper floors of that building and the seven-story Mohawk for condominiums.

To make the site attractive for a grocery to locate there, he said there would need to be more on-street parking adjacent to the Rookery.

But in July, the city turned down Wells’ request to nearly double the spaces by creating diagonal parking, according to John Pilcher, Spokane’s director of economic development. Pilcher said the city polled a handful of neighboring businesses, which unanimously resisted changing the parking arrangement. He said safety hazards caused by diagonal parking also factored into the city’s decision.

“That killed the grocery store,” Wells said. “It can’t happen without diagonal parking.”

Pilcher said the city has worked with Wells to develop alternative plans and incentives to help along the project. He said since the buildings are historical, the purchase qualifies for tax deferments, financing and cost defrayments.

Wells said three businesses have shown a strong interest in the Rookery’s first-floor space, which he said he would break into smaller commercial units. He declined to comment on potential tenants.

He said parking would be available in the back part of the first floor and underneath the Rookery building. The construction of a parking garage on the property would not be “a realistic possibility” for several years, he said.

Wells said he’s still considering long-term plans to build two condominium towers on the southwest and southeast corners of the block.

“I think it’s a viable project. I still think it is,” he said. “I think it’s a good project. It’s a great location, great buildings.”