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Spokane, Washington  Est. May 19, 1883
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Vacant downtown Otis building fenced off

Foreclosure process may lead to sale

The Otis Hotel in downtown Spokane, Washington is closed and fenced off, June 25, 2014. DAN PELLE   (Dan Pelle)
The Otis Hotel in downtown Spokane, Washington is closed and fenced off, June 25, 2014. DAN PELLE (Dan Pelle)

City officials have blocked off sidewalks around the old Otis Hotel in downtown Spokane, keeping out transients and others who have used the long-vacant building as a gathering spot or temporary home.

The city’s objective was blocking access to the sidewalk vaults alongside the building, said Jan Quintrall, the city’s director of business and development services.

Built in 1911, the Otis, at 110 S. Madison St., has been empty since 2007 when an investment group bought the building and moved out more than 30 lower-income residents.

Like with other older buildings in that area, the sidewalk has a number of covered openings with metal doors that drop down below the sidewalk.

Those doors have become rusted and don’t close properly, said Quintrall. In addition to letting people into the building, the vaults pose a safety concern, she said.

When opened, the doors provide access to the building’s basement. That was how materials and equipment were brought into the building, Quintrall said.

That problem came to the city’s attention through Bill Butler, the court-appointed receiver protecting the Otis Hotel during an ongoing foreclosure that began last year. The city blocked the sidewalks last week.

A Seattle investor, Michael Sherry, holds the bank notes on the Otis, currently owned by Atlantic Building Investment Group LLC. Some of those owners are former members of the Odd Girls LLC, which owned parts of the block across the street, including the renovated New Madison Building, at the corner of Madison and First Avenue.

Butler said his job is to take care of the 100,000-square-foot building and prevent further deterioration during the foreclosure.

A tentative foreclosure sale is set for mid-September.

Court documents say Sherry acquired from a bank the $1.7 million loan used to purchase the building in 2007. The buyers in 2007 included a number of Spokane investors who later gave up their interest, leaving the current owners to repay the loan.

Attorneys for Sherry claim that he’s owed about $2.4 million for the building, which includes fees and past-due defaults and interest. Sherry could not be reached for comment.

Steve Elliott, the Otis’ property manager and a member of the Atlantic Building Investment Group, said his group is considering its options, including possibly paying off the debt and keeping the building. Elliott said his group believes the $2.4 million is excessive.

Until it was closed in 2007, the Otis had been used as single-apartment housing for lower-income residents. The block it’s on also includes the Commercial Building, purchased by Erick Hansen, who told area officials he would use the building to produce Blu-ray disks. Hansen’s business never materialized, and federal investigators last year were investigating him for investment fraud.

Elliott said the project to convert the Otis into 70 mixed-rate apartments crashed as the economy tanked in 2008. City officials have hoped developers would rehabilitate the block dominated by the Otis and Commercial buildings. Over the past 20 years police have said that area has attracted street crime, drug dealing and prostitution.

Butler said he’s submitted reports to Spokane County Superior Court listing the tasks he needs to undertake to protect the value of the Otis.

“My job is to button it up and clean it out,” he said. “There’s a lot of stuff people left in there.”

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