City wants second go at condemning Hotel of Terror

Dan Smith: Eminent domain process is a fair one for court to set property value in an impasse.

Sterling Mathis: Hotel of Terror owner accuses city of moving goalposts during negotiations.

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Timeline of Hotel of Terror Negotiations

In a report to City Council at its Nov. 17 meeting, Springfield Public Works Director Dan Smith presented a timeline of recent negotiations between the city and the owner of the Hotel of Terror, Sterling Mathis.

Smith’s timeline follows, with additions from Mathis’ three-minute presentation during the public hearing portion of the meeting.

• April 2024: Mathis suggests he will sell for $2 million. Prior to this, in February 2024, the city had no problem with Mathis’ plans for renovations to the site where Hotel of Terror contents would be moved, the owner told council during his testimony.
• May 2024: City presents Mathis with contract to purchase for $2 million, but Mathis does not sign. In his statements before council, Mathis said the city came up with costly new requirements at this time for renovations to the secondary site.
• June 2024: Mathis had a cold reception from all-new city representatives who informed him of multiple new requirements following a denial of his contractor’s permits, according to his statements before council.
• August 2024: Mathis suggests he will sell for $2.3 million.
• October 2024: Mathis suggests he will sell for $2.7 million.
• January and May 2025: City meets with Mathis and asks for formal counteroffer.
• February 2025: According to Mathis’ statement to council, steel is delivered for roof replacement at secondary site, but city rejects his plans and steel is left to rust.
• June: City obtains updated appraisal for $315,000 and shares it with Mathis in October.
• August: Mathis obtains appraisal for $1.3 million with building valued at $358,000; Smith says the owner has not shared that appraisal with the city.
• November: Mathis offers to sell for $3.5 million.

Springfield City Council took steps toward condemning and demolishing the Hotel of Terror haunted attraction at its Nov. 17 meeting.

This was the city’s second attempt to declare eminent domain on the downtown property that has operated as a Halloween attraction for 47 years.

Declaring the power of eminent domain would allow the city to demolish the property and move forward with the replacement of the deteriorating Main Avenue bridge over Jordan Creek – described by city officials as a pinch point that restricts the flow of the creek and contributes to downtown flooding.

The city has been working on flood reduction measures downtown for six years, according to Public Works Director Dan Smith. The hotel stands on the western reach of the first phase of the Renew Jordan Creek project, currently underway to provide a public amenity and reduce flooding downtown.

Council previously declared eminent domain in February 2023 in an effort to acquire the property, but the body voted to repeal its own measure three months later after a successful petition effort that demanded a citywide referendum. The repeal skirted the need for a ballot issue to let voters decide whether to allow eminent domain and building condemnation to stand as council and Hotel of Terror owner Sterling Mathis agreed to continue negotiations on a sale price for the property.

In his report on the council measure, Assistant Director of Public Works Brett Foster showed photos of damage to the Main Avenue bridge, which has a grade of 2 on a 9-point scale in the National Bridge Inventory. That grade signifies a condition of imminent failure, according to the NBI, and the city has closed it to some traffic, including buses and fire trucks.

Foster said the bridge is in two sections, and the older part probably dates from 1900. Photos showed concrete delamination, rebar loss, pack rust and leaching evidence that resembled stalactites. He also showed a structural concern with concrete pulling away from girders.

A proposed replacement bridge consisting of two sections of arches would be much longer, eliminating the pinch point restricting water flow, he said.

Foster estimated widening the bridge would bring a 2- to 3-foot reduction in flood elevation.

Smith said the current bridge is adjacent to the building. He added that the bridge must be lengthened to allow more water to flow underneath it and ease downtown flooding.

Smith said it is not feasible to construct the bridge without significant risk to the building adjacent to it, and it is likewise not feasible to move the structure.

“That pathway for the water really needs to go right through where the building is,” he said. “Hydraulically, it’s not feasible to do this project without taking the building.”

On a slide, Smith shared the history of negotiations between the city and Mathis, showing they began in December 2019 and ran through the city’s February 2023 declaration of eminent domain, rescinded three months later.

After that, there was a back-and-forth with prices and tentative agreements that were never finalized, according to Smith.

Hotel of Terror owner Mathis spoke during the public hearing and was given the same three-minute window as the seven other participants.

“That’s a pretty short time for someone’s livelihood, you know?” Mathis said when cut off at the end of his remarks.

But during his testimony, Mathis said recounted difficulty in working with the city’s Building Development Services department.

Mathis said in February 2024, the city was “perfectly fine” with drawings of his plans for moving the contents of the attraction into a nearby Mathis-owned entertainment property, called Dungeons of Doom, and in May of that year the city offered the $2 million contract.

He said he was on board.

“We knew what we had to do; we knew how to do it,” he said.

He said he wanted to get started and contacted his builder, since the city’s contract said he had until March 31, 2026, to be gone or face a charge of $100,000.

Mathis said his builder was turned down for permits. A meeting in June 2024 featured all new people from the city, he said.

“We got there – all new people,” he said. “It started very aggressive – told me that we had to change several things; the codes changed, this changed, added a lot of money to this process.”

Mathis said he told city staff that was not what was agreed to.

In May 2024, he said city officials told him a formal proposal was required, and he spent $20,000 to make one and a lot more blueprints. The city did not even look at them, he said.

He said he did get a permit to do a roof at the Dungeons building and demolished its existing roof.

A city official then told his architect the roof plans would not work for a haunted house, he said.

“I’ve got $80,000 worth of steel rusting since February, laying on the ground back there,” he said.

Mathis began to talk about flooding at the site when Mayor Jeff Schrag cut him off for time.

Earlier in the meeting, council heard a discussion of historical markers planned for areas of the city. Mathis referenced those comments when he started his own.

“I’ve heard a lot about preserving history here tonight, and, you know, Hotel of Terror, 47 years of history? That’s pretty good, and I want to keep that going,” he said.

Mathis’ family established the haunted attraction in 1978, and the fright features inside of it are handmade. He reported $250,000 in revenue in the season that just ended – a season city officials said in the media event that they were waiting to get through before taking their action on eminent domain.

Mathis said it will cost him $3.5 million to move the contents of the building – a 2023 tour he gave to SBJ showed most of the features are built right into the walls and are customized for the 1904 hotel. The move would be into a site two blocks west, a former rail-side mill Mathis operates as Dungeons of Doom.

Mathis’ attorney is a familiar name to council followers: former Councilmember Kristi Fulnecky, owner of Fulnecky Law LLC.

Speaking before the body, Fulnecky criticized city officials for neglecting to name the Hotel of Terror in its presentation about the eminent domain measure.

“I notice that the city did not even mention the name of a business that’s been here for 47 years,” she said. “For 47 years, the Hotel of Terror has been more than just a haunted house; it’s been a rite of passage for generations of Springfield kids, a staple of our downtown economy and one of the longest-running seasonal attractions anywhere in Missouri.”

She said the business has survived recessions, pandemics, changing markets and a transformation of the city, but it is still thriving and driving families downtown.

Fulnecky said the Mathis family is fighting to exist.

“All they’re asking is a right to continue operating the business that they built, or if the city insists on taking their property, to be compensated fairly, fully and honestly under Missouri law,” she said. “This has not happened.”

She added the building had not experienced flooding issues in more than 40 years of ownership.

“These problems didn’t appear suddenly or mysteriously; they began only after the city changed the creek’s topography,” she said.

Like Mathis, Fulnecky said the city’s timeline does not reflect all of the regulations and requirements the city has put on the property.

“At the same time, the city has steadily increased regulatory burdens, permit requirements and code demands that other haunted attractions in this region simply have not faced,” she said. “These shifting and expanding requirements don’t look like safety concerns; they look like pressure – pressure after the city’s first eminent domain attempt was defeated by the people of the city of Springfield.”

The process of eminent domain – defined in state and federal law – was explained by Smith as a court-led one in which a judge appoints an impartial three-person commission to look at facts and data and determine a fair value for the property.

If the compensation determined by the panel seems unfair to either side, Smith said they can appeal and take the matter before a jury to rule on the value.

“It’s a good process, it has an appeal option to it, and it ensures that the final outcome is based on evidence – it’s based on public record and legal oversight, rather than on subjective decisions or private negotiations,” he said. “That’s a powerful thing.”