Woodruff, McDaniel buildings again avoid public auction

For the second time this year, the owners of downtown's Woodruff and McDaniel buildings have forestalled a foreclosure auction - this time, only to watch two stalwart Woodruff tenants move their offices to Plaza Towers.

The 7th District Congressional Republican Committee and patent attorney Jonathan Bay have reached their limit of uncertainty about the building's future and its state of disrepair, namely inoperable elevators shut down by the state earlier this year and a lack of heat that had them running portable space heaters during the recent cold snap.

Employees of both offices said they have been unable to reach landlord Brett Loethen, who with brother Bart - a Chicago attorney - owns a majority of Downtown Springfield Properties LLC, the entity that owns both buildings.

The Woodruff Building, 331 Park Central East, was built in 1909 and has about 75,000 square feet available for lease, and the McDaniel Building, 316-318 Park Central East, was built in 1914 and has roughly 45,000 square feet.

Bay, who has leased space on the third floor of the Woodruff building for more than 14 years, said he was excited when the Loethens purchased the buildings from Warren Davis Properties in 2002. He said the congressional office was the first to receive a facelift.

"Brett had an ambitious plan," Bay said. "For a moment, it looked like the building was going to enjoy a renaissance."

But Bay said complications stemming from the building's antiquated heating and air-conditioning systems derailed renovations and eventually led to an exodus of tenants that included Conco Cos. and several attorneys. After declining invitations from other lawyers to relocate elsewhere and share office space, Bay finally decided in June to sign a lease at Plaza Towers. He had planned to move into the fourth-floor office suite at Glenstone Avenue and Sunshine Street by Oct. 26.

Staff members in the Republican committee office - a fixture in the northeast corner of the building's eighth floor for more than decade - said they would be moving to the eighth floor of Plaza Towers the week of Oct. 26.

Twice this year the Woodruff and McDaniel buildings were scheduled to be sold at public auction on the steps of the Historic Greene County Courthouse - first in April and again earlier this month - and twice Cincinnati-based Fifth Third Bank cancelled the widely publicized sales after moving to foreclose on a $2.75 million loan made to Downtown Springfield Properties in 2004.

Husch Blackwell Sanders attorney Mike Bridges, the trustee assigned to the foreclosure proceedings, said the lender extended the Oct. 9 auction one week to Oct. 16 but then called it off. Bridges didn't know what the bank's next step would be, and a Fifth Third spokesman said in an e-mail that corporate policy prohibited him from commenting specifically on client accounts or assets.

Reached by telephone, Brett Loethen maintained that Downtown Springfield Properties is not delinquent on its loan payments or in default, and he suggested that foreclosure wasn't imminent.

"It was going to be foreclosed. (The bank) needed a certain document, and that's all we had to do," he said, declining to elaborate.

Loethen also dismissed tenant complaints about the heating and air-conditioning problems in the Woodruff building, which he said would be upgraded should one of the investor groups he's been in contact with decide to redevelop the 10-story structure.

"The heat and air-conditioning's been exactly the same it's been for 60 years," he said. "I'm not concerned with condition of the buildings. They're in good condition."

Loethen said one potential redevelopment partner is locally based while others that have expressed interest are outside the Springfield area. Loethen said he hopes to bring in someone who has experience with large-scale, mixed-use redevelopment projects.

"It's realistic, but it's not something that's going to happen overnight," he said. "We'll find somebody with the knowledge who's done this type of deal before to come in and do it right. We're not looking for someone that wants to just come in and fix the few items that need to be fixed."

Last year, the Loethens let one such candidate - Springfield architect Dan Scott - slip through their fingers. Scott said he was set to close on the Woodruff building in April 2008, but he backed out at the eleventh hour after learning the elevators needed repairs that could amount to a six-figure expenditure. Even though the deal fell through, the idea of rehabilitating the building still appeals to Scott, owner of Jericho Development Co. LLC and The Design Agency.

"Sure, I'm interested, but I'd say in the same breath that the financial markets have absolutely no appetite for speculative real estate right now," he said. "I don't know how anyone could take those on unless they have a whole lot of cash sitting around. ... Those are very difficult properties to take on."

Scott said he hasn't actively followed the buildings' foreclosure saga.

"You're not going to see me at the courthouse steps trying to buy that (property)," he said.