New owner will demolish Gateway, seek city development help

New owner will demolish Gateway, seek city development help

CHAMPAIGN — Demolition of the shuttered Gateway Studios on North Neil Street could begin a bit sooner than expected under a new owner, who wants the city to work with him in attracting a buyer to redevelop the property.

Kelly Dillard, who lives near Mahomet, said he took control of the property from its previous owner, Donovan Acres LLC, this week. He wants to tear the complex down himself at a cost of about $600,000, and his plan is to sell the property to a developer.

That is essentially what was going to happen anyway, but the work and subsequent sale was to be done under city authority — and with city money — after a demolition plan was approved this summer by the city council. The city had sought a court order for demolition, and Donovan Acres agreed to the action in May.

Dillard is asking for the city to hold on to its demolition order for at least six months while he does the work.

"We're going to demolish it right away," Dillard said. The work could begin within the next week or two.

He said he is not asking for money for the demolition but would like the city to waive liens against the property and demolition permit fees. He would also like the city to offer redevelopment incentives to attract a high-quality buyer when the demolition is complete.

Dillard said he believes the city would have to offer those incentives anyway, even if it did the work itself.

The Champaign County recorder of deeds' office has yet to reflect the change in ownership, but Deputy City Manager for Development Craig Rost said the city has verified that Dillard appears to be the new deed holder.

Rost said city officials are not yet negotiating waivers or incentives with Dillard — the situation has turned somewhat quickly, and they first need to get the legal framework in place before they can have those discussions.

"I just want the legal paperwork to catch up with the people," Rost said.

City officials had already vetted bids from demolition crews and were prepared to seek city council approval for a contract on Oct. 15. What happens now is unclear.

"We're kind of in this limbo spot where we have an order, a contractor lined up," Rost said.

The city is not telling Dillard he cannot demolish it, Rost said, but officials are trying to figure out what role they play with a court order for demolishing the property under its previous owner.

Either way, step one is getting the Gateway Studios torn down.

"We're driven to get the building down and keep people out of it," Rost said. "It's a safety question."

Dillard said he has been trying to get control of the property for about two years and finally did on Tuesday. He said he does not yet know what kind of buyer might be interested in purchasing the land after the existing building is demolished and the site is readied for redevelopment.

"It's hard to tell what will go up there," Dillard said. "Something that will look good for the city and will be a high-quality end user."

City demolition of the troubled Gateway Studios at 1505 N. Neil St. was to begin this fall after council members in July OK'd a plan to knock it down. Officials believed the demolition would cost anywhere between $750,000 and $1.25 million — money that it had hoped to recover in selling the property after the site was prepared.

Building inspectors evacuated the apartment complex — formerly a Holiday Inn hotel — in 2009 when they documented hundreds of code violations, and they say it has only gotten worse since then.

The building has been a hot spot for police calls, drugs and sexual activity since it was abandoned four years ago. Broken staircases, balconies without rails, stagnant water collecting in what was once a swimming pool and boarded windows plague the crumbling structure.

The building itself has a market value of $30, according to the Champaign County assessor's office, and the land was assessed at about $475,000. Collectively, the building and land were assessed at about $2.9 million before it was abandoned in 2009.

City officials estimated the site would be worth about $1.2 million upon completion of the demolition.

The structure has been gutted of all its valuable raw materials and has stood as a blight visible from Interstate 74 since it was abandoned.

"I believe we all have the same goal: To remove this eyesore from the community," Dillard said.

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EdRyan wrote on October 04, 2013 at 7:10 am

Why wait 6 more months (maybe more) and allow this to continue to fester?  Tear it down now and put a lien on the property for the demo costs to be recovered when this Dillard guy finds a buyer.  If he doesn't find a buyer then foreclose and the city finds a buyer.

787 wrote on October 04, 2013 at 10:10 am

When is the City of Urbana ever going to deal with the former Hanford Inn at Cunningham and I-74?  It'll probably drag out as long as this one did... if not longer.

We all know that the folks who work for the Queen of Urbana are some of the smartest people in the entire state.  They should be able to solve the Hanford Inn problem in no time.