Monday, June 2, 2008

City close to settling post-fire lawsuit

By William Kaempffer
Register Staff
— The city has offered to pay $700,000 and absorb $500,000 in demolition costs to settle a lawsuit that claims city negligence and haste to raze buildings damaged in a December fire unnecessarily doomed an abutting property.
If the $1.2 million settlement, which has been agreed to in principle, is finalized, the city would take ownership of the small lot at 848 Chapel St. that contained the Spector building where Shang-Jin Hahn and her late husband ran their jewelry store for decades. The settlement would be at what appears to be a steep price — more than twice the $543,000 the assessor’s office says the building, when it stood, and the property, were worth. The land alone is worth $372,000, according to the assessor’s office.
But according to a city attorney, a complex set of circumstances and the potential liability if the city were to lose in court prompted the settlement.
“It was a very singular situation, this one,” said Corporation Counsel John Ward.
“Obviously, the fire was in a different building. This building had to come down as a result of that fire, but in a somewhat circuitous way. It’s a very, very complicated set of facts.”
While saying he believed the city would have prevailed in court, litigating the case could have taken years, cost an enormous amount in legal fees and the city would still have run the risk of losing.
“The best thing to do is to stop it right now, end the litigation and obtain the land,” he said.
During negotiations on the lawsuit, the city commissioned a new appraisal, which came in significantly higher than the assessor’s and brought it more in line with what the city is willing to pay. That appraisal, completed after the Spector building was razed, put the property and structure’s value at $900,000.
“The outcome means we are acquiring the property for what seems like a reasonable settlement, all things considered,” said Robert Smuts, the city’s chief administrative officer.
The city came under sharp criticism after the Dec. 12, 2007, fire, which obliterated about a third of a block bounded by Chapel, Church, Center and Orange streets. Once the fire was extinguished, the city building official seized the former Kresge department store property that housed a series of small retail businesses, and ordered emergency demolition, over the objection of the owner, stating the building posed an imminent danger.
The city hired Laydon Industries, which didn’t have the required license to do the entire job, but city officials have said the company subcontracted the work it couldn’t legally perform.
Hahn’s property survived the fire largely unscathed, but was condemned to the wrecking ball after a support beam collapsed on Jan. 4in the abutting portion of the Kresge building. Engineers determined that years of neglect had left the Spector building weakened, and that it relied on the Kresge building for support. Without the Kresge building, the Spector building would have to come down, too, engineers said.
Three days before the beam collapsed, Hahn wrote to the city, demanding no steps be taken to complete demolition of the adjoining building until the city had “first taken all necessary steps to ensure that such demolition (did) not compromise in any manner the structural integrity of our building.”
Hahn’s attorney, Karen Kerpie, did not return a call seeking comment.
Paul Denz, owner of the Kresge building, who also has a legal action against the city, also didn’t return a call seeking comment, but in the past has been critical of the city’s rush and questioned whether it was part of a land grab.
The property is in the heart of downtown, a block from the Green. The Concord 9 site is about 0.07 of an acre, according to city land records.

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