SOUTH BEND – The Chase Tower lost another business this week.
The Cellar Door – a restaurant in the basement of South Bend’s tallest building – is the latest to close and let “a handful” of employees go. But the city insists an interested buyer is still on the hook.
The entrance to The Cellar Door was chained and locked Tuesday, one day after the Chase Tower’s court-appointed receiver, Ken Castrop, said he made the decision to close the restaurant “temporarily.”
Citing financial reasons for the closing, Castrop said winter is typically “a slow season” for hotels and says the restaurant wasn’t bringing in much money anyway. He would not divulge exactly how many employees lost their jobs but said it was less than a dozen and that he hoped to bring them back when business picks back up in the spring.
As the receiver, Castrop runs the day-to-day operations of the Chase Tower, deciding what the building needs, then asking the courts and Huntington National Bank for the money to do it.
The Cellar Door was run by the Chase Tower, rather than an outside tenant.
Building owner Damian Pettinelli said Castrop has done everything he possibly could to try to maintain the building and make it attractive to a buyer over the past 22 months it’s been in receivership. But the bank hasn’t been very willing to give Castrop money, Pettinelli added.
“Really the black cloud that hangs over the Chase Tower continues to plague the redevelopment of downtown,” said St. Joseph County Chamber of Commerce President and CEO Jeff Rea.
That “black cloud” arrived in late 2009 when the economy tanked, causing Pettinelli’s hotel business to fall on hard times. The bank foreclosed on the building a short time later. A St. Joseph County judge appointed Castrop as the receiver in February 2011.
Some tenants left. Others complained about elevators not working and a crumbling structure. When asked whether the building is safe for tenants and customers, Chief City Building Inspector Brian Haygood said it is, or Code Enforcement would shut it down.
WSBT obtained a document dated February 2012 – 10 months ago – outlining city code violations cited inside and outside the Chase Tower building. The complaints included deteriorating walls in the parking garage and on the building’s outside, something Haygood said happens to all buildings with age.
“I’m pretty satisfied with the repairs that are what we would consider needing to be done on an emergency basis,” he added, citing elevators that frequently became stuck between floors or didn’t work at all.
City inspectors walk through the building every 30 days to make sure it’s still safe for tenants and customers, Haygood said. But some of the repairs still haven’t happened.
“I think that’s something a new owner will have to take into consideration when they purchase it is that these are outstanding repairs that need to be completed,” he added.
But finding a new owner continues to take time.
“Buildings that have tenants already in them with longer term leases certainly are a lot more attractive,” Rea said. “So, if you start thinking about the top and the bottom now being empty, it certainly becomes less interesting to a potential buyer.”
The Summit Club restaurant that once occupied the 25th floor of the Chase Tower closed in May. A member of the club’s Board of Directors said media reports about the deteriorating building and faulty elevators essentially hurt business.
In spite of the recent news about The Cellar Door, South Bend Mayor Pete Buttigieg’s Chief of Staff told WSBT the same group of potential buyers that has been interested in buying the building since last summer is still interested in it.
“The Chase Tower has been actively marketed and there continues to be interest in the building. The city continues to be open to talking with any investment team interested in rejuvenating this important downtown structure," Mike Schmuhl wrote in a statement.
The Colorado company listing the Chase Tower for sale listed the building as “under contract” Tuesday, meaning a possible sale is likely still in the works. But that company, HREC Investment Advisors, and the city have been very tight-lipped about who that group of investors is or where they're from.
Pettinelli, who lives in Massachusetts, said the building’s asking price is about $8.4 million. Many people, including Rea, said that’s too high for a building in need of so many repairs, but Pettinelli said anyone who thinks the Chase Tower is worth anything less “is crazy.”
He also said he could lose a lot of what he owns if the building sells for less than what he’s asking.