10/10/2007

City using eminent domain in attempt to acquire property owned by mayor's firm: Hamilton OH Journal-News, 8/26/07

In '02, Ryan's company bought building from IP as city was trying to buy it to store coal

By Cameron Fullam

Mayor Don Ryan most likely knew the city wanted property on North Third Street when his company bought it in 2002 — the sale was finalized nine days after Hamilton had taken the previous owner to court to acquire a portion of it.

But, he said at the time, it was not until after purchase negotiations began that he learned of the city's interest as well.

The story begins in February 2002, when Ryan and business partner Kurt Robinson filed papers with the Ohio Secretary of State's office to create Kumardovic LLC, a real-estate investment and holding company.

Ryan, a former plant manager with Diebold, and Robinson, a former plant superintendent with Western States Machine Co., had recently gone into business for themselves.

For three years, they'd been leasing space at the Hamilton Tool Co. building on Hanover Street, Robinson said.

The two created Kumardovic to begin looking for a larger space to sustain their growing business, which now includes Fabridigm, Mulcahey and Thompson Metals & Tubing, all contract manufacturing companies.

The 85,000-square-foot empty building at 530 N. Third St. — then owned by International Paper — seemed perfect.

"We needed this building desperately in order to function," Robinson said.

But IP owned about 10 acres along North Third Street between Black and Vine streets — including a 134,000-square-foot building at 550 N. Third St. — and refused to sell just one piece. The company told Kumardovic it would sell it all or nothing, Robinson said.

The larger building was older — built in 1891 — but with wide bays and concrete floors, it was well suited for storage and heavy machinery. "There was tremendous risk (in buying it all)," Robinson said.

At about this same time, Hamilton officials had approached IP about purchasing the larger N. Third Street building and a parking lot just south of the city's power plant. The city wanted the building for coal storage.

But the paper company sang the same tune: it would not sell the lot in pieces, City Manager Mark Brandenburger said.

In a memo dated May 28, 2002, IP cut off negotiations with the city, saying the property was no longer for sale. It was only then Ryan learned of the city's interest in the property, Brandenburger said, and he immediately removed himself from all discussion of eminent domain proceedings — the legal process by which a city can force an owner in court to sell property needed for the public good.

Councilman Ed Shelton defended the mayor Wednesday against any inference that he purchased the property for any reason other than to use it.

"He bought that building as a businessman to run a machine shop, not as an entrepreneur to sell it," Shelton said.

Knowing IP was wanting to sell the whole 10 acres — including both buildings — the city decided to use eminent domain to acquire just the north parking lot.

"We weren't going to force business out of town (by taking the 550 N. Third St. building), whether it was International Paper in there or new business," Brandenburger said. "That's why we went for the parking lot only."

The city filed suit against IP Sept. 11, 2002, to acquire the 2.6-acre lot for $141,500. Nine days later, IP sold it all to Kumardovic for $1 million, according to Butler County Auditor records.

The court ruled in favor of the city, and Hamilton paid Ryan's company $141,500 for the parking lot.

Since then, Ryan and Robinson have invested millions of dollars in equipment, maintenance and upgrades to the two buildings, and more than 100 people work in the space, Robinson said.

Kumardovic also has purchased property at 235 and 241 High St. where Ryan plans to open a restaurant.

And last October, Kumardovic purchased the old SOS building on Fox and Belle avenues to expand operations. The company already has moved half of its equipment from the 530 N. Third St. building to the new site.

Hamilton officials — who have remained interested in acquiring the 550 N. Third St. building — believe the new space can hold the equipment and employees that would be displaced and feel now is the time to take action, Brandenburger said.

Last September, the city hired Beck Consulting to appraise the property.

The appraisal for the property — now almost a year old — places the value at $582,000.

City council on Wednesday voted to begin eminent domain proceedings to acquire the property.


Hamilton OH Journal-News: http://www.journal-news.com