City forced to pick up demolition tab after Newcomb owner says he has no insurance

The statue of John Wood in Washington Park looks over the demolition of the Newcomb Hotel Monday. (H-W Photo/Phil Carlson)
Posted: Sep. 9, 2013 8:16 pm Updated: Nov. 28, 2014 5:15 pm

Herald-Whig Staff Writer

The city of Quincy is staring at a potential $500,000 demolition and cleanup bill from Friday night's fire that gutted the Newcomb Hotel at 400 Maine.

Mayor Kyle Moore said the city confirmed Monday that owner Victor Horowitz of Skokie did not have the property insured because Horowitz said the property was uninsurable in its current condition.

Combining the demolition costs and the unpaid balance on a $500,000 loan and back property taxes that Horowitz has failed to pay, the city could be out more than $1 million through its association with Horowitz.

"We'll look for different legal avenues to try and recoup some of the costs, but the outlook doesn't look positive on that," Moore said.

Since the former historic hotel is officially owned by Newcomb Realty LLC, a limited liability company created by Horowitz for the Newcomb project, the city would have to seek damages from the LLC instead of Horowitz.

"It's basically the same issue we had with the property itself," Moore said. "The LLC that owned the property had no assets, so there are no assets to go after."

The building is being demolished by Blick's Construction and Niemann General Contracting at a cost of $400 to $500 an hour. It is expected to be finished Tuesday after crews hit a few snags,including the removal of traffic signals, streetlights and an I-beam section in the building. The city will then seek bids for the removal of debris and cleanup of the site.

Moore said the money would likely come from tax increment financing district funds. TIF funds in recent years have been used to match grants the city has received for streetscape work in downtown Quincy and parking lot renovations.

"That could delay some of the parking lot improvements we were doing," Moore said. "TIF funds are supposed to be used for economic development downtown. We like to have money set aside for if somebody wants to come in like the Kroc Center or Franklin Square (Apartments) and develop an area. That lessens our ability to have financial options to incentive some developers."

The city's TIF fund has a balance of about $500,000.

The $500,000 loan to Horowitz came from the city's Economic Development Revolving Loan Fund, created in the early 1980s when C. David Nuessen was mayor. The city received funding through a federal Urban Development Action Grant. City officials don't know if Horowitz had insurance when he received the loan to buy the building.

"We have been looking all weekend, but this was a loan in 2003, so you're dealing with 10 years of time that has passed and a couple of administrations," Moore said.

Chuck Bevelheimer, director of planning and development, said loans in recent years have been participation loans along with a bank, where the bank handles most of the due diligence, including making sure there is valid insurance on properties. He thinks insurance was presented when the Newcomb loan was approved, but the insurance was not kept current.

Bevelheimer was not with the city when the loan was approved during the administration of former Mayor Chuck Scholz.

"Usually with a loan in most cases, the insurance company will notify you if they're not paying their insurance," Alderman Jennifer Lepper, R-5, said Monday night.

Bevelheimer said he was not aware of the city receiving any notice on whether the property had insurance.

The city had filed to foreclose on the property in July and had agreed to enter negotiations with a Cedar Rapids, Iowa, developer interested in renovating the Newcomb into market-rate apartments and commercial space.

Moore said the city will have to reexamine its timetable on foreclosing on the property, but for now is focusing on the cleanup.

"One of the reasons why we were delaying the foreclosure of the property was because we were worried about owning it with the instability of the structure," he said. "Obviously, that concern is now off the table."

The city has given more than 100 loans through its loan program. Bevelheimer said the city can still give direct loans, like Horowitz, but has provided participation loans to developers in recent years.


Sign up for Email Alerts