Long saga of downtown Newark Arcade property may be near resolution

NEWARK – The long and complicated saga of Newark’s downtown Arcade may have some resolution in November. Or not.

The 110-year-old mini-mall, which features an enclosed walkway with suites on both sides under a glass roof, is at the center of an ownership dispute, fire code violations and a prospective bar owner waiting months to open.

Licking County Common Pleas Court Judge David Branstool ordered the property be transferred to a new owner on Nov. 8. And the Ohio Division of Liquor Control may have a ruling in November on the city's objection to issuing a liquor license to GeekEasy Arcade, 17-25 Arcade Place.

Appeals, however, could delay the ownership transfer or the final ruling on the liquor license.

The city's first enclosed shopping center, which opened in 1909, was one of eight glass-roofed shopping arcades built in Ohio from 1876 to 1928. Construction began in 1907 to house 30 stores. It once featured an orchestra playing over the Fourth Street entrance, dances every night and children playing around a fountain. A theater was later added and the building at one time became T-shaped, extending all the way to West Main Street.

In the last decade, The Arcade has been placed on 24-hour a day fire watch, flooded multiple times due to sprinkler lines freezing or water main breaks and cited for fire code violations on several occasions.

Restoration efforts

Tom Cotton, owner of The Arcade, purchased the property in 2007, saying, "I want to put it back the way it was."

Three years later, Cotton said he lacked the resources to restore the building and had received little help from City Council, local banks or developers. He unsuccessfully sought federal stimulus money and other sources of government funding. "It's almost like there are vultures waiting for me to fail," he said at the time.

Cotton said he has worked hard to improve The Arcade, reducing 287 violations a few years ago to just 13 in the last inspection. And, he said, the only current violation is missing plaster and drywall on a third-floor office. But, he said, the city will not return for another inspection.

"I'm proud of what I've done to clean this place up," Cotton said. "I know what it looked like when I bought it. The vision is still there and it's to put it back the way it was in 1909 when it opened. Every dime I have, I put back into this place."

Cotton said city government and business leaders want his property, so he is cited for violations others are not. And, he said he's required to fix things that were done in the building long before he purchased it. 

"Every time I turn down an offer to sell, they come over to inspect," Cotton said.

Legal battles

Law Director Doug Sassen said the last fire department inspection of The Arcade was on April 30, 2018. He said Cotton's many appeals have helped delay scheduling follow-up inspections.

"Mr. Cotton continues to claim that the citations have been rectified, thereby warranting a new inspection, but we know this to be untrue," Sassen said. "First, Mr. Cotton’s own maintenance man testified that many of the violations Mr. Cotton claims have been rectified, have in fact not yet been addressed.

"And, several of the violations can only be rectified by work that will require a building code permit to accomplish and no attempt to obtain such a permit has been made. Therefore, it is abundantly clear that many of the violations certified by the Board of Building Appeals are still problematic and an inspection is not required to validate this fact."

Cotton said, "I'm not supposed to comment on legal issues," and referred those questions to his attorney, James Cooper, who did not return phone calls seeking comment.

Beau Bromberg, a former Congressional and Newark City Council candidate, friend of Cotton's helping him clean up the property, said in the last four years, everything has been brought up to fire code, but city officials don't want to give him credit for what he's done.

"Why is this about Tom Cotton and not about the property being safe or not safe," Bromberg said. "You can see we're reducing violations each time they came back to inspect things. It clearly shows that we're progressing.

"What I feel is somebody wanted to buy this property and since Tom didn't want to sell it, they tried to strong-arm him," Bromberg said. "They want this property. They want people that have money to invest in Newark. Tom doesn't have the money. When you don't have the money to put into it, it just takes a little longer."

Fire department perspective

Fire Chief Pat Connor said his department will work with people who work with them to resolve fire code violations. Cotton, he said, has not.

"We've been dealing with these violations for six, seven years," Connor said. "He has not worked with me or my prevention staff. The object is to make the place safe. Tom Cotton has not been somebody I can trust."

The chief said every decision by his department has been upheld when appealed to another level.

A year ago, the Ohio Board of Building Appeals upheld violations from April 10, 2018, and Sept. 19, 2017. For the April violations, the board issued Cotton a one-time penalty of $9,000, and an additional $9,000 per month if all violations were not remedied in 60 days.  For the 2017 violations, the board issued a one-time penalty of $6,700 and $6,700 per month if violations remained after 60 days.

The 2018 violations included: water flow alarm devices not functioning or disconnected; no fire extinguishers in common hallway; marked exit door with flush bolt locks; holes in fire-rated or resistant construction on floors, walls and ceilings.

Sassen also said the decisions are made based on safety, not Cotton.

“I don’t particularly care who the owner is," Sassen said. "The only thing that has impact on our position is whether or not those violations are remedied. The identity of the owner is irrelevant. It’s the actions of the owner that’s important.”

GeekEasy Arcade

The fire department's concerns have prevented GeekEasy Arcade from opening inside The Arcade.

“We objected to the liquor license because the building is not in compliance with local codes and ordinances," Sassen said. "Now it’s in the hands of the hearing officer, who will make a recommendation on whether to issue or not issue a license.”

Asked if the city is opposed to any new businesses in The Arcade, the law director said the city can object to a bar in ways it can't object to other establishments.

"Some uses we wouldn’t have any jurisdiction to object," Sassen said. "In this case, we do because of the need for a liquor license. It's the nature of the business, expected volume, in conjunction with the multitude of  violations in place."

GeekEasy Arcade, which plans to open a bar with about 40 arcade games, recently posted its objections to the delay on its Facebook page. The GeekEasy Arcade owner is George Locke and manager is Shane Mack. 

“Unfortunately, we have been ready to open for going on four months now but find ourselves in a unique situation involving the city," the post read. "The Newark Fire Department refuses to come in and perform our opening inspection, due to long-since fixed violations on the Downtown Arcade Center as a whole.

“City officials have been pressuring us to relocate, assuring they would have no issues with us if we were to rent space from any other property owner. We are trying to hang tight and get this issue resolved, but current city management seems dead set on ruining the fun. We ask everyone for patience, and to stand with us, so Newark can start to have the unique downtown entertainment it deserves."

The GeekEasy Arcade, which has leased space in The Arcade for seven months, would be located where Pounder's Pub operated until about three years ago.

Lindsey LeBerth, brand manager, Ohio Department of Commerce, Division of Liquor Control, said the division's hearing officers have 30 days after the hearing to complete their report, which is provided to the superintendent of the Division of Liquor Control. The superintendent either sustains or overrules the local  objection.

Either side can then appeal to the Liquor Control Commission, a separate entity.

Locke said the bar could open in a week if they receive the liquor license.

"We're not concerned (about the fire danger) because I don't believe it's anything to worry about," Locke said. "We wouldn't have full confidence moving there if it was a problem."

Arcade ownership 

Cotton could soon lose his ownership of The Arcade, according to a recent court ruling.

The Arcade ownership, including the Center Pub bar, will transfer from Newark Downtown Center to Historic Arcade LLC and Historic Arcade LLC II, on Nov. 8, unless Branstool's ruling is appealed. Branstool said the 30-day opportunity to appeal will expired by that date, so the sale will close on Nov. 8 without an appeal.

Cotton is sole shareholder, sole director and president of Newark Downtown Center, according to the Oct. 16, 2018, filing in Licking County Common Pleas Court.

According to the complaint filed by Historic Arcade LLC, of Zanesville, Cotton executed a written contract on June 11, 2018, to sell two parcels at 15 Arcade Place to Outerlimits LLC for a total of $735,000. One parcel was priced at $685,000, and the other, the Center Pub bar, was priced at $50,000.

On July 26, 2018, Newark Downtown Center reaffirmed closing of the sale on or before Sept. 30, 2018, stating "time is of the essence," according to the complaint.

In the morning of Sept. 27, 2018, Historic Arcade LLC and Historic Arcade II LLC transferred $710,000 to pay the balance of the purchase price for 15 Arcade Place. In the afternoon of Sept. 27, 2018, the counsel for Newark Downtown Center stated they would not follow through with the sale, according to the complaint.

The Advocate could not determine who owns Historic Arcade or Outerlimits, or what their plans are for The Arcade.

The Ohio Secretary of State's website shows Historic Arcade LLC was organized Aug. 30, 2018, with attorney Michael Whitehead, of Newark, its statutory agent. Outerlimits LLC was organized Sept. 2, 2014, with Russell Deaton, of Zanesville, its statutory agent.

An appeal would transfer the case to the Fifth District Court of Appeals.

kmallett@newarkadvocate.com

740-328-8545

Twitter: @kmallett1958

Timeline

August 2007: Newark Downtown Center, led by businessman Tom Cotton, purchases The Arcade building. "I want to put it back the way it was," Cotton said.

August 2010: Cotton said he lacks the resources to restore the building and received little help from city council, local banks or developers. He unsuccessfully sought federal stimulus money and other sources of government funding. "It's almost like there are vultures waiting for me to fail," he said.

Winter 2012-13: Sprinkler lines freeze and burst after heat turned off in building at 21-31 W. Church St., connected to The Arcade. The building flooded and placed on 24-hour-a-day fire watch. The building, owned by Manuel Vela, is in foreclosure.

March 5, 2013: Newark Fire Department files citations against Tom Cotton, stating the building does not comply with the Ohio Fire Code and remains under fire watch until the sprinkler system has been repaired. Cotton said the sprinkler system has been repaired but the city declined to inspect the building.

Sept. 2, 2013: City Council votes 8-0 to oppose transfer of liquor permit from Newark Downtown Center/Tom Cotton to Eddie Guy, for Pounder's Pub, 17-21 Arcade Place.

Sept. 26, 2013: Arcade passes fire inspection the day before the deadline and 24-hour-a-day fire watch lifted. Guy said he paid for the sprinkler system repairs so the bar could open.

Oct. 8, 2013: City withdraws objection to liquor license transfer and cancels hearing with Ohio Division of Liquor Control.

Oct. 10, 2013: City places a large white X on red background on the building at 21-31 W. Church St., notifying firefighters the vacant structure is unsafe to enter. A large X is also attached to the Chilcote & Jones building, at 20-22 N. Fourth St. The building, abutting The Arcade building, is also owned by Vela and in foreclosure.

Nov. 7, 2013: Tom Atha, owner of Earthwork Recording Studio, is the only bidder at auction of the three-story building at 21-31 W. Church St. The foreclosed building had two unsuccessful sheriff's sales.

Jan. 4, 2014: Water main breaks and floods section of The Arcade, leaving 2 inches of water in some areas. Firefighters arrive to find water flowing into the main Arcade walkway. The break occurred in unoccupied ballroom on second floor.

April 14, 2014: Chilcote & Jones building at 20-22 N. Fourth St., behind city building, demolished, three years after fire department ordered the building evacuated and closed. Demolition was tedious because of an adjoining wall with The Arcade building.

Jan. 10, 2017: Newark Fire Department responds to a ruptured sprinkler line at The Arcade, and places the building on fire watch.

Aug. 25, 2017: Newark Fire Department cites Tom Cotton for 42 code violations at 8 Arcade Annex.

April 9, 2018: Newark Fire Department cites Tom Cotton for 13 code violations at 8 Arcade Annex.

June 11, 2018: Cotton executes written contract to sell parcels at 15 Arcade Place to Outerlimits LLC for a total of $735,000. One parcel was priced at $685,000, and the other, the Center Pub bar, was priced at $50,000.

July 26, 2018: Newark Downtown Center reaffirms closing of the sale on or before Sept. 30, 2018. Contract states "time is of the essence."

Sept. 27, 2018: In the morning, Historic Arcade LLC and Historic Arcade II LLC transfer $710,000 to pay the balance of the purchase price for 15 Arcade Place.

Sept. 27, 2018: In the afternoon, counsel states that Cotton will not close on the transaction.

Oct. 30, 2018: Following an appeal of the April citations, the Ohio Board of Building Appeals upholds the violations and issues a one-time penalty of $9,000, and an additional $9,000 per month if all violations are not remedied in 60 days. The board also upholds the September 2017 citations, issuing a one-time penalty of $6,700 and $6,700 per month if violations remain after 60 days.

Sept. 26, 2019: Hearing with the Ohio Department of Liquor Control on city's objection to issuance of liquor license for GeekEasy Arcade.

Oct. 2, 2019: Common Pleas Court Judge David Branstool orders Cotton to convey parcels at 15 Arcade Place to Historic Arcade LLC and Historic Arcade Place LLC II, by 9 a.m. Nov. 8.