Imagine the Lehigh Valley's largest city with a premier high- rise hotel at one of its key downtown intersections -- just blocks from the seat of county government and the federal building and around the corner from Symphony Hall and the Allentown Art Museum.
The first floor of the Americus is ringed with retail stores and restaurants. The upper floors are home to luxury apartments and condominiums. The soaring banquet room hosts all types of celebrations, bringing lots of people downtown from around the Valley.
That is Mayor Ed Pawlowski's dream for the Americus Center, a 13- story building at Sixth and Hamilton streets that was once the largest operating hotel in the Lehigh Valley and has been nearly vacant, except for a handful of small stores on its first level, since 2002.
But when he opens his eyes, what Pawlowski sees is the opposite: an embarrassing eyesore with a crumbling facade; a building in need of sprinklers and a major electrical system overhaul, with an owner, Americus Center Inc., that has allowed the property to be scheduled for sheriff's sale in April.
Mark Mendelson is the majority shareholder in Americus Center Inc.
"I can't allow a building of this size and magnitude to just sit there," Pawlowski said.
Allentown's effort to bring back its central business district won't be complete unless it can turn around the historic Americus, an imposing landmark at the heart of the city's downtown, said T. Anthony Iannelli, president of the Greater Lehigh Valley Chamber of Commerce.
It is the second-most prominent building in the city's skyline, next to PPL's Ninth and Hamilton headquarters.
"You can't ignore that building" Iannelli said. "It is so powerful by its physical presence."
Peter Koenig, an agent with Sperry Van-Ness Imperial Realty who specializes in downtown Allentown, put it frankly.
"It's a giant zit on Allentown's face," Koenig said. "We need to put someone in control who can make it viable and beautiful."
After trying for a year to get Mendelson to sell or to correct a list of safety violations, Pawlowski said he has decided to put away the carrot and break out the stick, with a threat to shut off the utilities to the building.
That is not going to help, said Mendelson's attorney, William Harrison. Harrison said his client is ready to make a deal with any legitimate developer who comes his way, and is willing to cooperate with city officials in doing so.
"Mark has heard the message loud and clear that they do not want him to redevelop this property," Harrison said. "He is eager to extricate himself from Allentown. They are not fond of him and he has no desire to impose himself on the community any longer."
He blamed Mendelson's inability to rehabilitate the building himself on negative publicity in The Morning Call, an argument that is central to a lawsuit Mendelson filed in 2003 against the newspaper. Mendelson alleges that the newspaper hurt his reputation and invaded his privacy in an in-depth story focusing on his real estate projects in Allentown and Philadelphia and his strained relationships with Allentown officials.
The city and Mendelson offer conflicting explanations of why the building hasn't been sold.
Mendelson referred questions to his attorneys, but he did say briefly that in his opinion, none of the developers the city sent him had the resources to purchase the building or convert it into the showplace Pawlowski envisions.
"I'm not in the position of refusing a check," Mendelson said. "Obviously there wasn't a check in hand, or I would have taken it."
In the past, Mendelson had asked for $3 million for the building, said Allentown landlord and Crocodile Rock nightclub manager Joe Clark, who led one investment group that was trying to purchase the property.
Harrison said he has lowered that asking price, and that the city's current crackdown only serves to scare away potential developers.
"He [Mendelson] will not be bullied or intimidated," Harrison said, adding that Mendelson will fight any effort by the city to shut off utilities, which would shut down several cellular towers on the roof and four tenant businesses on the first floor.
Pawlowski said Mendelson could easily get the city off his back.
"Fix the building, and we will go away," Pawlowski said.
Developers who have expressed interest in the building have envisioned converting the property to apartments or condominiums, Harrison said. One envisioned senior housing.
Clark said he backed away last year when he realized how much work would need to be done. Clark, who estimates the building could be rehabilitated successfully for about $12 million, said he doesn't think the city took his proposal seriously.
Mark Dambly, president of Pennrose Properties, the Philadelphia- based company that rehabilitated the former National Bank building on Seventh Street into senior housing and is overseeing the rebuilding of the city's Hanover Acres housing project, said he has looked at the Americus "from afar."
He estimated it would cost $200 a square foot to rehabilitate the hotel, which would put the cost of renovation at about $27 million. He said he never actually talked to Mendelson about the project. Pawlowski said he thinks the cost is probably between $10 million and $15 million.
"I thought about it. It is going to be a really tough deal to do," Dambly said.
Dambly said the current problem with redevelopment in downtown Allentown is that market rents alone won't support the cost of rehabilitation. To make such projects work, developers need subsidies.
Mike Leahy, president of Metropolis Management, the Garden City, N.Y., developer that converted the Farr Building at 739 Hamilton St. into loft apartments and a first-floor sneaker store, said he was close to a purchase of the Americus a year ago for $2.5 million, before it fell through.
He estimated it would cost $18 million to $20 million to turn it into a mixed-use combination of retail, hotel rooms and apartments.
Leahy said he thought he had an understanding, "and the next thing you know, he [Mendelson] said, "You need another $500,000."'
Pawlowski has said he sent four or five legitimate developers to Mendelson only to see him turn them down each time. Harrison said he can think of only two or three, including Metropolis Management.
But while the city has set a March 16 deadline for Mendelson to sell the building or fix a list of serious safety problems, the time for wheeling and dealing is not over.
The property is scheduled for sheriff's sale in Lehigh County Court in April, according to assistant city solicitor Martin Danks.
At least one developer is still in the game and was preparing an offer for the Americus this week, said Jerry Holliday, a Hellertown real estate agent with Patt, White Prudential Realtors who has developed a niche selling blighted Allentown property.
Holliday said she is working with a New Jersey investor with a track record of success.
With the Americus listed as a historic landmark and the state willing to help the city, any successful developer probably would be able to tap a variety of private and public funding sources, she said.
She said her client, whom she was not at liberty to name, would maintain the Americus as hotel and residences with retail stores on the first floor.
"Their plans are pretty much not to change things around, but to bring them up," Holliday said.
Louis Belletieri, an Allentown restaurateur who is employed by the city's Department of Community and Economic Development, said one of the problems the city ran into with some developers was that they wanted to convert the building gradually, finishing out a restaurant on the first floor for example, before moving to gradually renovate the hotel floor-by-floor.
He said the city is looking for someone who will convert the building all at once.
One developer the city was working with wanted to turn three lower floors into hotel rooms, the upper floors into apartments, and to complete penthouse apartments at the very top, Belletieri said.
Koenig said the building's recent history and the ongoing dispute between Mendelson and the city turns off potential investors.
"I've had people ask me questions about it, but because of how tumultuous the situation is between the city and Mendelson, they are staying kind of in the background," Koenig said.
If the city is successful in getting the building out of Americus Center Inc.'s control, it will send a strong message about the city's capacity to achieve its redevelopment goals, he said.
Iannelli said the successful redevelopment of the Eastonian, a former luxury hotel in downtown Easton, into a mixed-use building says the market would support a similar conversion in Allentown.
"It is going to take a commitment from someone who is going to prove their credibility," Iannelli said.Copyright © 2015, CT Now