City moves to purchase Fallon Hotel
LOCK HAVEN, PA – Faced with the continued deterioration of the Fallon Hotel on Water Street, the Lock Haven Redevelopment Authority has moved to purchase the city landmark from owners Terry and Dolores Mantle.
The authority board’s unanimous action came at a board meeting last Friday. According to information from City Hall, the purchase is to “ensure that a structural engineering study is performed to decide the viability of the building.” If the historic structure is still viable, “the Authority intends to pursue a sales agreement with a developer who can address, as expediently as possible, a significant investment” into the Fallon. The Record has learned that a developer from northeastern Pennsylvania has visited the site.
The Fallon has sat empty since December of 2017 when its boiler system failed and tenants were forced to leave.
City Manager Greg Wilson on Tuesday provided council with three pages of recent history on the Fallon, which dates to before the Civil War. It details the involvement of local developer Stephen Poorman and does not put that involvement in a good light. Cited was his role in the delay in the Bellefonte Avenue CVS development at the expense of the developer and the demolition of the Town Tavern at the city’s expense.
The information notes that a meeting was held in April of this year, hosted by 76th district Rep. Stephanie Borowicz. Attendees included C&Q Investment Properties, the development firm which agreed to purchase the hotel from the Mantles in 2019; also present were representatives from the city and “other interested parties.”
The city later in April issued a letter requiring that C&Q complete a structural analysis of the building, to be completed by May 30, but no report was submitted to the city. On May 27, C&Q official Carey Chisolm told the city that power of attorney had been provided Poorman and that Poorman agreed to loan money “to move the project forward” with an expected closing date of June 7. Chisolm maintained his firm has met its obligations to the Mantles, but a memorandum of understanding between the redevelopment authority and the Mantles sets the purchase price at $55,000 plus a little more than $7,000 in unpaid taxes. The Jersey Shore couple is also required to evict C&Q from the property for breach of a March 1,2019 agreement between C&Q and the Mantles, including “failure to pay real estate taxes when due, failure to produce insurance…failure to maintain and repair the property.”
The correspondence from the city manager to city council:
The following is provided by way of both background information and a current update on the Fallon Hotel located on E Water Street in the City of Lock Haven:
On May 11, 2017, resident Stephen P. Poorman filed a civil action suit against the City of Lock Haven in the Court of Common Pleas which was eventually dismissed on August 14, 2017. In Count VI of that suit, the city was accused of failing to cite the owners of the Fallon Hotel which Mr. Poorman stated was “clearly unsafe, unsanitary, out of compliance with many health and safety provisions, unsecured and infested,” and demanded that the city order an engineering study regarding the Fallon’s safety.
Later that same year on December 20, 2017, the boiler at the Fallon failed causing the building to be closed from that day to the present. Less than a month later, owners Terry & Delores Mantle put the building up for sale as reported in The Express on January 18, 2018.
A little more than a year later after the building had sat vacant and unheated for that time, in the March 23, 2019, edition of The Express, investors Carey Chisolm and David Quinones of Orlando, Florida, were interviewed about their purchase of the Fallon. Acting as C&Q Investment properties LLC, the two had entered into an Article of Agreement for the eventual purchase of the Fallon Hotel, financed by Terry & Dolores Mantle themselves. C&Q reported that they had used Stephen Poorman’s Florida office of Poorman & Group for a feasibility study. As reported, C&Q were guided that “Mr. Poorman determined the building could be preserved if it is reopened as a limited hotel, restaurant and bar without any major changes.”
In 2017, Mr. Poorman was cited as stating that the Fallon was a “dilapidated fire trap,” and “one of the most dangerous properties I’ve seen in my 45 years as a historical property real estate developer.” Less than two years’ later after sitting neglected and unheated, C&Q stated that Mr. Poorman had “scheduled meetings with 11 local firms to obtain prices to clean, paint and repair the existing space” including “a new roof and heating plant” as well as replacing all of the windows with “custom made units to resemble the original windows” all for the estimated cost of $227,000. Sometime after May 11, 2017, but before March 9, 2019, Mr. Poorman’s opinion about the Fallon had changed from a facility that “could not realistically become compliant” to one that according to C&Q could be reopened “without any major changes.”
Then, after 2 additional years sitting empty, without heat, with a deficient roof, fires, and missing exterior doors and windows, on April 1, 2021, PA State Representative Stephanie Borowicz hosted a meeting between C&Q, representatives of the city, and other interested parties. After the meeting, the city relayed to its commercial inspector of the state’s required Uniform Construction Code, Code Inspections Inc., that C&Q intended to begin construction once again. After discussion with Code Inspections Inc., the city issued a letter on April 15, 2021, requiring that C&Q complete a structural analysis of the entire building. C&Q was provided 45 days to provide this structural engineering report. That time period expired May 30, 2021, and no report was submitted to the city.
On May 27, 2021, three days before the structural engineering report was to be provided by C&Q to the city, Mr. Chisolm of C&Q notified the city that he had provided power of attorney to Mr. Poorman adding that “Stephen Poorman, individually, agreed to loan money to move the project forward and we expect to close on June 7, 2021.”
In the same May 27 letter to the city, Mr. Chisolm stated that “our group has maintained each and every requirement under our legal documents [with the Mantles] since March of 2019.” Under the Article of Agreement with the Mantles, C&Q is required to pay the real estate taxes on the property each year; however, as one of the taxing bodies, the city is aware that there remain unpaid taxes on the property that are currently with the County Tax Claim office. Additionally, according to a letter from the Mantles to C&Q on May 24, 2021, the Mantles assert that “there is no question that your client is well behind on his duties under said Article of Agreement.”
Later that evening Mr. Poorman contacted the city via fax on behalf of C&Q stating, “Mr. Chisolm indicated that he was given a 45-day period of time to provide an assurance the Fallon is stable,” asking “is the city demanding the LLC obtain an engineer’s report?” This was clearly stated by the city to Mr. Chisolm in the letter dated April 15, 2021. While on July 11, 2017, Mr. Poorman testified in the Court of Common Pleas that the Fallon “is a hotel ready to collapse,” Mr. Poorman now asked the city in the May 27 fax “if the LLC only remodels the Fallon as it existed in the past, and doesn’t change any of its egress entrances or exits, will it require a permit to clean and remodel the interior?”
The city has two recent experiences with Mr. Poorman and his interest in commercial real estate:
1. The delay of the CVS project at the expense of the developer
In November 2013, Robert J. Rosemeier, owner of one of the parcels of land on which CVS now is located, was represented by his consultant and later Power of Attorney Mr. Poorman. After the agreement was signed, according to the article in The Record May 27, 2015, “Poorman subsequently raised the sale price to $1.1 million and after Bar rejected the new figure, a ‘for sale’ sign with Poorman’s phone number was posted at the site.” After delay and legal fees, in March 2015, the article reported that Judge Salisbury denied Mr. Rosemeier’s and Mr. Poorman’s objections and sided with JC Bar Development that Rosemeier and his representative failed to abide by a signed sales agreement for the property. An appeal was taken, but ultimately settled.
2. The demolition of the Town Tavern at the city’s expense
When under Mr. Poorman’s ownership, the collapsed roof of the Town Tavern saw no repair although Mr. Poorman was notified by the city to repair the same or risk the dilapidation of the property that could result in a demolition order. In 2018, when the city purchased the condemned property at 47-51 Bellefonte Avenue (Town Tavern) the check cut by the city for that purchase bore the name of Stephen P. Poorman. By July 10, 2019, Mr. Poorman had failed to include this information when he stated in The Express “the city allows building owners, such as those who owned the Fallon Hotel and Town Tavern, to ignore maintenance until the structure is beyond repair.”
In the scenarios above, one teaches the city that true and meaningful investment could become unnecessarily delayed for the sake of personal enrichment, and the other teaches the city that continued inactivity could lead to the city being burdened with the cost of demolition.
While the Fallon has seen little activity and the faulty boiler and roof have yet to be addressed, the city has learned that for several months a developer doing significant, multi-million investments in eastern and central Pennsylvania has been in discussion with the Mantles. While C&Q was advised by Mr. Poorman that the Fallon would likely only take $227,000, to clean the interior and make “no major changes,” another local group of investors, which included one of the leading contractors in the area, who toured the facility prior to purchase by C&Q, put their renovation at greater than a million dollars.
With the city’s recent experience with Mr. Poorman’s recent involvement in development in the city, it was prudent to put this information before the Redevelopment Authority of the City of Lock Haven. On Friday, June 4, 2021, the Redevelopment Authority held a special meeting to discuss the matter in City Hall Council Chambers that was advertised at least 24 hours in advance and that was posted on the doors of City Hall. During the meeting, the Redevelopment Authority voted unanimously to enter into a Memorandum of Understanding with Terry & Dolores Mantle to purchase the Fallon from them for $55,000 plus a little more than $7 thousand in unpaid taxes. Under the MOU, the Mantles are required to prosecute an ejectment action to remove C&Q from 131 E. Water Street based on C&Q’s breach of the March 1, 2019, Article of Agreement. According to the MOU, the breaches by C&Q include “failure to pay real estate taxes when due, failure to produce insurance,” and “failure to maintain and repair the property.”
The Redevelopment Authority did not take this action lightly and weighed both the community benefits and the detriments to its actions. If meaningful, realistically funded development can take place and the authority can facilitate that, it will serve as a significant benefit to the community. If the building is unable to be stabilized in a way that can lead to development, then the lesson of the Town Tavern has taught the Authority that it is the city and its taxpayers that will pay the price for the demolition of the structure to secure public safety. Neither scenario can be known without a structural engineering study which C&Q failed to provide and which Mr. Poorman, now Power of Attorney for Mr. Chisolm, questions is requested.
For that reason, the first course of action by the Redevelopment Authority is to ensure that a structural engineering study is performed to decide the viability of the building. If the engineering report concludes that the facility can be preserved for the betterment of the community, the Redevelopment Authority intends to pursue a sales agreement with a developer who can address, as expediently as possible, a significant investment into this historic structure.
According to county records, the Mantles had purchased the Fallon in 1997 from the late Charles and Hazel Stevenson for $104,000. The asking price as of January of 2018 was $275,000.
