YOUNGSTOWN — City council will consider Wednesday settling two lawsuits: one to give $440,000 to owners of a student-housing complex and the other to resolve the former Anthony’s on the River building demolition for $80,000 and other financial considerations.

Mayor Jamael Tito Brown said he wasn’t pleased with either settlement, but the city has little choice but to do so.

The owners of The Enclave, the student-housing complex near Youngstown State University, filed a breach-of-contract lawsuit against the city on Sept. 13 saying Youngstown improperly withheld $440,000 owed to them from a promised water infrastructure grant.

The legislation in front of council, sponsored by Brown, would pay the entire $440,000 out of the city’s business development fund and not the water fund.

Youngstown Campus Associates LLC of Pepper Pike, which developed the $16 million project, entered into an agreement with the city on Sept. 14, 2017, for a one-year $4 million loan, a 100%, 15-year tax abatement and a $500,000 grant from the water fund to help defray the cost of water infrastructure expenses.

Youngstown Campus received $60,000 from the city in water funds on Feb. 26, 2016, and then turned over rights to The Enclave to two companies — Butterfli Holdings 001 LLC and Butterfli Holdings 002 LLC, both with the same Pepper Pike address as Youngstown Campus.

The Enclave consists of 64 units with 104 beds for YSU students at 310 Wick Ave.

The city contested paying the $440,000 because the state auditor in reports of the city’s finances in 2017 and 2018 determined Youngstown improperly used about $5.7 million from its water, wastewater and environmental sanitation funds for general fund purposes, primarily funding for economic development projects.

After receiving a large amount of federal COVID-19 relief dollars, the city repaid the money owed to the three funds from its general fund in 2021 and stopped the practice of using money from those funds for economic development.

In a March 13 filing in Mahoning County Common Pleas Court, Douglas Ross, the attorney for The Enclave companies, wrote: “Such a legal defense, whether couched in terms of illegality, contrary to public policy or impossibility is nothing but a ‘red herring’ and fails, no matter how presented.”

Brown said: “A previous administration (under former Mayor John McNally IV) and council made a decision to pay them a grant and where the money came from wasn’t allowed. But we made a commitment so we’ll pay it.”

The settlement agreement reads: “Rather than incurring further time and expense in pursuing and defending the claim in the lawsuit and to avoid the uncertainty of the outcomes, the parties desire to settle, resolve and compromise the claims with no admissions of wrongdoing or liability on the part of any party.”

The city will pay the money no later than April 30 under the agreement. Each party is paying their own attorney fees.

TWO BRIDGES SETTLEMENT

The Vindicator reported April 5 that city council would vote Wednesday on a settlement agreement with Two Bridges LLC, owner of the former Anthony’s on the River building that was demolished in a controversial decision on Aug. 22, 2020. But the details of the settlement weren’t provided until Thursday.

Two Bridges was seeking $212,000 in damages along with attorney fees and court costs in a federal lawsuit filed Nov. 13, 2020.

The settlement agreement has the city paying $80,000 as well as court costs — which are currently zero — as well as removing a $48,000 demolition assessment and $10,675 in interest on that assessment which are on Two Bridge’s property tax bill.

Also, because the tax bill shows there’s a structure on the property, despite the demolition, the delinquent tax amount is currently $89,901.

The city agreed to have that tax bill corrected and pay any remaining delinquent tax balance on the property, estimated at $10,000, according to the legislation sponsored by Brown.

Before the demolition, Two Bridges owed $5,402 in delinquent property taxes for the property at 14 Oak Hill Ave.

U.S. Specialty Insurance Co., the city’s insurance company at the time of the demolition, agreed to pay $25,000 towards Youngstown’s settlement amount. That reduced the city’s liability in the case to about $65,000. The city’s portion will come out of the environmental sanitation fund.

Each side will pay their own attorney fees.

“Here’s another delinquent taxpayer and we’ve got to pay them,” Brown said.

Charles Dunlap, Two Bridges’ attorney, had filed motions in federal court to seek the settlement payment, which he said was supposed to be paid no later than Jan. 31.

The two sides will be in front of U.S. District Court Magistrate Carmen E. Henderson on Thursday, a day after council’s vote.

The demolition was done without first informing city council, which was going to vote four days later on paying for an emergency demolition.

The issue bothered council members who refused to pay the $48,000 demolition cost until June 2, 2021.

Two Bridges contended in the lawsuit that the city’s emergency demolition ordinance, which allows buildings to be taken down, violates the Ohio Constitution and Youngstown deprived it of its property without due process in violation of the U.S. Constitution’s 14th Amendment.

While the state constitution claim was dismissed, U.S. District Court Judge Benita Y. Pearson denied a motion from the city that it had “statutory immunity” from the U.S. Constitution’s 14th Amendment on May 10, 2022. The U.S. Court of Appeals for the 6th District rejected the city’s appeal on June 15, 2023, sending the case back to Pearson.

A tentative settlement was reached Dec. 11.

The city argued fire Chief Barry Finley, who issued the emergency demolition order, has that authority while Two Bridges contended the matter wasn’t an emergency and the city should have held hearings to give property owners the right to appeal.

Brown said Thursday: “If someone got hurt, people would have said, ‘Why didn’t the city not get it demolished?’ Why do we have to justify safety when we stop in and say, ‘The building is unsafe?’ Why did the owners take so long and why didn’t you pay the taxes and take care of the building? The safety of citizens is important.”

The structure demolished by the city was built in 1910 and opened as Anthony’s on the River in 1997, closing about a decade later and stayed vacant. Two Bridges bought it for $100,000 on Feb. 20, 2019, contending it planned to use it for a restaurant, offices and housing.

In its lawsuit, Two Bridges said it had repaired the roof, removed debris from the building and moved an antique bar in before it was demolished.

By the time of the emergency demolition, several municipal code violations and related complaints were filed against Two Bridges, according to the appeals court decision. The city mailed multiple notices to Two Bridges in 2019 advising the building was in unacceptable condition, but sent them to the vacant building and no one from Two Bridges received any notices.

Finley and Michael Durkin, the city’s code enforcement and blight remediation superintendent, inspected the building on June 12, 2020, to determine if it posed a fire hazard.

They observed the roof had apparently sunk about 6 to 12 inches on all sides. Finley concluded on June 12, 2020, it was a fire hazard and danger to human life. It was demolished a little over two months later.