Demolition Man: Todd Blue fights City Hall over developing historic Main Street whiskey warehouses [News]

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This article appeared in the October 2010 issue of Louisville Magazine. To subscribe, please visit loumag.com.

His voice is raised now, just on the threshold of yelling, and his hands, tightened into white-knuckled fists, hammer the desk with such intensity that the recorder before him wobbles. He is discussing the seven buildings he owns and has not been able to level downtown on Main Street, mostly former whiskey warehouses and distilleries that are at the heart of a controversy one local preservationist calls “the biggest preservation fight Louisville has seen.” As he talks about the situation — which has put him at odds with Mayor Jerry Abramson, preservationists and others — Todd Blue, the developer and owner of the properties, digs his fingertips into his reddened forehead, trying to quell an unscratchable itch that has burrowed deep into his skull.

His stance is that what he owns is dangerous and must come down “immediately.” Says Abramson: “The city respectfully disagrees.” Five months ago, Blue filed an emergency demolition request that has not been granted. His move prompted the local preservation community, led by the nonprofit Preservation Louisville and its executive director, Marianne Zickuhr, to initiate a process that, last June, ultimately determined the structures to be historic landmarks, which can make it more difficult to knock them down. “He’s trying to destroy our heritage,” Zickuhr says. “He may own those buildings, but he doesn’t own our history.”

Blue, meanwhile, has sued the city, hoping to bypass the landmarks process and, he says, “compel the city to take action”: either let him raze the old warehouses or give him a reason why they’re safe. (Blue will go through the Landmarks Commission’s more rigorous demolition process — and could have to deal with the Waterfront Development Corp., too — if he has no other option.) The first hearing, in federal court, is set for this month. “Look at the BP oil spill and those executives that were so supposedly reckless,” Blue says from his third-floor office on the corner of Jackson and Market streets, where he runs his company, Cobalt Ventures. “Here I am, a CEO, coming forward saying, ‘We have a safety problem, government. I need help.’ And the government is ignoring it.”

Recently, a weekday in late August, the 41-year-old returned to Louisville from Houston, where he owns a Porsche dealership. That explains the luxury German car manufacturer’s logo on the sleeve of his sweater-jacket, which is the same color as his slicked-back black hair. The strong scent of the cologne he wears is pervasive, an invisible cloud suspended in the air. Mounted press clippings of his various developments paper the hallway outside the spacious room. One of the articles, from three years ago, mentions the Iron Quarter, the skyscraper Blue hoped to erect on his Main Street land for a planned Humana expansion that never happened. The original goal was to complete construction before the new KFC Yum! Center opened down the street, a project he has advised from the beginning. Blue’s buildings still sit. Most recently, his proposal for the site includes two hotels, with a completion goal of 2013.

In the office’s lobby hangs an enlarged, sepia-toned picture, taken during the 1937 flood, of the Preston Street location that used to be Louisville Scrap Material Co., the multi-million-dollar company Blue’s family — led by his father, David Blue — owned and ran for generations. Almost two decades ago, the city locked horns with the elder Blue, asking him to move Louisville Scrap to make way for Waterfront Park. A lawsuit dragged on for seven years, and the Blues ultimately sold the property to the city. Slugger Field now stands on that land. “My dad taught me to be undeterred. A lot of people in this city have collateral heartburn from the years of fighting with my dad,” Todd Blue says. “And the same with Jerry. He’d be lying if he told you anything else. You can print that. It’s a freaking conspiracy.”

“The city is damaging me,” Blue adds. “They are precluding me from developing my project. I’m not a member of the Tea Party, but it’s un-American. It’s government putting its hands in a situation where it needs to stay out.”

*****

Three years ago, Blue bought for more than $4 million the contiguous Main Street properties, some of which date to the late 1800s and have been vacant for decades. Preservation Louisville has listed them as one of the city’s 10 most-endangered historic places. Their cast-iron facades — Louisville has the nation’s second-most, behind New York’s SoHo neighborhood — are one reason preservationists love them. Including a site where a building collapsed before he was involved, Blue owns the majority of the block, which is bound, respectively, by Washington and Main streets to the north and south and First and Second streets on the east and west.

Plywood hides the rectangles that used to be windows; a barbed-wire-topped cyclone fence stretches around Blue’s long and narrow structures. Secured to the bricks are yellow signs stating his intent, in capital letters, to tear them down. Meanwhile, on the same block, known as Whiskey Row, the pub Patrick O’Shea’s has opened and local developer Bill Weyland is making progress on his loft project, both small-scale restorations compared with Blue’s vision for the area and, really, Louisville in general. “I’ll say this: I have experienced pro-business communities, and I’m telling you it’s a different feeling here,” Blue says. When asked to name some “pro-business” cities, he mentions Washington, D.C., where he went to George Washington University, and Chicago, where he worked as a metals trader for three years before returning to Louisville to get into the family business, which the Blues eventually sold.

In March 2007, Blue, the mayor and then-Gov. Ernie Fletcher held a press conference, publicly announcing Blue’s plans for a $50 million project named the Iron Quarter, 12 stories that would include offices, 500 parking spots and, in Blue’s words, “shopping, shopping, shopping.” He said then that saving the facades was part of the plan, a cost the city would help cover. (Preserving the facades is still important, Blue says, though that could mean taking them down and reconstructing them with the original bricks and iron.) Abramson called Blue a “visionary” and says he still has a promotional beret with an Iron Quarter seal from that day.

In a depressed economy, Humana eventually backed out as Blue’s “anchor tenant.” Fast-forward to earlier this year. The city closed the sidewalks and banned street parking in front of Blue’s Main Street holdings, which decay further with each passing season. (Blue says they’re in no worse condition than when he bought them.) A study by the Downtown Development Corp. (Blue is on its board of directors) determined it could cost up to $1.5 million to stabilize everything. Blue and Abramson got together several times, and among the discussions they had, Abramson says, was finding somebody to take some, or all, of the properties off Blue’s hands. “My goal was to create a balance that would preserve the block’s historic nature but also promote economic development downtown,” Abramson says.

Blue says he is not opposed to selling but has never received a formal offer, though he acknowledges Weyland and developer Gill Holland have expressed interest. “The problem is that Todd thinks they’re worth three times what he paid. That’s just not true, in my opinion,” Weyland says.

During one of the meetings with Blue, Abramson recalls saying, “The one thing you shouldn’t do is make a request of the city to demolish the entire block.” Less than a week later, in early May, that is what Blue did. “I can’t tell you how surprised I was,” Abramson says. He left a message for Blue telling him as much. “Never returned my call,” Abramson says.

By that point, Blue says, he was frustrated and believed the buildings should come down, in part, because he feared for the “22,000 people” who would pass by on the way to the new arena. “I think Jerry has let me down. If I didn’t have a development track record, I could understand if he had some hesitancy to helping me. But I have taken a chance on downtown,” Blue says. “Louisville needs new leadership — whether it’s Hal (Heiner) or Greg (Fischer). Whoever wins the mayor’s race, at least Louisville will hopefully have a pro-business and pro-development focus.”

Says Abramson: “Every time he has called on me, this city government has been willing to help him. How he chooses to resolve this situation will set the legacy for Todd Blue for years and years to come.”

*****

Blue’s demolition request united Louisville preservationists. “When there’s an imminent threat, people take action,” says Joanne Weeter, a preservation consultant who wrote the book Louisville Landmarks and used to be the city’s historic preservation officer. “There’s a long and rich history with distilling and certainly the bourbon industry has been key in Louisville and Kentucky. Those buildings have played an important part in that history.”

Says Blue: “There’s nothing historically significant about anything on those buildings other than the facades on Main Street. Not inside, not outside, not Washington Street — none of that. If the preservationists are interested, then they can buy them. If not, let me do my project.”

Although Preservation Louisville’s Zickuhr has a board of directors and volunteers, she is the nonprofit’s only full-time employee. “Saving the facades and putting a big glass cube behind them is not preservation,” she says. “That’s demolishing a lot of building inventory that is worth saving.” Zickuhr is headquartered in the Brennan House, a historic, three-story Italianate townhouse on South Fifth Street. She says her interest in preservation began as a child because her Lutheran pastor father worked in old churches. She notes that the city’s Board of Alderman, in the early 1970s, enacted Louisville’s first historic-preservation ordinance and adds that, among the states, Kentucky has the fourth-most listings on the National Register of Historic Places. “Sometimes, coming up with a preservation-friendly resolution takes a little bit more creativity and thought,” she says. “Economic development and preservation run parallel.”

To begin the landmarks process this past May, Zickuhr responded to Blue’s demolition request by posting petitions on her organization’s website. Each of the seven petitions, one for each building, got more than 1,000 signatures, more than the necessary 200. At the June hearing that determined the landmarks status, an interviewer asked Zickuhr if she would have a cup of coffee with Blue. “I said, ‘I’ll one-up you. I’ve already sat down with him, and we had Panera box lunches,’” she says. For that meeting with Blue at Cobalt’s office, Zickuhr brought together the state’s historic preservation officer, two preservation attorneys and others to explore topics such as historic-preservation tax credits. “Mr. Blue basically wasn’t willing to work with us,” Zickuhr says.

Weyland, who’s doing the block’s loft project, says Blue shouldn’t let his buildings “deteriorate beyond repair” and should instead stabilize them because, from a development standpoint, that would give him the most options moving forward. “When you buy historic buildings, you have a little more responsibility. My concern is that he is going to demolish these buildings without a financed plan for what will replace them. It’s hard to lose that stuff when there’s no guarantee we’ll get something back besides a pit — a pit that could be there for years and years,” Weyland says. “Todd wants to pursue the big. In this economic climate, I think we’re in an era of more small projects.”

When asked if he would describe himself as stubborn, Blue says, “I sometimes take a position that I think will help the community.” Jim Walters, the local architect and developer who sold Blue the properties, says, “Todd Blue has big ideas, and he wants to do impressive and innovative things that make a statement downtown. He’s a young guy, and I hope all of this doesn’t make him lose interest in downtown Louisville.”

Jim Mims, the city’s director of codes and regulations, says Blue’s properties, as a whole, are not in “imminent risk of collapse,” admitting that some of the buildings on the block’s east side may not be salvageable. Mims says the city is “pursuing compliance” with Cobalt regarding property maintenance, which means getting Blue’s company to do things such as fix roof holes that let rainwater pour in and stabilizing the structures to the point that the city can reopen nearby sidewalks. Asked if he thought Blue’s strategy included fighting in court until the buildings start collapsing, dominoes-style, into one another, Mims said, “It’s called demolition by neglect.”

The middle ground, Weyland says, is to build smaller on the parts that can be stabilized and taller where restoration is not an option. Blue’s preferred stabilization method — which the city lists as a choice — is demolition. “Based on the scientific reports we have, we don’t think saving the buildings is possible,” Blue says. When asked about restoring them one at a time, he says, “It’s not economically of interest to me to do it that way. The economic risk is not commensurate with the economic payoff.”

Says Zickuhr: “The fact of the matter is it can be done. If he personally can’t get it done — if he bit off more than he can chew — then step aside and let somebody else do it.”

*****

Blue and his older brother Jonathan founded Cobalt Ventures in the late 1990s (Jonathan now has a company focused on sports and entertainment), and soon after, the local architecture firm Bravura outbid Cobalt to construct the high-rise Waterfront Park Place. “My business model was that I wanted to make downtown Louisville cool. I had no experience in real estate, no spreadsheet,” Blue says. “I wanted to physically see change, to create something and actually see it and say, ‘Wow, we did that.’” Blue’s earliest business influences, besides dinnertime conversations with his father, were biographies about Donald Trump and Lee Iacocca. “He learned some of his business acumen from me,” his father says, “but he has always had an entrepreneurial spirit.”

Blue calls himself a preservationist, mentioning how he’s in the business of buying and selling vintage cars and citing projects such as downtown’s Mercantile Gallery Lofts — which he worked on with Bravura’s president, Walters — and his headquarters on Jackson and Market streets, a building from the 1880s that once housed Schiller Hardware. Says Blue: “Where’s the preservationists’ money or investment? Where’s their risk? None. Zero. The loudest voices have never invested a dollar. By definition, I am a preservationist — it is fact. They’re obstructionists that prevent a community from moving forward.”

Zickuhr says the description hysterical, instead of historic, preservationist is partly accurate because she’d “stand between a wrecking ball and Todd Blue’s buildings.” She sees this situation ending one of two ways. Her preference: Somebody buys Blue out. Option two: “This court case that Todd has brought against the city, and his lack of maintenance, will continue to let those buildings deteriorate until they’re lost,” she says.

The only reason Blue bought the properties was the proximity to the arena, which he describes as the city’s “aorta artery” that should circulate lifeblood into his project. “It would if the city leaders would quit eating cheeseburgers and clogging up the arteries,” he says. “Eat healthy, and let it flow.” Asked if he wants too much for the properties considering their derelict state — one source says that price is $15 million — or if he paid too much for them to begin with, Blue says, “Actually, I think I stole them. The value has skyrocketed since the arena has been built. There’s no more valuable property in the state of Kentucky.”

He says the distance between Slugger Field and the Yum! Center is the size of your average shopping mall, so we should think of Slugger Field as a Macy’s, the arena as Nordstrom. Cobalt has even created a concept called Stadium2Stadium, with eateries and stores sprouting up between the two destinations. The intimate Washington Street, which backs up to his warehouses and is his “favorite part of the city,” would be the link connecting the two. A live-work-play development, called Sky Garden, would rise from the parking lot he owns next to Slugger Field, which would create more restaurants and shopping, which would inspire even more construction.

“Through this process — even though it’s very unnecessary and it’s a shame — I’m trying to change this community to become pro-development and pro-business,” Blue says. “Maybe this will change our city for the better, and everybody else could be the beneficiary. I’d be willing to be the guinea pig to make that happen.”

Photo: John Nation

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