If only the walls of the Ambassador Apartments in Dundee could talk.
They could tell of the Spanish Revival building's former grandeur and of the wealthy Omahans who once lived there.
Or maybe they could help sort out the ugly battles that have ensued among the owners and construction contractors who have spent nearly five years and about $4 million to revitalize the building.
The apartments have gone from a rundown remnant of the 1920s to an updated complex with historical character that won it a Redevelopment of the Year Award from an industry group.
But behind the original Spanish tile, parquet floors and plaster walls, financial and legal battles continue to plague the project.
Since the renovation began in 2008, there's been a bankruptcy, a foreclosure auction, six construction liens, a delinquent tax payment and multiple lawsuits.
“We all got into this thing, and it's just been like the Tom Hanks classic ‘The Money Pit,'” said Randy Wheeler, an Omaha landscape designer who co-owns the building.
In the movie, a naive couple buy a fixer-upper that falls apart almost as soon as they get the keys, and construction lasts far longer than planned.
But, of course, the movie ends happily.
The same can't be said yet for the years-long saga at 111 S. 49th Ave.
The Ambassador's former and current owners are fighting each other. So are the current owners and project subcontractors. Additionally, a few subcontractors and former owners have been to City Hall to argue the project shouldn't get tax incentives.
The combatants agree the end result is a good project for the city, Dundee and, ultimately, the building's residents.
But the consensus ends there. In an illustration of how contentious the renovation has become, there isn't even agreement about who owns the building or how many apartments it has.
Subcontractors and former owners say two apartments that didn't exist when the Ambassador was built in 1928 have been added. If they were, the 30,000-square-foot building would need fire sprinklers throughout.
Jay Davis, who oversees building inspections for the City of Omaha, said his office has reviewed floor plans dating back to 1928. He said it didn't appear apartments had been added, but the plans are unclear on one unit. He and a fire marshal will inspect that unit next week.
The owners are advertising 20 apartments.
Two families are living at the Ambassador. However, Davis said Friday that the property had failed a final city inspection because of problems with a garden-level egress window, which he said was a “major code violation.”
Wheeler said he knew there were problems with the window, but he wasn't aware that residents shouldn't be in the building. He said the window was being taken care of Friday. “I think we're fine,” Wheeler said, “but we'll do whatever (inspectors) need us to do.”
As for ownership, James Merrick, a former Ambassador investor, has sued for a partial claim to the property because he said it was transferred fraudulently at a foreclosure auction. Current owners are Wheeler; Neil Willer, an apartment manager; Carol Jones, a real estate agent; and Bob Sadler, an electrician.
Public records and interviews reveal how things got to this point:
In September 2007, a group of real estate developers and investors bought the Ambassador Apartments for $1.9 million, with the help of a $955,000 loan from Dundee Bank.
The group intended to renovate the units and sell them as condominiums by the spring of 2009, said Jason Plog, one of the original developers.
But disagreements erupted over leadership and payments. “It was a very fractured partnership,” Plog said.
About a year and a half after buying the apartments, the group had to borrow roughly $600,000 more, Plog said, which included refinancing the mortgage.
The injection of cash didn't save the project. By December 2009, the apartments were in foreclosure, Plog said. The owners, operating as OSC Ambassador LLC, filed for Chapter 7 bankruptcy in March 2010.
At a foreclosure auction in June 2010, four of the original investors bought the building for slightly more than $1 million to continue the renovations.
Since then, the owners — former and current — have been entangled in lawsuits.
Seven of the original owners, including the four who now own the Ambassador, sued Plog and three others to win back their initial investments. Plog countersued. The litigation is ongoing.
In January of this year, Merrick filed his suit against the current owners, saying they intentionally let the mortgage default for their financial benefit. That's also ongoing.
At the end of May, the general contractor, Rosacker & Associates of Omaha, sued for more than $355,000 worth of unpaid labor and supplies.
After a construction lien filed in March for the same amount wasn't taken care of, the company sued, said President David Rosacker.
Five subcontractors also have filed liens against Ambassador Apartments LLC and OSC Ambassador LLC since 2008, county records show. The value of three of those liens — which were filed in March and are pending — is included in Rosacker's suit.
“In December the owners told us they were kind of hitting some financial issues and to just keep working,” said Mike Corrado, the former on-site project manager. “That lasted until March, and finally we said, ‘We're drawing a line in the sand. We're not working for free.' ”
Corrado said he hasn't been paid since November.
According to Corrado's lien filing, he is owed about $31,500 for his workers' labor. He said he plans to file another lien for $9,000 to cover his own labor.
Wheeler, the current co-owner, attributed the payment delay to a dispute over invoices and “services rendered.”
“We have compensated contractors up to a point where we felt we were being taken advantage of,” Wheeler said.
For now, the public dueling continues. The Omaha City Council on Tuesday is scheduled to vote on the current owners' application to use more than $500,000 in tax-increment financing to help fund the project.
Some of the original owners are fighting to get the application rejected, saying Ambassador Apartments LLC has violations of its contract with the city.
Among them: TIF agreements require developers to pay real estate taxes on time. A check of Douglas County property tax records Wednesday showed the owners hadn’t paid $12,286 in taxes that were due March 31 and $353 in interest.
“That was an oversight on our part,” said Wheeler, who wasn't aware of the overdue payment until a World-Herald reporter asked him about it. “We really goofed.”
By Thursday, the taxes had been paid.
City Attorney Paul Kratz said the loan “is not going to fall apart” because of a delinquent payment. He told subcontractors and owners who testified at a public hearing this week that their concerns are civil matters with no bearing on the TIF proposal.
Meanwhile, the current owners are marketing the apartments — one- and two-bedroom units plus a three-bedroom, two-story penthouse. The apartments have granite countertops and stainless steel appliances; a washer and dryer in each unit; barrel ceilings with crown moldings; new heating and cooling systems; and updated plumbing and electrical.
In the end, Wheeler said he just wants the conflict to be over and to wipe his hands of what he considers to be a bad business deal. Subcontractors said they want to do the same.
“We got sucked into this, and it's just been one thing after another,” Wheeler said. “But the building itself and the Dundee area are wonderful, and in the end I think it will work itself out.”
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