Duke Energy had given notice Tuesday that it planned to shut off the utilities at 8:30 a.m. Wednesday because the building's owners hadn't been paying the bill.
Tom Steele, vice president and CFO for financial firm Bartlett & Co., which has offices in the building, said the law firm Strauss & Troy is representing the tenants, and working with Duke on a more permanent solution.
"The intent is to contract directly with Duke to keep the utilities going so each tenant would pay their share directly to Duke," Steele said in a phone interview. "We pay and have paid the owner. They are supposed to funnel it to Duke. Our intent is to skip that step, pay direct and pay less rent. We are more than hopeful that is going to be successful."
The building's owner and manager, Chicago-based Sterling Phoenix Development and Carnegie Realty Partners have run into financial problems and, tenants said, have been neglecting the building.
Carnegie Realty Partners filed for Chapter 11 bankruptcy in U.S. Bankruptcy Court in Chicago on Nov. 16 with assets less than $10,000 and liabilities topping $1 million. Duke Energy Corp. was listed as a creditor in the petition.
In May, the Chicago Tribune reported that Sterling Phoenix CEO John Thomas had served as a federal mole for at least a year, tracking fraud in the financing of large commercial real estate deals. He had been convicted of federal business fraud in New York in 2004.
Sterling Phoenix purchased the Bartlett Building for $8.2 million in March 2006 from two partnerships, the 36 East Fourth Street Investors and the Fourth Street Limited Partners. At the time, the new owners planned a $4 million renovation, including an upscale restaurant in the building's grand ballroom.
In September, the firm notified the 18-story building's 30 tenants that it was in talks with a global hotel operator for a possible conversion of the building. Since then, those tenants have searched for new homes.
American Airlines, which operates a reservation center with more than 400 employees, is the largest tenant. The airline said in October that it planned to close the center by September 2008.
Local real estate brokers say the tenants have dealt with poor management of the building since the 2006 sale. Many restrooms are out of service and the building's HVAC system does not operate at appropriate levels.
"It's an unfortunate situation for everybody involved," said Peter Snow, a Colliers Turley Martin Tucker broker working with several of the tenants in their search for new office space.
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source: bizjournals.com
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