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Development Projects in Des Moines and Ottumwa at Standstill, Investment Company Owes $1.6 Million

OTTUMWA, Iowa -- For nine months, residents in Ottumwa have been staring at a half-demolished, warzone looking building that is still standing across from their homes.

St. Joseph's Hospital is a skeleton of its former self. It closed in 2012 and is only partially demolished. Nearby residents are starting to feel doubtful the eyesore will ever be gone.

“Every morning when I get up, I look out my bedroom window and it's still there,” John Richards, an Ottumwa resident said.

It all started when Blackbird Investments, a Des Moines firm, started a project back in 2017 to build 104 luxury condominiums in place of the Ottumwa hospital. But in August of last year, demolition came to a halt and it hasn't started back up since.

"In the fog it looks like a really bad, cheap Dracula movie. It's a horror story," Richards said.

Richards lives in a nearby neighborhood in Ottumwa. Just feet away from his home is the falling apart, abandoned hospital.

Community members now stare at the remains of a building where loved ones were born, and where loved ones died.

"It's just a complete disregard for the neighborhood, its historic past and the historical significance of the hospital itself." Now it just sits, crumbling day after day for over nine months.

The subcontractor, Elder Corporation, stopped work in August and filed a mechanic's lien against the building's owner, Blackbird Investments subsidiary, 312 East Alsta Vista LLC. Elder also filed a petition through the Wapello County court. The subcontractor says they are owed $1.6 million.

This isn't the only Blackbird project now at a standstill. They also own “Kaleidoscope at the Hub” building in downtown Des Moines. Their website shows plans to replace it with a 33-story residential tower, but today it looks untouched. No construction has been started.

Now, both their demolition permit and development agreement with the city are expired.

"It's concerning that 80 miles to the south of us we have projects that basically look like Beirut," Des Moines City Councilman Joe Gatto said.

Gatto says the city is apprehensive to give Blackbird another development agreement and another permit to demolish, seeing what's happening in Ottumwa.

"Once it's demolished, it could sit there for three years without any skywalk on there, and that really makes me nervous,” Gatto said.

Blackbird’s previous development agreement included about $4.4 million in property tax rebates, but Gatto said that might not be the case if they re-apply.

So for now, Kaleidoscope, just like the Ottumwa hospital, will sit vacant.

"It is frustrating that all the leases have been terminated, everyone is gone, and it's empty,” Gatto said. “It's sitting there and we don't know where it's going to go from there."

Channel 13 confirmed at least one other active lien against Blackbird. That one is from Weitz Corporation also in Des Moines.

The only reason Blackbird owns Kaleidoscope is because back in May of 2018 they formally swapped downtown sites with EMC Insurance Companies who now own the former site of the Younkers department store.

Channel 13 did reach out to Blackbird Investments via phone and did not hear back.

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