Work nearing completion on troubled restaurant project

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by Jordan Green

City official: A restaurant renovation project plagued by dysfunction and shoddy workmanship is 75 percent complete and could be ready for operation in 45 days.

It’s been four years since Winston-Salem City Council approved funds to revitalize the Ogburn Station Shopping Center in an aging industrial seam in the city’s northeast quadrant.

Funds for the shopping center were approved as part of a $2.8 million allocation through the city’s Revitalizing Urban Commercial Areas program, financed through economic-incentives money recovered from Dell when the computer maker closed its Winston-Salem plant. The program also targeted tattered shopping centers in the Waughtown area in the southeast, the Cherry/Polo crossroads on the north side and Peters Creek Parkway near the West Salem neighborhood.

It’s been a bumpy road for the Ogburn Station Shopping Center, whose revitalization efforts have centered on the old Bell Brothers Restaurant. In January 2014, almost three years after city council approved a total of $750,200 in low-interest and forgivable loans for the shopping center, staff came back to council requesting additional funds to complete the project amid reports of shoddy workmanship and a legal dispute between a restaurateur and the property owner. Council approved an additional $400,000 on a split 5-3 vote to keep the project alive. The majority included Mayor Pro Tem Vivian Burke, who represents the Northeast Ward where the shopping center is located, Councilwoman Denise D. Adams, Councilman Derwin Montgomery, Councilman James Taylor and Councilman Dan Besse.

Since then, staff has stepped in to provide additional oversight and hired a new contractor, Coe Electric & Plumbing, to complete renovations of the restaurant.

Assistant City Manager Ritchie Brooks said he anticipates that renovation work will be completed within 45 days. After that, the only thing standing in the way of the restaurant opening would be for the building to pass city inspections and the installation of equipment such as refrigerators and furnishings by the restaurateur, Brooks said. Bernetta Oakes, who plans to open Malone’s Family Restaurant in the renovated building, could not be reached for comment. Oakes also operates the Bunny Stop Preschool in Winston-Salem.

“Construction is moving along good,” Brooks said. “I checked with our construction manager, and he said it’s 75 percent complete. There have been a couple change orders, but otherwise it’s moving good. The heating and air conditioning has been installed. The floors and walls have been painted.”

The change orders are for minor issues such as an air-conditioning vent that needed to be relocated, Brooks said, adding that the figure was not significant enough to require staff to go back to council for approval.

“I don’t think there have been any types of problems or issues out of the ordinary that would have caused the project to be substantially delayed,” Brooks said. “There were some time delays. There was some confusion about the plans that were being used. I think one of the engineers had reviewed the plan. To my memory we haven’t had any large obstacles that have come into play, just normal construction kinds of things.”

The city has paid Coe Electric & Plumbing $156,463 for renovations to Malone’s Family Restaurant, according to information provided to Triad City Beat by Ken Millett, the city’s business-development senior project supervisor. Out of the $750,200 initially allocated for the Ogburn Station Shopping Center, $120,000 was earmarked for Malone’s Family Restaurant. Millett said the original estimate of construction for Malone’s, part of which will be covered by the additional funds approved by city council in January 2014, was $230,077. He added that the total cost of the project, “including change orders and contingencies,” will be higher.

The $400,000 approved by city council in January 2014 should cover the additional costs, Millett said, and any unspent funds will be available for use in other parts of the shopping center.

The 2011 allocation also included $400,000 earmarked directly to the Ogburn Station Shopping Center, which is owned by Daniel Kim. Millett said $252,550 remains available from those funds. A January 2014 report by staff indicated that the money had been spent on façade renovations, painting and roof repairs. Brooks said Kim only recently authorized the city to move forward with general improvements to the shopping center, whose parking lot is showing signs of distress. Brooks added that the money could be spent for resurfacing the parking lot, striping and signage enhancements.

“He was having some personal issues,” Brooks said, “but it’s my understanding that he’s working it out.”

Kim could not be reached for this story.

The city filed suit against Kim for nuisance abatement related to an alleged code violation at Ogburn Station Shopping Center on May 4. Based on visits on March 25 and April 30, city inspector Shawn Helm reported in an affidavit that he observed “old furniture, junk and rubbish on the side and back yard of the subject property which would attract rats and other vermin.” The lawsuit cited Kim for violating the city code regulating “creation of rat harborage.”

Brooks said last week that he was unaware of the city’s lawsuit against Kim, adding that he didn’t see any reason why it should impede progress on the renovations of Malone’s Family Restaurant. If anything, he said, the city would charge Kim for the cost of hauling away the garbage and assess any associated penalties.

Malone’s Family Restaurant is not unique as a recipient of a loan with favorable interest and repayment terms from the city of Winston-Salem. Camino Bakery on a thriving downtown stretch of West Fourth Street and the Porch Kitchen & Cantina in the West End Mill Works are also beneficiaries of the city’s small-business loan program.

But Ogburn Station is a more challenging business environment than the city’s trendy downtown and West End. The shopping center lies five miles from the city center, just north of Smith Reynolds Airport. An area that never attracted suburban residential subdivisions, the rundown apartment buildings of northeast Winston-Salem gradually change over to rural farmhouses with little transition.

The area around the shopping center seems barely changed since 2006, when the city noted a variety of ailments in an official report, including “Dumpsters visible from the road and sidewalks”; “parking lot design/landscaping/weed control”; “abandoned ‘skeleton’ signs (frame only)”; “concentration of unsightly auto-related uses/tire storage” and “areas with trash and litter.” City staff estimated that 37 percent of structures in the area were dilapidated or deteriorated and 17 percent were vacant.

The cycle of divestment in the area appears to have been exacerbated in the past by conflict and lack of coordination between Oakes and Kim.

“Problems started with the roof repair and interior wall work shortly after the work began, i.e. water from the roof began to leak into the restaurant area,” Brooks reported in a December 2013 memo to Mayor Allen Joines and members of city council. “The interior wall that was removed was a load bearing wall that should have either remained in place or been removed by a qualified contractor instead of the on-site employees hired by Mrs. Oakes. Roof repair was the responsibility of Mr. Kim, and the interior wall repair was the responsibility of the tenant, Mrs. Oakes. These problems hindered progress of the interior upfitting in the restaurant area and caused a substantial delay in the work because each party believed the other was responsible for the leaks in the roof.”

Eventually work on the project halted, Brooks reported, when Oakes stopped making rent payments because she believed Kim was reneging on his agreements. The city recommended that Oakes hire a lawyer to represent her interests. Brooks added in the memo that Kim agreed to pay for the installation of heating, ventilation and air conditioning.

“While the above was underway, Mrs. Oakes discovered that some actions taken by her project manager (which she hired), were not in her best interest and said manager was terminated,” Brooks wrote. “It was also discovered that her project manager was working for Mr. Kim. Discussions occurred with Mrs. Oakes regarding the city assisting with obtaining a new project manager to oversee the remaining work. This was suggested because the experienced city staff member that could provide this service was paid from community development block grant funds and was limited in the amount of time he could devote to the project.”

Brooks wrote in a harsh assessment of city staff that “failure to complete the above project can be attributed to lack of proper project management and supervision,” while simultaneously arguing for additional funding.

“Regarding the Malone’s Restaurant project,” he continued, “the following contributed significantly to the problems encountered: (1) the lack of city construction oversight at the beginning of the work; (2) staff’s opinion that the project manager who worked for Mrs. Oakes did not act in her best interest; and (3) the project not being adequately funded.”

  • Guy

    What a mess.

  • On what planet was this money pit a good idea? Almost $1.2 MILLION TAXPAYER DOLLARS for this sure to fail business? And people wonder why some others feel their taxes are too high. Anyone want to bet the city never gets a dime of their money back?

  • jpm006

    Throwing good money after bad, I sense some fraud,