South Bend will demolish former Fun F/X building, as owner's lawsuit continues

SOUTH BEND — A former Halloween supply warehouse that was ravaged by a 2019 fire is to be demolished in late May, city officials say.

The former Fun F/X building, at 1000 W. Sample St., has been in ruins southwest of downtown since plumes of smoke erupted from the warehouse in July 2019. Nearly five years later, despite an ongoing lawsuit against the city by the building's owner, South Bend's Board of Public Works on Tuesday authorized its demolition.

The city will pay Green Demolition Contractors $528,800 to do a monthslong cleanup, beginning May 27 and finishing by Sept. 2, according to Caleb Bauer, executive director of the Department of Community Investment. Though the building is privately owned by Victor Cao, the city will demolish it under Indiana's Unsafe Building Law, which gives municipalities the right to demolish vacant buildings that threaten public safety.

"We will be taking action to be reimbursed for the cost of this demolition," Bauer said, saying Cao will be billed directly or forced to pay through tax liens. "Ultimately, the private property owner has not resolved what is an unsafe building."

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But Cao maintains that the city's negligence led to the fire, which torched all of the inventory he'd amassed through the Halloween supply business he founded in 1989.

Cao's lawsuit alleges that a South Bend employee in April 2017 errantly cut and capped the pipe that supplied the building's sprinkler system, thinking the Fun F/X warehouse was abandoned. An inspection later that year revealed the sprinklers had no water pressure. The issue was unresolved by the time of the 2019 fire.

Using a similar line of reasoning, Cao lost a federal court case against his insurance company in February 2023.

A judge ruled that Frankenmuth Mutual Insurance Company owed nothing to Cao because he knew about an issue with the building's sprinkler system and failed to report it to his insurer. Cao said he had requested a $7 million payout, claiming the fire destroyed the building and almost everything inside.

After that ruling went against him, Cao said, he's lacked the money to pay to demolish the old warehouse.

"I would have done it if I had the money to do it," Cao said. "I needed the property. I wanted to rebuild my business. It was the results of (the city's) actions that caused me to lose the business."

Because Cao is delinquent on his property taxes for the building, Bauer said, the city aims to take over the site through St. Joseph County's tax certificate sale — the same process it used to acquire the old Drewrys Brewery location.

The old warehouse is the last building standing among several that made up the former Wilson Brothers shirt factory campus. The Environmental Protection Agency partnered with the city in 2022 to tear down neighboring properties to the west, Bauer said.

Email South Bend Tribune city reporter Jordan Smith at JTsmith@gannett.com. Follow him on X: @jordantsmith09

This article originally appeared on South Bend Tribune: South Bend will demolish former Fun F/X building, burned out eyesore