Off and on over the last two years, the two men have huddled over laptops and paperwork in a dark corner of a bar on East Madison Street...

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Off and on over the last two years, the two men have huddled over laptops and paperwork in a dark corner of a bar on East Madison Street.

One represents the emerging face of the area around them, this nexus of Capitol Hill and the Central Area.

The other symbolizes what increasingly is becoming its past.

More than two decades after he began assembling buildings in the 2000 block of East Madison for which he eventually paid less than $1 million, Central Area real-estate investor Dean Falls has sold them all to developer Jim Mueller and a group of private investors for $7.5 million.

Mueller will follow through on Falls’ plans to transform what had been a blighted, drug-plagued block — home to the notorious and now-shuttered Deano’s Grocery and Club Chocolate City — into a high-end apartment and retail complex that for now he’s calling 2026 Madison.

The former development director for Vulcan, Mueller is still reviewing the final project design and did not provide a cost, although Falls had estimated that the six-story, 200-unit complex, to be built around a courtyard, would cost between $30 million and $50 million.

This is a key neighborhood block and one of the last yet to be redeveloped on that stretch of Madison — Seattle’s only Sound-to-lake corridor. Its renewal would finally bring to this locale the kind of gentrification that has been taking place east and west of it and throughout much of the Central Area.

And despite grumblings about traffic and parking problems, and the somewhat exclusive feel of the development, there’s anticipation by those who have lived and worked here for years and remember the troubles on the block.

“That block is the anchor of this area and has been the holdup all these years,” said Chester Dorsey, who has operated his auto-detailing business less than a block away for 28 years.

“People were afraid of the area because of that block. They would drive past and look straight ahead. You didn’t see women walking babies down that street. Now you do.”

Demolition of its boarded-up properties should be completed this month, with construction to take place over the next two or three years.

Mueller, 56, who lives in nearby Madison Park, has also purchased a second parcel — across the street at 2051 E. Madison St., site of a restaurant and bar, The Twilight Exit — where he plans another 90-unit apartment and retail complex.

His new properties are located at the only point where the otherwise arrow-straight Madison bends, and Mueller said creative retailers might find a way to market that uniqueness.

“We have an opportunity to have both sides of the street change at the same time so it becomes the focus of pedestrian activity,” Mueller said.

In addition to those East Madison purchases, Mueller also bought a vacant lot at the corner at East Union Street and 23rd Avenue, where he plans another apartment building with retail space.

“Many of the commercial intersections in this area are tired and in need of investment, and that is what I’m interested in doing,” Mueller said.

Lively scene in ’20s

The East Madison block and the neighborhood around it have a storied and colorful past. Historians describe lively bars and nightclubs that existed here throughout much of the 1920s.

In more recent years, however, the block became notorious for drug activity and prostitution, remaining stubbornly troubled even as new apartments and condominiums sprang up nearby.

Falls first came to the East Madison intersection 40 years ago, when he opened his first real-estate office in the building that now houses The Twilight Exit.

He declined to speak publicly about the sale of his properties, which he began assembling in 1984, at a time when he said redlining by banks had created a wasteland out of the block.

In 1999, he began plans to redevelop the site, fighting one battle after another to get his development proposal fully permitted, a status he obtained for that site and transferred to Mueller. He said he sold the property rather than develop it himself in part because the current economic outlook concerns him.

“I’m pleased to see that the plans finally come to fruition,” he said.

Some in the neighborhood blamed Falls for many of the corner’s troubles, first as the bars’ owner and later as their landlord — troubles he said historically have come with the liquor licenses of the businesses there and existed even before he started buying the properties.

When Deano’s Grocery and Club Chocolate City finally closed last year, the brisk corner drug trade disappeared almost overnight.

Welcome change

City Councilman Tom Rasmussen said he’s walked the block with neighbors and credits many of them for helping to bring about its transformation.

“I think it will encourage more to want to live and do business in the neighborhood,” Rasmussen said.

Some who recall the corner’s more troubled days are now eager to see what Mueller’s project will bring.

Longtime resident Andrew Taylor, who heads up the Miller Park Neighborhood Association, is encouraged by the plans.

“I like that it is not an amorphous apartment building with people you never see, but will have front porches along the Denny Way side, giving people eyes on the street,” he said.

“That and the fact that it will have a courtyard will help to make it a more friendly and positive part of the neighborhood.”

Deacon John Capps of Mount Zion Baptist Church said development at the site can only increase nearby property values, including several parcels held by the church just a block away.

“It’s good that something is being done finally at that corner,” he said. “I see it as the culmination of what we’ve worked for in this neighborhood.”

Going too far?

DeCharlene Williams, who runs a nearby beauty salon, said while she believes the new construction will help clean up the area, she worries Mueller might be trying to jam in too much.

She said he’s approached her about buying her site as well.

“They’re overdeveloping the neighborhood, putting up buildings that will sit there empty,” she said.

Some in the neighborhood grouse about parking and traffic. And Williams, Capps and Dorsey all say the apartments will likely be out of the reach of many in the neighborhood — as well as some who used to live there and may want to come back.

“People who used to live here can’t afford to live here anymore,” Dorsey said. “They’ve been reassigned to other areas, and I don’t think that’s good.”

Mueller said there’s already plenty of subsidized housing generally in the neighborhood. He’s planning what he calls “work-force housing — well-designed housing that people who work for a living would afford.”

He declined to specify what the units would rent for but said they will likely be market rate, which now has a 1,000-square-foot unit renting for around $2,000.

Like many other cities, he said, Seattle is attracting people back from the suburbs, people of means who want to be close to work and have less need to use their cars.

“That gives folks like us the impetus to look at parking lots and lots of empty buildings to plan new uses for them,” he said.

Reporter Sara Jean Green

contributed to this report.

Lornet Turnbull: 206-464-2420 or lturnbull@seattletimes.com