Dec. 04–After two previous foreclosure sales fell through, a Minneapolis lending firm cast the only and winning $1.45 million bid Tuesday in the third auction this year of a downtown Eau Claire hotel and convention center.
Dougherty Funding of Minneapolis — the firm that loaned Singh Brothers Hotel Management $1.75 million in 2004 to buy the Ramada Convention Center, 205 S. Barstow St. — will be able to sell or operate the hotel following payment of its winning bid.
“It gives them the flexibility to do something themselves or work with somebody direct,” said Mike Schatz, executive director of Downtown Eau Claire Inc.
Eau Claire attorney John Leary, who represents Dougherty, declined comment Tuesday about his client’s plans for the downtown Eau Claire hotel and convention center.
Eau Claire County Judge Jon Theisen is scheduled to confirm the sheriff’s sale Dec. 19, according to Wisconsin’s online courts database.
Even if it hadn’t won the auction, Dougherty would’ve been given the option to buy the property if winning bidders or runners-up would fail to pay for the hotel by court deadlines, according to terms of the sale.
Eau Claire Area Chamber of Commerce President Bob McCoy suspects the firm will try to sell the property, but he hopes it would get at least minimal maintenance while on the market.
“Any empty building will start to deteriorate — especially going into winter,” he said.
Running minimal utilities would prevent pipes from rupturing and other problems that can hit an unoccupied building during cold months, he added.
Schatz said he wants the hotel to be renovated so it can again bring overnight visitors to downtown Eau Claire.
“We’d like to see that part of the downtown economy get going again,” Schatz said.
But he added that restarting the business will be tougher after it went dark last month.
“It’s more difficult after a building closes,” he said.
Losing money
S&L Hospitality of Verona ran the business through a receivership agreement since May, but the money-losing hotel and convention center ultimately closed on Nov. 24.
The October receiver’s report written by Mark Quinn of S&L Hospitality showed that the business continued operating at a loss.
For that month it ran $13,940 in the red when its budget had projected a $10,574 profit.
Only 22 percent of the rooms were occupied for the month, below expectations of 36 percent.
And to reduce expenses due to lower demand, the hotel had cut hours for cooks, banquet staff and housekeeping, as well as continue a hiring freeze.
The building needs to be rehabilitated, earn a new hotel franchise and bring lodging and convention business back to downtown, McCoy said.
“Somebody’s going to have to create that atmosphere,” he said.
Everybody wants a hotel downtown, McCoy said, but the current one needs an investor with a formula to make the business work.
“Maybe somebody here was hoping to get it below $1.4 million,” McCoy said.
Though Leary cast the lone bid, there were about 35 people including local business leaders at the 11 a.m. auction in the Eau Claire County Courthouse lobby.
The auction’s audience included executives from MyNextHome and Commonweal Development, but they did not bid.
Proceeds from sheriff’s auctions help lenders recover debt owed to them in foreclosure cases.
Debt dispute continues
Eau Claire attorney Michael Happe filed an appeal Nov. 25 with Wisconsin’s District 3 Court of Appeals to prevent Tuesday’s foreclosure auction and to dispute his clients, Amarjit, Surinder and Kanwal Singh, debt to Dougherty.
But a three-judge panel denied the appeal Monday, allowing the sheriff’s sale to continue and leaving it to the local courts to continue handling disputes over the debt.
Leary wrote that the Singhs still owed his clients, Dougherty Funding, $1.79 million as of Tuesday in the foreclosure case.
But Happe contends that Dougherty did not credit Singh Brothers for the deposits forfeited from the first two unsuccessful sheriff’s sales.
In addition to a dispute over attorneys’ fees in the case, Happe stated that the Singhs now owe the lender $1.4 million.
During the previous two auctions in July and September, the winning bidders lost their deposits after failing to pay their full bid price. The Singhs lost a $147,000 deposit from the first auction, and Minneapolis investor Wayne Miller forfeited $175,000 from the second auction.
Those payments go toward debt the Singhs owe to Dougherty from a foreclosure judgment entered a year ago by Theisen.
Singh Brothers Hotel Management retained ownership of the property, but the court appointed S&L to run it during foreclosure proceedings.
Dowd can be reached at 715-833-9204, 800-236-7077 or andrew.dowd@ecpc.com.
