Saturday, February 26, 2011

Trustee-sale date set for resort

Chandler's historic Crowne Plaza San Marcos Golf Resort is headed for foreclosure March 31, but the real-estate agent hired to market the property said it could sell before then.

Operation of the 98-year-old icon was taken over by a court-appointed receiver in October after San Marcos Capital partners defaulted on a $23.9 million loan from Guaranty Bank and Trust Co.

It has been on the market less than a month, and more than 70 potential buyers have shown an interest, said Sam Winterbottom, senior vice president for Grubb & Ellis in Atlanta. He would not disclose a price.

"The San Marcos resort has a lot of amenities that are hard to replicate with its historic golf course and hotel. It is well-known in the hotel industry," he said.

Opened in 1913, the facility is on the National Register of Historic Places and entertained the likes of Clark Gable, Fred Astaire, Joan Crawford, Christian Dior and President Herbert Hoover. It was Chandler's first large building and featured the state's first grass golf course.

According to documents filed with the Maricopa County Recorder, the foreclosure, a trustee sale, will be in the Ryley Carlock & Applewhite law offices in downtown Phoenix.

Winterbottom said it is rare in today's market for a resort trustee sale to attract bidders willing to pay more than the loan amount. If there are no outside bidders, ownership will be transferred to the lender, and the San Marcos will remain on the market if it hasn't sold, he said.

Frank Heavlin, a member of the defaulting partnership, and his wife, Darlene, were retained by the receiver to continue running the facility. When the financial troubles and receivership became public in October, that hurt business, Darlene Heavlin said. She fears the foreclosure news will deal another blow to operations and prompt event cancellations.

"So many hotels in the Valley have been affected (by the economy). It's a very difficult time for Arizona and the tourism business," she said.

The San Marcos has remained open during recent transitions, retained employees and honored contracts.

"This resort is going to stay open; it's a vital part of downtown. There are 15 restaurants and shops within walking distance. But my employees will be terrified and think they're going to lose their jobs," Darlene said.

City officials have expressed concern about the San Marcos' financial problems coming on the eve of the city and state's centennial celebrations in 2012, shortly after a new City Hall opened within walking distance of the resort and more than $11 million of enhancements to Arizona Avenue through downtown were done.

The resort's financial struggles and the recession also put Chandler's longtime hopes for a convention center on hold. In 2009, after consultants pointed to the area around the San Marcos as one of the best for conventions, the city started negotiations to build a 100,000-square-foot conference center on the property.

Those talks stopped when the owners defaulted, and the city has since delayed all non-essential building projects for five years or more because of declining tax revenues.

It is almost certain the next owner will keep the property as a resort, said Kirby Payne, the court-appointed receiver whose office is in Rhode Island. Strict zoning and city pride in the resort's history would make conversion to other uses unlikely, he said.

"This property has a fabulous history," he said. "More people are interested in it than we expected, and we've already had some offers but aren't considering them until we finish marketing."

Courts appoint receivers to take over day-to-day operations of troubled properties until financial issues are resolved through foreclosure or sale.

Teri Killgore, Chandler's downtown-redevelopment manager, said several potential buyers have contacted her to inquire about the city's involvement in downtown redevelopment.

Former Mayor Jerry Brooks said he expects the next owner "will get a really good deal on a tremendous asset."

When he was mayor during the mid-1980s, Brooks helped a group of Canadian investors secure tax-free bond financing to remodel and reopen the resort in 1987 after it had been closed for eight years.

by Edythe Jensen The Arizona Republic Feb. 24, 2011 12:00 AM

Trustee-sale date set for resort

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