Receiver lines up $16 million sale of St. Clair Inn

The limbo of receivership for the St. Clair Inn — massive financial litigation that’s tied up management of the business and historic hotel property for the last two years — may soon come to an end.

St. Clair County Circuit Judge Michael West signed off on a $16 million sale of the inn, 500 N. Riverside Ave., as well as the vacant commercial property across the street during a hearing Monday.

The prospective buyer, Graham Hotel Services Inc., an entity behind hotel facilities in Ann Arbor, issued one of nine written offers for the property, according to court documents. Kelli Baker, the attorney for the court-appointed receiver, said they had over 70 non-disclosure agreements signed with parties considering the site but that “the offer from Graham Hotels was the best and highest offer.”

Representatives of Graham Hotels couldn’t be immediately reached for comment outside of court as of Monday afternoon.

St. Clair Mayor Bill Cedar said that prospective buyers have been in contact with city officials within the last several weeks. Citing two individuals he recalled behind the Kensington Hotel, a Graham Ann Arbor property, he said he was looking forward to having them in town.

“They were very personable, and they seemed very humble and honest, and I was hoping they would get it," Cedar said.

The receivership of the St. Clair Inn property, as well as the long-idle Harrington Inn in Port Huron, began in 2022, after lenders — namely Access Point Financial HDDA LLC — sought to recoup millions’ worth of mortgaged and other debt on the St. Clair site after owner Jeff Katofsky walked away from his St. Clair County properties.

Since then, both the St. Clair and Harrington sites have gone into the tax forfeiture processes with Port Huron’s Lady of the Maccabees building, another historic site bought by Katofsky. That property is further in the foreclosure process and with a tax auction date set for August.

A big piece of the unpaid assessment on Katofsky’s St. Clair property is a PACE, or property assessed clean energy loan. According to court documents, the principal PACE balance was in excess of $11 million for the inn and $775,000 for the property across North Riverside Avenue.

Those properties have been owned by Katofsky under Planet Clair, LLC, and On the Vine, LLC, respectively.

Those debts are in addition to the $11 million and $5.3 million individual claimed by Access Point against Planet Clair in the original December 2021 lawsuit that pre-empted receivership the following year, as well as HDDA’s claim of over $588,000 against Planet Clair and $3.3 million against On the Vine.

On Monday, court officials weighed the potential financial liability for Sherwin Williams, and the historic tax credits the company purchased from Katofsky five years ago.

“Part of the overall plan for Mr. Katofsky and the borrower was to try to get as many funding sources as possible to raise money for the St. Clair Inn and the On the Vine property and the redevelopment of those properties,” Baker told West, “and part of that was to sell the historic tax credits that were available to him.”

Alexis Beachdell, an attorney for Sherwin Williams, asked for the ability to come back to court while Graham Hotels undergoes due diligence on their purchase. Originally, she said there was a five-year tax recapture period associated with those credits via a master lease to the company, and they feared a property purchase before that period expires Sept. 21 this year “could cost Sherwin Williams close to $850,000 in tax liability.”

Baker said Graham Hotels’ initial due diligence period before closing on a purchase was 60 days with available extension of 30 days.

Michael Almassian, an attorney for the plaintiff lenders, said they were OK with Sherwin Williams’ request.

West agreed there was time to come back and revisit the master lease on the St. Clair property if needed.

“I know that Mr. Almassian wants this over. His client wants it over. It’s been hanging around on the docket for a long time now, and I think the community is ready for this to come to an end,” the judge said. “So, that there could be some closure and some finality to what’s going on in St. Clair, I think it’s all a good thing. But I think it’s important to keep moving forward.”

Contact reporter Jackie Smith at (810) 989-6270 or jssmith@gannett.com .

This article originally appeared on Port Huron Times Herald: Receiver lines up $16 million sale of St. Clair Inn