New London - The Lighthouse Inn's interior furnishings and equipment go on the auction block Friday, but the auctioneer expects the personal property - to be sold in one lot at a starting bid of about $125,000 - won't attract a buyer.
"The market is loaded with used restaurant and hotel stuff," State Marshal Joe Heap, who is conducting the sale, said in a phone interview Wednesday. "You get maybe 10 cents on the dollar."
The minimum bid of $125,388.51 for the Lighthouse Inn's contents was based on personal-property taxes owed by the previous owner, Business Loan Center LLC. Heap said Business Loan Center made some attempts to pay real estate taxes to the city after it came out of bankruptcy but had never tried to catch up on personal property back taxes.
Mayor Daryl Justin Finizio said the noontime auction Friday is just one of the many steps the city must take before offering the Lighthouse Inn for sale. The city earlier this year took title to the historic property after a real estate tax auction failed to elicit a single bid at the minimum price of about $577,000.
The 1902 Lighthouse Inn property on Guthrie Place, a cherished dining spot and drinking establishment for generations of local residents that had been transformed into a resort in recent years, includes three buildings encompassing about 32,000 square feet of space and 51 guest rooms.
Though Heap said the city might be better off if the auction of personal property fails to generate a bid - since the Lighthouse Inn could then be sold with all of its classic furnishings in place - Finizio said he is interested only in seeing that the process speeds along so the property can be sold as early as January or February.
Finizio's plan is to make repairs to the inn, get the new City Council in November to pass some sort of tax-abatement package for the property and then hold a general auction of the property in which the highest bidder will walk away as the new owner.
"It will be the same deal for everybody," he said.
Finizio acknowledged, however, that the open-bid plan is controversial, with some officials suggesting that a request-for-proposal process would result in a better development plan. But Finizio said there are too many rumors swirling around about backroom deals for the property and that it's important to establish a transparent process without favoritism.
It would be up to the next City Council, however, to decide which process will be used to market the Lighthouse Inn, he said.
Meanwhile, Finizio said the property has been generating remarkable interest, considering it has been years since the Lighthouse Inn was last open for business. He said at least 20 developers have contacted the city for information about the property, though no one is currently being shown through the buildings.
Heap said among the potential buyers is a developer who is a former busboy at the Lighthouse Inn.
"People have been interested from all over," Finizio said.
Finizio said that based on engineering estimates he has heard from developers, it will cost $1.8 million to $2.5 million to bring the Lighthouse Inn back to its former grandeur. He indicated that he doesn't expect work to be completed until the end of 2015, at the earliest.
"These things take time," he said. "It's going to be open soon."
Finizio said it is to the city's credit that it took over the property as quickly as it did because if it had waited much longer, the structures may have been irreparable.
He added that a few other issues, such as outstanding water and sewer bills and unpaid beach dues, have yet to be resolved. Finizio said he believes all the various issues swirling around the property are what prevented it from eliciting a bid during the property-tax sale, noting that several offers had been made on the property previously that were turned down by the Business Loan Center.
Heap said he expects only a couple potential bidders to show up at Friday's tax auction. Bidders will need to bring a check for 25 percent of the minimum auction price - more than $30,000 - to be able to view the contents of the Lighthouse Inn at 11 a.m.
Among the items listed for sale are "bedroom furnishings, bedding, restaurant equipment, furniture, flatware, dishes, glassware (and) salon equipment," according to a legal notice published in The Day.
The auction, Heap said, allows the city to take official possession of the Lighthouse Inn's personal property if no one comes up with the minimum bid price. The city legally has to hold two separate auctions, for personal and real property, Heap said, before taking complete possession of the inn and its contents.