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New London - A public auction of the shuttered Lighthouse Inn - the third in the past four years - will be held Thursday at City Hall.
State Marshal Joe Heap, who is overseeing the auction, said this week that the Business Loan Center, which took over ownership of the historic inn after a previous owner defaulted on a mortgage, has decided to walk away from the property and let it be auctioned at a tax sale. The sale will be held at 10 a.m. in the City Council chambers, with the minimum bid set at about $577,000 - enough to cover real estate taxes, fees and other costs through the July tax cycle.
"Hopefully we'll get a bidder," Heap said.
Ned Hammond, the city's economic development director pointed out, however, that the minimum sale price required to cover tax obligations has grown so high that it could leave some would-be buyers on the sidelines.
"Now you're getting to a point ... the city may end up with it," Hammond said. "We certainly don't look forward to that."
A decision will likely be made shortly before the tax sale about whether the city would take over the property if there are no bids or would simply continue to assess tax bills on the Business Loan Center, Hammond said.
Heap said he knows of at least two or three interested parties, but anyone bidding will need quick access to cash because 20 percent of the price is due before the start of the auction and the rest needs to be paid within seven days.
"This is not for someone looking for financing," he said.
It's also not for someone short on patience, because a six-month redemption period essentially puts the property into legal limbo, allowing the original owner to come up with the cash necessary to retain the property. So anyone who acquires the site will not be able to obtain title to it for half a year, further delaying the historic property's potential return to glory.
"It's something that we certainly need to see back up and operating," Hammond said. "It's too stately a building to see it just fly away."
Heap, who has keys to the property, said he took one interested buyer through the inn last weekend. Most interested buyers, he added, see the possibility of an updated property incorporating more of a resort atmosphere with space for conferences.
Heap described the inn as remaining much the way people remember it, with beds - some of them unmade - waiting for the next check-in. A spa area still includes all the equipment and chemicals that were used to treat clients until shortly before the inn's closure in 2009.
"It's like somebody locked the door and never came back," Heap said. "It's really, really weird."
The Lighthouse Inn's 4.2-acre property on Guthrie Place has been auctioned three times in recent years. In 2010, New Haven businessman Anthony Acri bought the inn for $1.25 million, but backed out of the deal after two break-ins resulted in the loss of property.
Earlier this year, the Business Loan Center tried an online auction of the property - which includes a restaurant, bar and carriage house - but bids did not rise to what had been set as the minimum.
An auction in 2009 was canceled when the inn's previous owners, Christopher Plummer and Maureen Clark, filed a bankruptcy petition that later was denied. Both Plummer and Clark over the past two years were found guilty of defrauding investors of hundreds of thousands of dollars in a separate scheme and were sentenced to federal prison time. They also left unpaid bills of more than $2 million related to the Lighthouse Inn.
Heap said that if the inn is sold for more than the minimum bid, the money will go in escrow and creditors can apply for compensation. He added that the mortgage holder let the property go to tax auction despite being offered a $750,000 cash deal just a few months ago.
"The Lighthouse Inn presents a very interesting and very unique aspect to the standard marshal's sale for taxes," said Hammond.
Taxes, which had been only about $120,000 four years ago, have mounted over the past few years as the Business Loan Center went through Chapter 11 bankruptcy reorganization.
The 1902 inn, a local landmark for decades and site of countless family celebrations, originally was built as the summer home of steel magnate Charles S. Guthrie in 1902. Designed by renowned architect William R. Emerson, it features a landscape design by Frederick Law Olmsted, famed for his conception of Central Park.
The property includes three buildings encompassing about 32,000 square feet of space and 51 guest rooms.