Norwich - Following the death of its elderly owner and developer, the historic Hale Mill in Yantic will be sold at a foreclosure auction April 5, ending a long and bitter foreclosure and bankruptcy battle over the hotel conversion project.

United Country-Absolute Auctions and Realty Inc. in partnership with J.L. Todd Auction Co. will host the auction at the 140 Yantic Road mill at 11 a.m. The partially renovated mill will be sold "as is, where is, with all faults," according to a large sign posted at the corner of the property recently.

Despite that ominous warning, auction agent Paul Stansel said much of the building is in good condition, with a new roof and windows keeping out the worst of the winter weather. The original section of the mill dates to 1846.

"I was there subsequent to two blizzards and during one, and other than having to fight to get into the place, it was tight and fairly dry, except for two sections," Stansel said Friday. "Most of the windows in the main building have been replaced. I was impressed. And it has some terrific architectural features that have been maintained."

"The location is terrific," he added. "Yantic is an adorable little village in Norwich and it's right off Route 2."

The auction includes two vacant parcels also owned by Phoenix Development Group at 244 Yantic Road and 45 Sunnyside St., but both are listed as "essentially ancillary land" to the mill property with "no excess development potential."

No minimum bid is listed, but the buyer would need to make a 15 percent down payment with $100,000 in certified funds. The mill property is appraised by the city for $566,000.

The auction companies will host an inspection tour for bidders on March 23 from 10 a.m. to 3 p.m. at the mill.

Stansel said he would like to get a count of those interested ahead of time, but walk-ins would be welcome. Anyone interested in the tour can contact Stansel at (203) 592-1961.

In 1995, Zena Nemetz and her former partners launched the project to convert the former mill into a luxury hotel, with features that included a large showroom for boat or auto shows. The project experienced several starts and stops over the years, with progress that included a new roof, elevator shafts and hotel rooms framed out. The plan called for retaining the historic character and at one point the developers sought artifacts from the old woolen mill to display in the completed hotel.

But a financial tangle ensued. Nemetz allegedly dismissed partners and obtained major financing against their wishes. Work stopped in 2007, with mounting debt and liens by contractors. Point Center Financial Inc. filed for foreclosure on the debt total of $16.7 million. Despite ownership disputes between Nemetz and her former partners, a New London Superior Court judge approved the strict foreclosure last May.

Nemetz successfully stalled that action, however, when she filed for Chapter 11 bankruptcy.

Nemetz, 83, died in Brookline, Mass., in November, and the bankruptcy case has been closed, allowing the foreclosure auction to proceed.

According to city assessor records, Nemetz owned an apartment house at 6 Chapel Hill Road that overlooks the mill. Auction officials said only the mill property and two vacant lots are up for auction on April 5.

Stansel and Jerry Hammond of J.L. Todd Auction Co. both said they haven't yet done any marketing for the property, other than post the sign at the mill and information about the auction on their websites.

But Stansel said those actions already have raised some interest, including someone who might be interested in completing the hotel project and another considering elderly housing in the complex.

No one has contacted city planning and development offices or the city assessor's office about the mill. Mayor Peter Nystrom said no one has contacted his office.

"Obviously, we would prefer a hotel as the highest and best use of the property," he said.

Peter Davis, director of planning and development, said the Phoenix Development Group's permits have expired, and whoever purchases the mill would have to apply for new permits regardless of the proposed use for the property.

c.bessette@theday.com