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Lake Lawn trying to fight back from financial brink

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ANN MARIE AMES
June 13, 2010
— Financially, Lake Lawn Resort is having its best summer in five years, General Manager Pete Zellmer said.

But the city of Delavan wants $20,000, and the Walworth County Treasurer’s Office is waiting on more than $1.3 million for two years of property taxes.


On top of that, Lake Lawn is trying to secure financing to keep the bank from taking back the business in September.


“We remain optimistic that we’ll remedy our financial situation so we can move forward and really start to build our business,” Zellmer said.


Anchor Bank of Madison in August filed a $51.9 million foreclosure action against the resort.


A Racine County Judge in March made a judgment of foreclosure. That puts the business into a redemption period that ends in September, Zellmer said. Between now and then, Lake Lawn is trying to secure alternate financing, Zellmer said.


When asked, Zellmer said he couldn’t say what would happen if Lake Lawn can’t refinance by September. Anchor Bank wouldn’t necessarily take ownership of the business, Zellmer said.


“It’s way too early to say,” Zellmer said.


Anchor Bank could not comment because the case is in litigation, spokeswoman Emily Campbell said.


Lake Lawn has not contacted the city to talk about the resort’s financial condition, Administrator Joe Salitros said.


Last week, the Delavan City Council voted to deny Lake Lawn’s liquor license along with a handful of other licenses in the city.


The council made the same choice at its June 2009 meeting.


Last June, Lake Lawn paid $87,200 that officials said Lake Lawn owed the city. That allowed the resort to keep its license.


Lake Lawn denied it owed some of the bills.


Now, Lake Lawn owes the city $20,200, according to a memo from Treasurer Jennifer Wiese.


According to Walworth County Treasurer’s Office documents, the owners of Lake Lawn owe more than $1.3 million in property taxes for 2008 and 2009.


Delavan Resort Holdings owns several parcels on the east side of the city of Delavan. The largest is the parcel at 2400 E. Geneva St., Delavan, where the resort is located.


The property owners owe the county $684,202 in property taxes for 2008 and $630,800 for 2009 for that parcel, according to online documents.


LAKE LAWN TIMELINE


2004—Delavan Resort Holdings buys Lake Lawn Resort.


2005—Resort owners present—and the Delavan City Council approves—a $390 million conceptual plan to redevelop the property. Plans include renovating the existing hotel as well as building two- and three-bedroom condominium units, moving the resort’s main entrance from Highway 50 to North Shore Drive, building the Grand Delavan hotel and conference center and building an indoor water park.


2007—Resort ownership changes from 37 people to less than 10 in an attempt to streamline decision making, President Pat Nelson said.


January 2009—The resort says it’s officially done with the first, $40 million phase of the upgrade.


May 2009—Orren Pickell Development of Lincolnshire, Ill., filed a $13.1 million lawsuit in Waukesha County Court. According to the summons and complaint, Delavan Resort Holdings broke a contract to sell 258 acres and 37 condos to Pickell. A final pre-trial hearing is scheduled for December 2010.


June 2009—The Delavan City Council unanimously renewed the resort’s liquor license when the resort paid $87,200 city officials said the resort owed.


August 2009—Anchor Bank of Madison files foreclosure documents in Walworth County Court against the owners of Lake Lawn. Eventually, the Walworth County judges recuse themselves from the case, and it is moved to Racine County Court.


March 2010—Racine County Judge Richard Kreul makes a judgment of foreclosure against the resort.


June 8, 2010—The Delavan City Council votes to deny Lake Lawn’s liquor license because the resort owes the city $20,200. A hearing is scheduled for 6:30 p.m. Tuesday, June 29.


—Ann Marie Ames



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