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Lake Lawn deal is great news for community, Delavan official says

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Darryl Enriquez
May 21, 2011
— The much-awaited sale of Lake Lawn Resort was finalized Friday for $9.5 million, and work is under way to quickly reopen it to summer vacationers, Jim Drescher, head of the investors group, said Friday.

The sale drew immediate kudos from a top Delavan official who called it “doggone exciting” and a spokesman for the resort’s condominium owners, who said new ownership gives his group renewed hope in their financial investments.


Drescher said he expects the golf course and the Delavan Lake marina to be open Friday, May 27, for Memorial Day weekend. The 281-room hotel should open within 30 days, he said.


The golf course will need work to return it to championship standards, he said.


“I had to work 24/7 to get this deal to the finish line,” Drescher said.


Now, the pursuit is to overcome other hurdles.


The resort must acquire numerous state and local operational permits and licenses for such services as liquor and room sales, use of the golf course and sales tax reporting, he said.


Because it was closed in late fall, the resort does not have golf or room reservations. The resort has a web site under construction lakelawngolf.com for reservations and to provide information.


Madison-based Anchor Bank took control of 128-year-old Lake Lawn at a foreclosure sale in October and closed it in December. More than 300 people lost their jobs.


Delavan Lake Lawn LLC, Drescher’s group, bought the 241-acre property, which includes the airport, from lenders led by Madison-based Anchor Bank.


The group wanted to take ownership by April 15, but that plan was delayed when an investor dropped out of the project.


Drescher said he was able to find another investor to close the deal with Anchor.


The previous owner, Delavan Resort Holdings LLC, was foreclosed on by Anchor after a $34.4 million court judgment was attained when the group defaulted on its bank loan.


Drescher said he’s grateful for the faith his investors have shown in reopening a resort that’s been closed for about five months.


Another group with financial interests—the 222-member condominium owners association at Lake Lawn—was thrilled to hear of the reopening.


The association depends on the resort to lease condos when the units are unoccupied, Delavan attorney Dale Thorpe said.


The owners and the resort equally share revenue from the leases, and owners depend on that money to pay mortgages and taxes, Thorpe said.


Without a resort, no one was making lease arrangements, and reopening the resort provides hope, he said.


“The condo association is thrilled to have new ownership for Lake Lawn,” Thorpe said. “New ownership brings the opportunity for a reopened resort, which benefits all unit owners.”


City Administrator Joe Salitros said the purchase was great news for the community.


“Anticipation had been building for the resort to open for the summer,” he said. “But then things went into a lull in terms of a closing.


“There was serious disappointment being expressed in the community. For a Friday afternoon, this is a great way to go into the weekend,” he said.


Salitros and Drescher earlier had conversations about the need to move as quickly as possible once closing took place so the resort could open and attract summer tourists, Salitros said.


Besides the golf course and marina, “it was a matter of getting as many of the resort staff back so (they could) get into some kind of a summer marketing effort,” he said. “Who knows, there might be some weddings there yet this summer.”


When city officials knew last fall that the resort was going to be closing, they cut in half the city’s budgeted room tax revenue, which had been expected to put $500,000 into city coffers this year.


While the reopening is later than the April 1 date city officials had anticipated, the resort is expected to generate lodging tax for the city, he said. It’s also welcome news for the city council in planning the 2012 budget.


“This will certainly take away part of the additional challenge that we would have otherwise been anticipating had the resort not opened,” he said.


As for the lingering issue of the $900,000 fee the city assessed on the property, Salitros said city council members have not put anything in writing to waive the $900,000, but they sent a clear message at a recent meeting that they were willing to work with Drescher toward a solution.


Drescher is working toward restoring the resort’s 18-hole golf course. Geneva National Golf Club, near Lake Geneva, will provide the equipment and staff needed to speed the refurbishment.


Anchor Bank trimmed the course recently, but additional cuts are need, Drescher said. The roughs are overgrown with up to 6 inches of grass, he said. Although not as tall, fairways and greens will need several cuts to become playable.


Grass on golf courses must be cut in small increments to avoid an abundance of grass clippings and yellowing, he said.


To accomplish detailed manicuring, the turf could require as many as four trims, he said.


Another task will be to rehire former employees who were integral to resort operations under previous owners. Drescher said he wants to hold a job fair as soon as possible, maybe right after the Memorial Day holiday, and former employees would receive priority in hiring.


“I think everyone worked as hard as they could on the deal, which includes Anchor Bank,” Drescher said.


The next round of hard work is opening the doors for business, he said.


LAKE LAWN RESORT TIMELINE

The Friday sale of Lake Lawn Resort is another chapter of a story that has been part of Delavan since the early 1800s. The history was documented in the book “Lake Lawn” by Chicago native Ellen Baker Bell. Published in 2009 by Arcadia Publishing, the book contains many pictures of the resort property throughout the decades as well as a foreword by Delavan historian Gordon Yadon.


Some highlights from Bell’s history:


July 19, 1836—Samuel F. Phoenix stakes his claim near what is now the fourth green on the Lake Lawn Resort golf course. Phoenix and his brother moved west from New York to found a temperance colony.
1847—Brothers Edmund and Jeremiah Mabie buy property as a place to winter their U.S. Olympic Circus. The brothers’ success landed Delavan on the map as Wisconsin’s first circus community.
1878—The property becomes a vacation retreat when Anna Mary Phillips, the widow of Jeremiah Mabie, opens a 50-room hotel that becomes a popular vacation spot for Milwaukee and Chicago residents.
1904—Lake Lawn becomes the first hotel with electric lights on Delavan Lake.
1923—Commonwealth Edison buys the property and uses it as a summer resort for the employees of three utility companies, in the fashion of the period.
1929—George Borg buys Lake Lawn from Commonwealth Edison and opens it to the public.
1942—Lake Lawn starts to remain open year-round. The ballroom draws dancers from around the region and such musical greats as Lawrence Welk.
1948—Owner Jay Reader, a pilot, leases property across from what is now Highway 50 and develops Lake Lawn’s airstrip. As many as 50 planes land daily.
1955—Lake Lawn develops into the one visitors will be familiar with in 2010. The exception would be the resort’s Native American theme that might make some politically correct people cringe in 2010.
1958—The owners take on a major expansion of the resort. Construction projects continue through the 1960s.
2004—Delavan Resort Holdings buys Lake Lawn Resort. Early in the year, resort owners present a $390 million conceptual plan to redevelop the property. The city approves the plan in September.
January 2009—The resort says it’s officially done with the first phase of the upgrade. The $40 million project included improvements to guest rooms and public spaces.
May 2009—Orren Pickell Development of Lincolnshire, Ill., files a $13.1 million suit 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.
June 30, 2009—The Delavan City Council renews the resort’s liquor license as it was about to expire. On June 29, the resort pays the city $87,200 to take care of some outstanding invoices as well as a few that had yet to be cut by the city.
Aug. 5, 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 again votes to deny Lake Lawn’s liquor license because the resort owes $20,200 in cost-recovery bills. The bills are paid, and the resort continues to operate.
Oct. 7, 2010—Anchor Bank of Madison is the highest bidder at a Walworth County Sheriff’s Office foreclosure sale. The bank buys the resort for $19.97 million.
Dec. 7, 2010—Lake Lawn ceases operation, putting 126 full-time, 50 seasonal and 110 part-time employees out of work.
Week of March 13—A group of investors including Walworth County philanthropist Jim Drescher offer to buy Lake Lawn for $8.4 million from Anchor Bank and a group of 12 other banks that own portions of the debt on the property.
March 17—Drescher makes a presentation to the Delavan City Council saying the investors had upped their offer to buy Lake Lawn to $9.3 million. Drescher said he is optimist about closing the deal at a meeting the next day with Anchor Bank.
March 25—Drescher says he and the other investors have come to an agreement with Anchor Bank to buy Lake Lawn for $9.5 and expect to close on the deal within 30 days.
March 31—After hearing a two-hour presentation from Drescher, the Delavan City Council agrees to gradually eliminate a $900,000 special city assessment for utilities at Lake Lawn Resort.
May 10—Todd Wilkins, a Lake Geneva builder and developer, says he’ll meet with Anchor Bank officials later in the week with a counter offer to purchase Lake Lawn Resort. At Drescher’s request, the Delavan City Council removes from its agenda discussion of a formal agreement with Drescher on the issues the city council conceded March 31.
May 13—Todd Wilkins says he plans to offer Anchor Bank more than the $9.5 million package Drescher and other investors have on the table for Lake Lawn Resort. An attorney working with Drescher says he is confident Drescher will be able to close on the property and reopen the resort.
May 20—Jim Drescher says he and other investors closed that morning on a $9.5 million deal to buy Lake Lawn Resort. They hope to have the hotel portion of the complex open within 30 days.

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