Investment group buys downtown Delavan hotel
DELAVAN After years of vacancy and a mortgage foreclosure three years ago, the former Delavan House Hotel has been purchased by a California-based investment group.
Stonecrest Income & Opportunity Fund of San Jose, Calif., in June submitted the winning bid for the five-story, unfinished 60-room hotel at 215 W. Walworth St. through an online foreclosure auction by the Federal Deposit Insurance Corp. The closing is scheduled for mid-August.
The FDIC acquired the building in a sheriff's auction in 2011. The previous owner, Midwest Hotels, lost the building to foreclosure in 2009 in the midst of a renovation project for a national hotel franchise.
Construction stopped when the lender, Rock River Bank, stopped releasing money and filed for foreclosure in February 2009.
The hotel was a popular spot until the building was gutted by a fire in 1978. It has been vacant since 2004 and has a history of various owners and plans, including once being slated to join the Holiday Inn and Suites franchise.
A spokesperson for the Stonecrest investment fund, which was created to buy foreclosed properties, declined to comment on the deal.
Brian Wolff, vice president of the Madison office of the CBRE Group, which is handling the real estate transaction, did not reveal the purchase price but said Stonecrest paid "below assessed value for the hotel."
The building's assessed value in 2011 was $1.45 million, according to the city treasurer's office.
Wolff said the investment group had a contractor examine the building earlier but hasn't revealed its plans for the property.
"At this point, they're still investigating all their options," Wolff said.
Laura Jacobs-Welch, owner of the Brick Street Market, 104 E. Walworth Ave., said the vacant building had become an eyesore.
"Vacant buildings are always a matter of concern in a small downtown area," she said. "We would love to have that property be developed and hope it would be something that would bring traffic downtown."
Delavan City Administrator Denise Pieroni said plans for a tax incremental financing district that could provide money for work on the property should be finalized by the common council's first meeting in September.
The proposed district would finance building improvements in a four-block area of Walworth Avenue, a move Pieroni hopes will lure retailers downtown, where a handful of vacant storefronts have popped up over the last few years.
"We have really identified our main priority for the last three years as the city's downtown, and we've always known that at 41,000 square feet of commercial space, the hotel is a critical structure in the viability of the downtown," Pieroni said.