Janesville33.3°

Lake Lawn reboot seems to be going well

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Catherine W. Idzerda
June 11, 2012
— Sunshine and tax increment.

That's the formula for success at Lake Lawn Resort in Delavan.


This spring marks the resort's second year under new ownership, and the business is re-establishing itself with its customers and the community.


On Tuesday, the Delavan City Council will consider an agreement that could help the resort become—again—a long-term fixture in the community.


Sunny days

By most indications, things are going well at Lake Lawn.


"We're going to have one of the best years we've had in three or four years," said Dave Sekeres, resort general manager.


That's not including the period when the resort was in foreclosure and then closed.


The resort, which sits on 278 wooded acres and two miles of Delavan Lake beach front, has been a staple of the community's economy since 1878. Visitors from Chicago who preferred a quieter location than Lake Geneva with a marina and plenty of family activities routinely spent weeks each summer at the resort.


The resort closed in December 2010. The former owners, hit hard by the recession and the debt load from an ambitious project to remodel the buildings and create a water park, lost the business.


A group of local investors, led by retired Lake Geneva developer Jim Drescher, bought the resort for $9.8 million.


After several months of remodeling and upgrades, the resort reopened last summer.


Earlier this year, Drescher sold his holding in the property to other owners.


On Memorial Day, the resort had "one of the highest turnouts" of family groups, Sekeres said.


The resort employs 325 seasonal and full-time employees.


"That's higher than the number of employees we had before," Sekeres said.


The resort is focusing on first impressions and service.


"Right now, we're big on the initial points of contact," Sekeres said.


The front entrance, lobby and landscaping all have been extensively redone.


"When somebody comes to the resort, we want them to say 'wow,' to make a visual impact," Sekeres said.


Customer service has been another focus.


"We want to ensure that guests return," Sekeres said.


Challenges

Restarting the business was expensive. The resort is spending "probably twice" what the previous owners did on marketing. Hiring and training new staff are expensive. Finally, the resort is just starting to get the wedding and corporate parties that are a staple of such businesses. Those bookings usually take place a year in advance, Sekeres said.


Advance bookings require confident customers.


Sekeres sometimes gets asked, "How do we know you'll still be there?"


"We tell them we don't have any bank loans, that we have guests returning to the resort and point to the number of employees we've hired," Sekeres said.


All are signs that the ownership group is committed to the resort.


From the beginning, the ownership group and the city have tried to work out an agreement to cover a $900,000 special assessment levied to cover water, sewer and other improvements put in before the current owners took possession.


Under an agreement to be considered at Tuesday night's city council meeting, the city would agree to defer—each for nine years—the next six of nine annual payments. However:


-- Deferred payments would be subject to an annual interest rate of 4.5 percent.


-- Deferments would be subject to performance standards. Those standards would require the resort to open for a certain number of days each year, to provide a certain number of full- and part-time jobs and to generate a certain amount of room tax for the city.


-- Certain parts of the resort must be connected to city water by a set date.


-- The ownership group is required to invest a certain amount of capital into property improvements.


In addition, city officials built several layers of protection into the agreement, including stipulations about using the property for collateral for loans, what happens when one property owner sells his or her share and a variety of other clauses designed to keep taxpayers safe.


Delavan City Manager Denise Pieroni said the objective was to help the owners with the development. The jobs, room tax and outside money that the resort bring in benefit the whole community. As the same time, taxpayers need to be protected, she said.


Deferring the payments would allow resort owners to use their capital to improve the property.


Improving the property translates into an increase in the "tax increment"—the amount of taxes the city gets from the property.


As for the resort, if the tax increment exceeds the amount needed to cover the current debt and deferred debt, Lake Lawn can use 50 percent of the excess to cover special assessment costs.


Translation: The better the resort does, the better the city does. The better the city does, the better the resort does.


"There's a whole circular benefit," Sekeres said.



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