‘The best of a bad situation’

GREEN BAY – A new owner is expected to improve The Hotel Northland property in Green Bay, which alternatively might be headed for foreclosure, under a deal the Green Bay Common Council approved July 21.

The agreement, if realized, would provide $1 million to the City from lender Octagon Credit Partner LP while releasing the hotel’s owner, 304 North Adams Green Bay LLC, from about $2.6 million in financial obligations, including mortgage, rents and leases and other financing agreements.

The council voted to approve the agreement after a 40-minute closed-session meeting to discuss related strategy.

Hotel Northland is an upscale hotel in Marriott’s Autograph Collection group of properties and will remain so, said Blake Malecha, co-founder at Tertium Development in Dubuque, Iowa, which is expected to purchase the property.

“This is a great opportunity we saw to be involved in an iconic asset and turn things around,” Malecha said. “We’re excited about the property. We think it has a chance to be put back in its old glory; it’s old iconic self.”

If the deal goes through, the new owner plans to pave the gravel parking lot adjacent to the hotel and use it for events with live music and food trucks. He foresees Packer season tailgate events held there.

“We’re excited to be making the downtown area more lively,” he said. “We will be touching up the rooms, doing a lot of work in the lobby and redoing a lot of the furniture,” he said.
Malecha said the hotel’s Walnut Room will serve dinner and he wants to open the basement bowling alley and bar to the public on certain weekends.

The city stands to receive $1 million when the purchase closes from a loan it extended in 2015 that is outstanding.

“This is the best of a bad situation, is how I would describe it,” Green Bay Mayor Eric Genrich said in an interview following the meeting. “None of us would choose to be in this position, but the alternative was to receive nothing if the property were to go through the foreclosure process.”

In addition to the $1 million from the sale, the city also has access to a $550,000 reserve fund associated with the loan.

“It doesn’t get us all the way to $2.6 million, but it allows us the opportunity to make some payments here on the front end for several years and then potentially figure out another strategy to pay the balance of that loan,” Genrich said.

The city guaranteed a federal loan paid out in 2015 to a previous owner of the property, Cochart said.

The loan was guaranteed using Community Development Block Grant funding, meaning if the city is unable to identify another funding source before the money from the sale and reserve fund run out, its CDBG payments will be reduced over several years in order to pay the balance of the loan, Genrich explained, noting that he is hopeful the city will be able to come up with an alternative strategy before then so that CDBG funds will not be impacted.

“This is the best option for the city in a less-than-ideal scenario,” Mayor Eric Genrich said in a statement released immediately following the council meeting. “I’m satisfied with the agreement we’ve negotiated, recognizing the alternatives were worse for the City financially and worse for the health of our downtown.”

In response to an alder’s question, City Attorney Lacey Cochart said the hotel was in receivership, heading for foreclosure.

If the hotel sale doesn’t close and the hotel goes into foreclosure, the city likely won’t see any of its loan paid back, she said.

Council President Alyssa Proffitt said, “We’re looking at either zero or the million with purchase price.”

Proffitt also pointed out none of the current alders were on the council in 2015 when the city extended the loan.

“It’s a deal that was agreed to by a previous administration and a past council,” Genrich noted.

“I’m glad we don’t make deals like this going forward,” Proffitt said.