|By Denise Jewell Gee, The Buffalo News,
N.Y.McClatchy-Tribune Regional News
Jul. 10, 2009--NIAGARA FALLS -- The Crowne Plaza Hotel on Third Street, which the state invested $6 million in three years ago, is under the control of a court-appointed receiver after it slipped behind in property tax payments and other debts.
Gramercy Investment Trust started foreclosure proceedings on a $30 million mortgage on the 391- room hotel in March.
The hotel, touted as one of the success stories of a state effort to redevelop downtown Niagara Falls, underwent a $21 million public-private investment to completely renovate the property in 2006 and 2007, after its current owner purchased the property for $14.5 million.
But court records show that the owner, NS Partners, failed to pay $857,852 in 2007 school taxes and 2008 city taxes, and racked up other debt worth $1.2 million last year that was not paid within 30 days after it was incurred.
The debt allowed Gramercy Investment Trust of New York to start to foreclose on the property and ask State Supreme Court Justice Richard C. Kloch Sr. to appoint a receiver to oversee its operations.
Mark Bibb, general manager of the hotel and a senior vice president for Sentry Hospitality, said the foreclosure has not impacted its operations.
"Operationally, our business plan is being maintained. Our marketing plan is being maintained," Bibb said Thursday. "This is business as usual. I do not foresee, and I don't think anyone does, in any way, that the Crowne Plaza is going to close."
Bibb said the hotel has continued to perform well despite a softening of the tourism industry this year. He said the hotel's performance so far this year has remained "basically flat" compared with the same period last year.
"The property is a very viable operation," Bibb said. "It's doing extremely well. It's having a strong season and we look to continue operating for the short term as well as the long term."
Bibb contends the foreclosure is a result of a "dispute between the current owner and the lender," but could not provide additional information.
According to court papers filed by NS Partners that sought to move the foreclosure proceeding into federal court, the company had planned to pay the school and city taxes last year with a rebate of its property taxes from the prior year, but the mortgage company moved to foreclose because of a technical default under the loan agreement in the meantime.
The Crowne Plaza Hotel foreclosure came just a few months after Namwest, a Phoenix- based developer that is one of two partners that owns NS Partners, filed for Chapter 11 bankruptcy protection late last year. NS Partners, a partnership between Namwest and Sentry Hospitality that owns the Crowne Plaza Hotel, was not included in that bankruptcy.
Sentry Hospitality has continued to manage the hotel during the foreclosure proceedings.
The 2006 renovation of the hotel completely updated it from a Holiday Inn Select and added a sports bar and grill and a licensed Starbucks store that is owned by NS Partners. Bibb said Starbucks Corp. is considering closing the store, but has not yet made a final decision regarding the location.
Bibb said the hotel would open an independent coffee shop in that location if the Starbucks closes.
The renovation, awarded InterContinental's "Best Overall Renovation" award, received a $6 million grant from the state's Empire State Development Corp.
"Until the foreclosure process plays itself out, it's not possible to say if or how it will affect the grant," said Christopher Schoepflin, president of USA Niagara Development Corp., a subsidiary of Empire State Development Corp. "That said, the grant has been made for a reimbursement for the $34 million investment already put in place by the developer."
John Percy, president and CEO of Niagara Tourism and Convention Corp., said the size of the Crowne Plaza and its ability to lodge people for conferences has made it one of the stronger hotels in the city.
Court papers show the hotel produced a net operating income of about $2.6 million since the renovation was completed in 2007.
"This property does well. It's one of the best performing hotels in this area," Percy said. "They're really diversified as far as how many different types of markets they can service."
To see more of The Buffalo News, N.Y., or to subscribe to the newspaper, go to http://www.buffalonews.com.
Copyright (c) 2009, The Buffalo News, N.Y.
Distributed by McClatchy-Tribune Information Services. For reprints, email firstname.lastname@example.org, call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA. NASDAQ-NMS:SBUX,