2016-12-29 / Front Page

‘Loaf owner stresses patience

Price to fix up put at $20 million to $50 million
By Eric Carlson
Of The Enterprise staff


KATOFSKY KATOFSKY If the new owner of Sugar Loaf Resort has a message for Leelanau County residents, it’s this: “be patient.”

Following his first-ever visit to the long-shuttered and blighted ski resort earlier this month, California real estate attorney Jeff Katofsky said it will take “24 to 30 months” just to prepare plans for redeveloping the property.

Katofsky told the Enterprise this week that it will likely require “$20 million to $50 million just to put Sugar Loaf back together again.”

He added: “I spent nearly an hour on the phone with a lady last week who just doesn’t understand why we can’t get something going by February. Well, to start with, the roof is caved in in six places.”

Jeff Katofksy visited his newly-acquired property for the first time while meeting with Leelanau County Construction Code Authority Steve Haugen to discuss what needs to happen next.

Haugen said Katofsky’s brief Dec. 14 visit to the resort went well and was clearly an eyeopener for its new owner. He said Katofsky understands that he needs to board up the building in accordance with Construction Code requirements as soon as weather permits, although that may be several months off.

Haugen acknowledged last week that he and other Leelanau County officials have been attempting to understand more about how, and under what circumstances, Katofsky acquired the resort from its former owner, Remo Polselli.

Earlier this year, Katofsky said he acquired options to purchase Sugar Loaf and several other Michigan properties from Polselli as the result of a lawsuit against Polselli involving his properties in another state.

Indeed, Katofsky has been busy redeveloping a hotel near Detroit Metropolitan Airport in Romulus that was formerly owned by Polselli, and is now turning his attention to redeveloping the historic St. Clair Inn, also formerly owned by Polselli in downstate St. Clair County.

Katofsky has said that redevelopment of those properties will take priority over Sugar Loaf, which he acquired sight-unseen last month.

According to a warranty deed recorded Nov. 14 at the Leelanau County Register of Deeds office in the county Government Center, a Nevada corporation headed by Katofsky, “Sweet Bread L.L.C.,” acquired the Sugar Loaf Resort property from a Michigan corporation controlled by Polselli known as, “4500 Investment, L.L.C,” for the sum of $3 million.

Katofsky told the Enterprise this week that the $3 million recorded on the warranty deed does not represent the full “sales price” of the resort which, he said, exceeded $6 million. He declined to say what the actual sales price was.

Also recorded at the Leelanau County Register of Deeds office on Nov. 14 was a $6 million mortgage given to Katofsky’s “Sweet Bread” corporation by a Montana corporation known as “Farmer’s Merchant Capital, L.L.C.”

Haugen said that he has not yet been able to access mortgage documents on file in the State of Montana outlining terms of Katofsky’s mortgage on the property. However, a Montana Secretary of State website indicates that “Farmer’s Merchant Capital” was incorporated in Montana on Oct. 25, 2016, just weeks before Katofsky acquired Sugar Loaf.

In addition, county officials have been reviewing other documents on file in the Register of Deeds office related to Sugar Loaf. Register of Deeds Dorothy Miller was unable to find documents on file discharging two judicial liens against the property that were filed in 2011 totaling some $41,000.

In addition, three state tax liens recorded against the property in 2000, 2001 and 2005 totaling some $213,000 do not have corresponding “lien discharge” documents on file at the county Register of Deeds office, according to county officials.

“You would think these liens would have been discharged before the title company issued a warranty deed,” said Miller. “It may be that they’ve been discharged and the paperwork just hasn’t been filed,” she added.

Katofsky said this week he’s confident that all the liens have been discharged on the Sugar Loaf property. He said he encountered similar circumstances with the St. Clair Inn properties he acquired from Polselli, but it turned out that all the liens had been paid off.

“My title report is clean,” Katofsky said, “and this is why I have title insurance.”

As for the corporation set up just weeks before he acquired Sugar Loaf that issued him a $6 million mortgage on the resort, Katofsky said that Farmer’s Merchant Capital is “just a lender to me,” and he has no knowledge of who is behind the corporation.

“My guess is that Remo (Polselli) sold the paper to Farmer’s Merchant Capital, but, frankly, I don’t care,” Katofsky said.

“I get it that you guys (in Leelanau County) have gone 15 years getting screwed-around over Sugar Loaf and are worried about conspiracy theories,” Katofsky said.

“Be patient. To do this right will take several years.”

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