NACOGDOCHES, TX (KTRE) - A foreclosure sale of Hotel Fredonia occurred Tuesday morning on the courthouse steps in Nacogdoches. Texas State Bank general counsel Paul Clark was the lone bidder on the third lien.
Clark, in behalf of the bank, purchased the hotel for a total of $508,985 of offsetting credit on the note and the account of SE Pack Hospitality. A similar proceeding was stopped last month when SE Pack Hospitality filed Chapter 7 bankruptcy. Objections to continue foreclosure proceedings were dropped, allowing the proceedings to continue.
"Parties are interested in the hotel. As far as a buyer, there are none at this present time," said Clark. "Negotiations will continue over the next 30 days to see if an agreement can be kept in place to keep the first and second lien financing.
The first lienholder is Texas State Bank of Joaquin. The second lienholder is U.S. Small Business Administration.
The former owner, Susan Pack Reents was present. "It was hard to watch." Reents said.
Reents said her desire for the hotel is, "That it will sell and that it will be a part of Nacogdoches. I'm worried ultimately what will happen to it, but I know I've done all I can."
Reents closed the Hotel Fredonia in November of 2013.
"Between the mortgages and the federal tax liens there was approximately $5 million on it against the property," said Clark.
The hotel was built in 1955 thanks to community business leaders and residents who wanted a fine hotel for the city. The property has had several owners. There was closure in the 1980s.
The transaction does not wipe out the first and second lien. Nor does it make numerous federal tax liens against the property go away.
"There was approximately $5 million on it against the property," Clark said.
Allowing the IRS...
"To redeem the property should it so desire to within the 120 day period allowed by law," Clark said.
But bank representatives say they're actively seeking a buyer.
"We feel like the hotel has some definite value, but that's all in the eye of the beholder," Clark said. "There are parties that are interested in the hotel. As far as a buyer for the hotel, no there is not at the present time."
Three hours later, Reents watched the foreclosure sale of her home.
"It's my livelihood and a lot of other people's money and it's very serious to me," she said.
Reents says she wants the best for the hotel, but fears the worst.
"I'm worried about, yeah, ultimately what will happen to it, but I know I"ve done everything that I can," she said.
Texas State Bank representatives say they may know over the next 30 days if a deal can be struck with interested buyers. Attempts will be made to keep the current financing in place.
Also present at the foreclosure sale were two people very close to Hotel Fredonia.
JD Harkrider, 102, lost his home in the hotel when it closed.
Currently, he lives in an assisted living facility, but watches the hotel developments closely.
"And I have hopes of getting it over with so I can go back to room 116," he said.
Harkrider still drives to the hotel to visit the roses he planted in his wife's memory.
He's greeted by George Arriola, who maintains the hotel.
He describes the Fredonia as the heartbeat of Nacogdoches. He checks out more than 100 rooms daily.
"I go to room-to-room every day making sure the water and no leaks and making sure the pumps are on, the boiler on," Arriola said. "It's just a full time job for one man."
Just like everyone else, Arriola is hopeful a good owner is found for the hotel.