Receiver gets OK to sell long-vacant Harrington Inn. Here's what we know so far.

The long-vacant Harrington Inn in downtown Port Huron will soon be under new ownership.

However, after years at a development standstill since it was last purchased in 2018 and months in receivership, it may be too soon to know what that means for the historical property at 1026 Military St.

St. Clair County Circuit Court Judge Michael West signed off on the formal sale of the site last week after it was put up for auction in May.

According to court documents, the Harrington went to the Florida-based MAQ Financial LLC for a bid of just $9,500.

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In addition to a $25,000 platform fee, that winning bid also comes with a nearly $3.4 million debt from a PACE, or property assessed clean energy, loan for environmental-friendly improvements that were originally pledged by former developer Jeff Katofsky.

“That’s where the value exists, bringing someone in to assume that debt,” Michael Almassian, the Grand Rapids-based attorney for Access Point Financial and HDDA, said in court last week.

Those lenders filed suit in late 2021 against Katofsky’s entities Planet Clair, LLC, and Hip Hip Huron!, LLC, through which he owned the St. Clair Inn and Harrington, respectively.

Who is the buyer and what comes next?

In an interview Monday afternoon, Mahammad "MAQ" Qureshi, who was the signatory in the Harrington deal, said, "We plan to rebuild it back — a retirement home or student housing. We will be doing a demographic study. So, either one of them, which(ever) is feasible in the study will come back to us with what the community needs there."

But Qureshi also didn't entirely rule out a potential hotel, recalling meeting owners of Port Huron's DoubleTree Hotel by the Blue Water Bridge two weeks ago. Local realtor Gerry Kramer confirmed briefly meeting Qureshi.

Once he heard back on the closure of the sale, Qureshi said they'd move forward with a feasibility study he expected to take several weeks.

Representing MAQ Financial, he said he was the principal for MAQ Group, which he purported to manage assets as a holding company while working with "local people" in each site's community. He additionally reported investing in retail centers in the Atlanta, Georgia area, buying a property in California, and owning a cricket athletic league.

"We're not looking for funding from any of the places (we work with) to build for the local (community)," Qureshi said. "It's a benefit for the city and county, both of them, so you can see something good (in a) project. But they have to work as a team. We're just a bunch of investors in the group."

How did we get here and what does the sale agreement include?

Katofsky, a California-based attorney and developer, originally mortgaged the Harrington through Access Point in 2018 for $6.2 million, having purchased the site for $1.6 million that year.

Years earlier, he’d mortgaged the St. Clair Inn, 500 N. Riverside Ave., for $4 million through Allegiant equities. That was discharged in September 2017 before Planet Clair mortgaged that property through Access Point Financial for $2 million, according to the St. Clair County register of deeds.

Other parcels on Riverside in St. Clair had also been mortgaged under On the Vine, which is also named in the Access Point lawsuit, for $3.5 million from the firm in early 2019.

According to the receivership requests in 2022, the total indebted amount to Access Point, as well as subsequent lender HDDA, for all three entities was $32.3 million by July 2021.

The deal to sell the Harrington, which has been in receivership along with the St. Clair Inn since last year, also cuts out the developments’ lenders and Macomb Mechanical, a contractor on the Harrington, from receiving payment on the millions in debt they claimed.

Instead, the circuit court ordered proceeds from the sale to satisfy receivership and sale costs with any net proceeds up to $600,000 to be split between Macomb Mechanical and the plaintiff lenders.

During the motion hearing on June 26, West said he understood there had been “a lot of negotiating behind the scenes to get to the settlement agreement,” adding, “The expectations are coming up probably way short from everybody’s perspective.”

Still, Almassian said Access Point and Macomb Mechanical had been “very realistic about this eventuality” because of the “super-lien interest” on the PACE loan.

“We understand why it worked out this way. Obviously, we would’ve preferred to see a better result,” said Benjamin VanderWerp, an attorney for Planet Clair and Hip Hip Huron! “But we have no objection, and we feel the receiver and everyone else has complied to the court order.”

PACE loan leaves future Harrington improvements unclear

Some officials with the city of Port Huron weren’t satisfied with the Harrington sale settlement either.

City Manager James Freed said they continue to get regular inquiries with interest in developing the old hotel site, but he added he was concerned a new buyer of the site may leave the property to sit vacant long-term similar to other downtown real estate similarly owned by out-of-town entities.

“I’m disappointed it sold this way, and it’ll probably be held hostage like the Fogcutter and the AT&T building,” Freed said, referring to the larger properties at 511 Fort St. and 112 Grand River Ave. “That’s my fear.”

Gantry Business Solutions LLC, doing business as Amicus Management, became the court-appointed receiver last September for the Harrington. It got the OK to engage a broker to sell the property and liquate other personal property assets in February.

And it engaged the Delaware-based Berkadia Real Estate Advisors, LLC. According to court documents, the broker put the property before an auction sale, which ultimately generated 16 active bidders.

As of Monday, the Harrington remained under Hip Hip Huron! on the county’s deed documents.

It wasn’t clear what the sale of the vacant Harrington would mean for the St. Clair Inn, which has remained in operation and completed construction on the inn’s north wing of new hotel rooms.

This spring, Amicus transferred receivership duties to GF Hotels. Messages seeking comment from the company through its St. Clair Inn manager were not returned as of Monday.

Other figures around town have taken note of the Harrington’s future.

Developer Larry Jones, who’s behind other downtown Port Huron projects, such as the imminent Wrigley Center, was among the original bidders on the Harrington “when the old folks home moved out” six years ago.

He said he believed the PACE loan taken out on the building “should still be in escrow for money going toward” its development under a new buyer. Freed said a couple of city officials, including himself, had more recently been inside the Harrington, adding none of the alleged PACE improvements appeared to have been addressed.

Under a PACE program that the county joined six years ago, developers like Katofsky could enter plans to pay back private loans over time, similarly to regular special assessments founded by local governments, and use the funds to pay for environmental upgrades that’d save their projects money.

The county board of commissioners approved new PACE agreements with higher loan amounts and under another lender to both of Katofsky’s major projects in September 2020. They went up from $2.6 million to $3.1 million and from $5.5 million to $11 million for the Port Huron and St. Clair properties, respectively.

The plan for the Harrington, according to an agreement filed with the register of deeds, had listed ceiling insulation, window improvements, LED lighting, solar features, and high-efficiency heating and cooling and plumbing fixtures among the intended eligible PACE projects.

Contact Jackie Smith at (810) 989-6270 or jssmith@gannett.com. Follow her on Twitter @Jackie20Smith.

This article originally appeared on Port Huron Times Herald: Receiver gets OK to sell vacant Harrington Inn. Here's what we know so far.