Saturday, December 10, 2016
Provincetown's Harbor Hill resort goes on the auction block
Source: Wicked Local - Cape CodBy Katy Ward
PROVINCETOWN - Harbor Hill's 26-unit condominium and timeshare resort is going up for bulk auction after its trustees alleged that fraudulent actions by former manager Donna Zoppi forced it into bankruptcy.
Zoppi's behavior was brought to light in late 2014 after two unidentified former Harbor Hill trustees learned about possible mismanagement and had indications of "substantial improper conduct," according to a document filed at U.S. Bankruptcy Court for the District of Mass. on Nov. 17.
The trustees' investigation apparently confirmed that taxes were paid by timeshare holders but were not sent to the town and federal governments for several years. The resort owes the town $230,000 and the federal government $320,000.
In February 2015, Harbor Hill's board of trustees was reconstituted and a constable was hired to help regain control over the resort's operations, bank accounts and business records.
But the damage had already been done.
In addition to nonpayment of taxes, Zoppi had allegedly been repurchasing timeshare intervals on behalf of Harbor Hill and reselling them to new owners while diverting the profits away from the resort. Court documents do not indicate where the money went. The deeds for many interval ownership transfers had not been recorded and some were never signed. Zoppi also failed to maintain proper business records, including ownership lists and financial records. Employees were not paid and telephone services were about to be cancelled, the documents say.
"The property also had substantial deferred maintenance issues and no capital reserve account had been established. The building needed new roofs, there were structural issues and the furniture and fixtures hadn't been replaced in decades," according to court documents.
Attempts to contact Zoppi were unsuccessful.
With help from the accounting firm Verdolino & Lowey, RKM Property Management and special counsel Marcus, Errico, Emmer & Brooks, it was decided to close Harbor Hill's operations and file for Chapter 7 bankruptcy on Aug. 30.
"[Their] analysis concluded that [Harbor Hill] would be unable to raise sufficient funds through special assessments to successfully restart operations and satisfy debt obligations," court documents read.
Attorney Warren Agin of Swiggart & Agin in Boston took on the role of bankruptcy trustee and is now seeking to sell the property to a single buyer.
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"I assessed a variety of options for creating the greatest chance of recovery for the interval owners," Agin said in a press release. "Ultimately, based on a review of the final situation by myself and my financial advisory team, plus a survey of the owners, I concluded the property should be sold by auction to ensure transparency and valuation certainty."
Agin plans to seek a termination of the timeshare association pursuant to Mass. General Law Chapter 183B so that the property can be sold free of timeshare ownership interests. This can be accomplished only if 80 percent of interval owners consent to a termination agreement. Sale proceeds will then be distributed to interval owners after payment of claims and the estate's administrative expenses.
Nestled in the West End, the timeshare resort sits on a 1.2-acre site and includes one-, two- and three-bedroom condominiums spread across four wood-frame and wood-shingle buildings. Agin has not yet gotten a formal appraisal for the property, but estimates by sales agents suggest a market value of $10 million.
Working with Agin on the sale is NRC Realty and Capital Advisors. Interested buyers will need to make an initial sealed-bid offer on a purchase and sale agreement with a deposit of $150,000 to NRC no later than 3 p.m. on Feb. 14, 2017.
NRC, with the approval of Agin, will then notify qualified bidders who may be eligible and will hold a final round of live in-person bidding in bankruptcy court. Time and location have not been finalized.
Subject to bankruptcy court approval, those with the best four initial bids, as well any as initial bids submitted that are within five percent of the fourth best bid, will qualify.
David Levy, auction manager at NRC, said the reason for an auction is to take advantage of the greatest recovery of the resort.
"That's why we are running a process like this so it's completely transparent," he said by phone on Friday.
Interested buyers and brokers can get more information by visiting www.nrc.com/1624.
"This sale presents an extremely rare opportunity for investors or re-developers to purchase a project of this type in an iconic town," NRC's Executive Managing Director Evan Gladstone said. "The upside here is enormous."