A year into receivership, debt-heavy Bel-Aire Hotel closes; Erie-area landmark for sale
When Memorial Day weekend arrives at the end of the month, tourists celebrating the unofficial start of summer will be unable to check into a well-known hotel near Presque Isle State Park.
The Bel-Aire Hotel has closed.
A year after the 131-room complex at 2800 W. Eighth St. in Millcreek Township went into receivership and went on to operate for a time during the pandemic, “the property is currently for sale with no plans to reopen at this time,” said Ralph V. Izzi Jr., vice president for corporate marketing and public affairs for TPG Hotels, Resorts and Marinas and the Procaccianti Companies.
The Rhode Island-based TPG owns the Bel-Aire’s court-approved receiver, named in April 2021 — the Maryland-based Marshall Hotels & Resorts Inc., a third-party hotel management business.
The Bel-Aire’s lender, HDDA LLC, of New York City, which specializes in hotel real estate, sought a receiver after HDDA foreclosed on the Bel-Aire’s mortgage in March 2021. HDDA filed for foreclosure due to the hotel owner’s nonpayment of three loans plus interest totaling $7.7 million, with the largest of the three at $6.1 million, including interest, according to court records.
The receiver took over management of the Bel-Aire from its owner, Kertra Ltd., whose president is Fairview resident Kerry Schwab. The Schwab family has owned the Bel-Aire for 60 years.
HDDA in June got a $7.7 million default judgment against Kertra, furthering strengthening its hold on the Bel-Aire. Schwab consented to the appointment of a receiver in the event of a mortgage default, according to court records.
In petitioning for the receiver, HDDA said outside oversight was necessary to preserve the property — and HDDA’s large investment in it — and reduce the risk of further financial damage to the Bel-Aire, including a tax sale due to delinquent property taxes. HDDA said the pandemic particularly had hurt the hotel industry.
HDDA also authorized the receiver to market and sell the Bel-Aire. The sale proceeds would help pay off the outstanding loans.
“A receiver is desperately needed to manage and maintain the Mortgaged Property and to collect all rents, issues and profits,” HDDA said in the emergency motion for appointment of a receiver, filed in March 2021. “Numerous issues, including but not limited to the effect of COVID on the hospitality industry, necessitate the appointment of a receiver on an expedited basis.”
Erie County Judge Daniel Brabender approved Marshall Hotels & Resorts as the receiver on April 6. The Bel-Aire kept operating for a while, according to monthly financial reports the receiver filed with the court. The pandemic and other factors limited the business, and the Bel-Aire eventually closed.
Izzi, the TPG official, said he had no further information on when the Bel-Aire closed for and the asking price for a sale.
Receiver approved:COVID casualty: Bel-Aire Hotel, an Erie mainstay, goes into receivership; sale is an option
Debts piling up
As it has lost revenue due to the closure, the Bel-Aire has also seen its debts increase. Kertra, the Bel-Aire’s owner, owes $289,700 in back property taxes, covering 2021 and 2020, according to Erie County assessment records. The Bel-Aire’s annual property tax bill is about $124,000.
The 5.35-acre property encompasses 89,263 square feet and includes an indoor pool; a restaurant, known as Maxi’s; and rooms inside and outside the main hotel. The total assessed value of the property is $5.1 million, according to court records.
State and federal agencies have filed liens against Kertra over the years, and the filing of the liens has continued during the receivership. In March, the state Department of Labor & Industry filed a $13,900 lien against Kertra over unpaid unemployment compensation contributions in 2020, according to court records. Also in March, the state Department of Revenue filed a $62,300 lien against Kertra for unpaid employee withholding taxes and sales, use and hotel occupancy taxes in 2019 and 2020.
Distressed industry:Battered by COVID-19, hotels pitch themselves as remote workspaces
The liens would be satisfied with the proceeds of a sale of the Bel-Aire. If the property were to go on the list for a regular tax sale, in September, any buyer would take on the liens and the $7.7 million in mortgage debt. The regular tax sale — known as an upset tax sale, as opposed to a lien-free tax sale — is for properties with at least two years of delinquent property taxes.
Longtime family business
The closing and potential sale of the Bel-Aire come as Millcreek Township has focused on the planned development of the area of West Eighth Street and Peninsula Drive — the area that includes the hotel. The Millcreek supervisors in April updated the township zoning regulations to include a new village — or Main Street — concept for West Eighth Street and Peninsula Drive, which leads to the entrance to Presque Isle State Park. Waldameer Park & Water World is also in the area.
Family adventure:Waldameer Park o
pens with high hopes for a return to normal
The new regulations, for a Presque Isle Corridor, envision developments along West Eighth Street and Peninsula Drive with a feel similar to that of the Colony Plaza, the upscale shopping district on West Eighth Street east of the Bel-Aire Hotel. Buildings are to be built closer to the street and sidewalk, but with parking in the rear.
“We would like to see that area redeveloped to benefit not only the residents of Erie County but also visitors to Erie County,” Millcreek Supervisor Kim Clear said.
New regulations:Millcreek supervisors adopt zoning rules that include ‘village’ concept near Presque Isle
Clear said she could see the Bel-Aire property getting redeveloped for multi-use, such as for offices or commercial space. Renovating the hotel could be another option, Clear said.
“There are so many ideas we have,” Clear said of the Presque Isle Corridor. “But we need a hotel in the area.”
The Bel-Aire has been a fixture for decades.
Former pharmacist Clem Schwab and his wife, Elaine, the late parents of Kertra president Kerry Schwab, 75, bought the Bel-Aire Motel in 1962. Over the next 20 years, the Schwabs bought the Presque Isle Motel, the Seaway Motor Lodge and a group of offices, all on the same block on West Eighth Street.
More on West Eighth Street:Multimillion-dollar upgrades coming to a portion of Erie’s West Eighth Street
In 1983, the Schwabs spent about $4.5 million to combine them with the Bel-Aire and change the motel to a hotel. The family added rooms and updated the facilities over the years. In late 2018 and early 2019, the Bel-Aire, then the Bel-Aire Clarion Hotel, underwent $2 million in renovations.
The hotel at that time also changed its affiliation from Clarion — it was also known as the Clarion Hotel Lake Erie — to Wyndham, the owner of Ramada, though the Bell-Aire remained an independently owned property. The independent relationship allowed the Bel-Aire to retain many of the boutique hotel characteristics while enjoying the benefits of a brand name.
Peninsula history:The head of Presque Isle Bay was once a summer resort wonderland
The renovations in 2018 and 2019 upgraded the Bel-Aire’s Regency ballroom, Maxi’s restaurant, the Atrium pool and guest rooms. The Bel-Aire also got all new furniture, carpet, wallpaper, artwork and a new paint scheme.
It was the first full-scale renovation project at the hotel in the past 10 years, though Kerry Schwab said that he had made smaller repairs in the past. He said the Bel-Aire had to get improvements to compete with newer hotels in the area. Kerry Schwab also owns, via Schwab Realty Corp., the Best Western Erie Presque Isle hotel, 3041 W. 12th St. in Millcreek.
Speaking of the Bel-Aire, Schwab said in an interview with the Erie Times-News in January 2019: “Obviously, I’ve had this for a long time and felt it was time that we go through this remodeling program and spend the money to bring it up to date. We’ll have a brand-new facility because the whole property is being renovated.”
A little more than a year later, the pandemic hit.
Following this story? Download the GoErie app to get all the latest updates.
Contact Ed Palattella at [email protected]. Follow him on Twitter @ETNpalattella.
This article originally appeared on Erie Times-News: A year after receiver took over, Bel-Aire Hotel closes and is for sale
