Victor Frenkil, who said he was never was able to make the Belvedere Hotel profitable after buying the decaying Baltimore landmark in 1975, watched in silence yesterday as a Bankruptcy Court judge ordered it sold to a Miami developer for conversion into condominiums.
The sale to the Miami-based Hertz Group for $5.5 million would put an end to the city's involvement, which has often been characterized as a series of sweetheart deals struck by the administration of former mayor William Donald Schaefer.
The city poured about $4.5 million in loans and guarantees into the building at Charles and Chase streets, first to help with renovations, later to keep it from defaulting on other loans.
The bankruptcy sale will net the city $1 million in cash plus ownership of a hotel restaurant, bar and food service facilities that city officials say are worth at least $3 million.
U.S. Bankruptcy Court Judge James F. Schneider ordered the sale of the hotel, which has been appraised at $6.7 million, to satisfy claims against its owners totaling some $12 million in principal and interest.
A consortium of banks led by Philadelphia-based Meretor Savings holds a first mortgage. Therefore its claim will be settled before any other and the consortium will receive $4.5 million under the bankruptcy sale. The judge approved the sale reluctantly, saying it would not net enough to pay the city back. But he lauded Mr. Frenkil as a dedicated man who tried to resurrect the hotel to its former glory.
"I do think this is a sad day for Baltimore City because the sale did not bring anything near what the building was worth," said Judge Schneider, who noted that the Belvedere means "beautiful walk" in Latin and traced its troubles to its "ill-fated conversion" into student housing before it was eventually purchased by Mr. Frenkil. "Were it not for Victor Frenkil, the city would not have had the benefit of this asset."
John J. Hentschel, chief of the city's real estate office, defended the sale arrangement however, saying it will net the city more than could be expected in a depressed real estate market.
The city began lending money to the hotel after then-Mayor Schaefer asked a political supporter, Mr. Frenkil, to help expand the number of available hotel rooms in Baltimore. Mayor Kurt L. Schmoke has refused to extend further loans to the Belvedere.
The Hertz Group, a Miami-based business headed by Judah Hertz, plans to covert it into 125 condominiums. Mr. Hertz has said they will sell for between $59,000 and $110,000 -- a range he says should make them affordable by people already living in the Mount Vernon neighborhood.
Another prospective buyer, the International Culinary Institute, which last month asked the court to allow it to lease the building from Mr. Frenkil under a long-term arrangement financed through the sale of Maryland industrial development bonds, withdrew the offer and did not appear before the judge.
Mr. Frenkil, who said he invested $12.5 million of his own money in the hotel and "never got a nickel out of it," shook his head slowly as the judge approved the sale.