March 8, 2013 in City

Marina will change owners

Debate over dock rights may delay Conkling opening
By The Spokesman-Review
 
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A light shines above the docks at Conkling Marina & Resort near Worley on Friday.
(Full-size photo)

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The century-old Conkling Marina & Resort on Lake Coeur d’Alene is about to change hands again, and the new owners likely will be familiar faces to boaters.

Tom Kirkpatrick and other family members who operated the resort east of Worley from 2002 to 2007 are poised to take it over again this month through foreclosure.

But the traditional April 1 start of the boating season may be delayed as lawyers prepare to litigate over who owns the marina docks, which include about 200 of the most affordable boat slips on the lake.

Developers who bought the 16-acre property had grand plans to renovate and expand the folksy resort and marina, including construction of luxury waterfront condominiums.

None of that came to pass, and the current owner, Coeur d’Alene Marina Project LLC, defaulted on its payments to the Kirkpatricks, who carried the five-year note on the $5 million purchase.

The marina and resort, including a store, restaurant and RV park, will be auctioned March 15. With a bid of what they are owed – around $3.2 million – Kirkpatrick and his wife plus their son and daughter-in-law will take back the property.

Kirkpatrick, 73, said his family wants to operate Conkling again and hopes to have it ready to go by April 1. He said they will work with returning customers who have made payments to reserve slips for this year.

“My son and I are doing all the things that we can to get ready to take it over,” he said, noting they’ll only have two weeks to take possession and get ready to open. “So needless to say, our backs are to the wall.”

A big wrinkle that could delay the start of marina operations is the dispute over who owns the docks.

Coeur d’Alene Marina Project, owned by Prime Assets LLC and its parent company, EQlibrium, both of Seattle, claims the docks are not part of the property subject to foreclosure. The docks are attached to the lake bed and fall outside the lien the Kirkpatricks have on the property, said the company’s attorney, D. Blair Clark, of Boise.

“The docks and the dock rights don’t belong to the Kirkpatricks because they’re below the ordinary high-water mark,” Clark said.

Coeur d’Alene Marina Project can’t prove it owns the docks, said Stephen McCrea, a Coeur d’Alene attorney representing the Kirkpatricks.

“If they’re saying the docks aren’t part of the land, then what do they have to show that they own the docks? They can’t come up with a bill of sale, because there was not one,” McCrea said.

Both McCrea and Clark said it’s unlikely the issue will be settled by April 1.

“My clients and the Kirkpatricks have come to basically no consensus on anything,” Clark said.

Left hanging are customers who prepaid or made deposits for moorage this year. One of those is Spokane Valley resident Pat Dean, who has rented a slip at Conkling the past 12 years.

“It would be nice for the uncertainty to sort of be cleared away, and I just look forward to being back on the water again,” Dean said.

Moorage rates last summer ranged from $824 to $3,673 for the six-month season.

Dean paid a $400 deposit last fall on a slip for his boat and owes another $1,800 for this season. He could have received a 10 percent discount for paying in full last October, but the uncertainty around the property held him back.

“I just didn’t know who ultimately was going to end up being the owner, so I didn’t know who to pay,” he said.

Dean and his wife, Roberta, go out on the lake almost every weekend during the season, and they’ve scheduled the spring maintenance on their 30-foot Bayliner.

“I’ll be ready to go, I just hope I’ve got somewhere to go,” he said.

A judge this week agreed to appoint a receiver to hold marina deposits and related fees through the change of ownership. But Kirkpatrick is worried about sorting out who has paid what and where the money is.

“We don’t know what will be there when we get there, but we have to have money to operate,” he said. “And these people have already paid, so they’re going to expect service.”

“Our hearts go out to the customers,” Kirkpatrick added.

Another issue to resolve is a lease agreement between the marina operator and the Coeur d’Alene Tribe, which owns the southern third of the lake up to the ordinary high-water mark. That agreement is in place for the coming season but may need to be renegotiated after the auction next week.

“I can’t imagine the tribe is going to lease the docks to someone who doesn’t own the waterfront,” McCrea said.

The foreclosure was delayed six months when Coeur d’Alene Marina Project filed for bankruptcy last July. In that proceeding, the company proposed extending its deed payments to 20 years. The Kirkpatricks, who previously agreed to restructure the payments twice, wouldn’t agree to the longer deal, and the bankruptcy judge dismissed the case Jan. 22.

Paul Martinez, managing member of Prime Assets, did not return calls seeking comment.

Established by Albertus Conkling in 1912 to cater to steamship travelers, the resort had been owned and operated by local families until the Kirkpatricks accepted an unsolicited offer to sell it to Entezar Development Group, which specialized in pricey custom homes in Western Washington.

Martinez and business partner Louis Pugliese III bought out Entezar’s interests in the property. They sold more than $4.8 million worth of membership interests in Prime Assets to investors in 13 states to acquire and develop their marina project. Their sales pitches included advertisements on Craigslist boasting of investors tripling their money.

A promotional video on the EQlibrium website offered a tantalizing glimpse of the extravagant redevelopment plans: “Majestic lakefront living. A boater’s paradise,” a silky-voiced narrator announces over images of people frolicking on the lake and swinging in a hammock. “Let the new Conkling Marina captivate your soul.”

In February 2011, the Washington Department of Financial Institutions concluded that EQlibrium, Martinez and Pugliese had sold unregistered securities in violation of state law. The state ordered them to cease the transactions and pay $3,500 for investigative costs.


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