A once iconic hotel is now in the possession of the City of Waverly after a judge granted its title transfer following the former owners abandoning the property.
Bremer County District Court Judge Chris Foy ruled that the city would have a free and clear title to the former Red Fox Inn, 1900 Heritage Way, following at least six months of vacancy by RR LC. The owners of the limited liability company, Rajesh and Ramesh “R.D.” Bhakta, left the hotel and turned off all utilities in late 2019.
Meanwhile, the holders of the mortgage on the property, MidWestOne Bank, foreclosed on the hotel and then took ownership of the facilities during a sheriff’s sale on June 29, 2019. The bank was trying to recover $892,000 plus interest on the Red Fox because of the Bhaktas’ delinquency.
In a press release from Waverly City Attorney and Economic Development Director Bill Werger, the city used Iowa law Chapter 657A that allows cities to secure titles of abandoned properties subject to substantial and continued deterioration. The deed changed hands via a quit claim deed, and the title was recorded on Monday.
In December 2018, the Red Fox Inn was in the middle of renovation when investors in a group called Red Fox Renaissance walked away from the project when negotiations with RR LC broke off the previous month. Project spokesman Richard Dane told Waverly Newspapers for a story in June 2019 that they didn’t want to continue talks if it was to their and the Small Business Administration’s detriment.
In Werger’s statement, after the Bhaktas abandoned the hotel, it became a target for trespassers, who caused indeterminate damage to the buildings and contents. Attempts for the Bhaktas and MidWestOne Bank to remedy the situation were unheeded.
The Waverly City Council then approved a resolution on March 2 to begin the process to obtain the title as well as to secure the Red Fox. After the three-month lawsuit, the city was able to acquire the hotel without having to pay any purchase price.
Also on Monday, Werger appeared before the Bremer County Board of Supervisors to request abatement of property taxes on the hotel site, which was approved on a unanimous 3-0 vote.
“Now that the city has legal title to the property, action will be taken to fully secure the facility,” Werger said in the statement. “Trespassing, including vehicle traffic into the property, will not be allowed, and trespassers on the property will be arrested and prosecuted.”
The Red Fox Inn was opened in 1974 and had 118 guest rooms on 44,000 square feet of real estate. During its life, it was part of the Best Western and America’s Best Value Inn chains, among others.
However, it fell into disrepair over the last several years of business. In July 2016, the hotel’s management was sued by three former guests due to an alleged bed bug infestation, but the case was settled out of court a year later, according to a search of court records.
In 2017, Red Fox Renaissance attempted to rehabilitate the hotel to its former glory, but the group was only able to repair the facilities before negotiations to buy the property broke off. The marquee along the highway has said, “Closed for remodel,” ever since.
Werger, the city attorney, said in the statement that the city is exploring all opportunities to redevelop the hotel and has fielded inquiries from some interested groups and individuals.
“Any parties interested in discussing redevelopment are urged to contact the City of Waverly Economic Development office,” Werger said.