Izatys sale may bring cash to pay off its debt

From a simple fishing camp to a resort with two championship golf courses, there has been an Izatys on the southwest shore of Lake Mille Lacs for more than 80 years.

Now, the venerable recreation spot, which abruptly closed late last year, is on the auction block as part of a bankruptcy, and in less than a month it should be in the hands of new owners.

Among the possible bidders? The Mille Lacs Band of Ojibwe, which owns a 494-room hotel and casino just up the road.

The Mille Lacs Band, should it make an offer, likely will not be alone. The attorney representing the resort owners in bankruptcy and the auction house handling the April 3 event report widespread interest in Izatys and believe the facility will be up and running by late spring.

"We've had lots of inquiries and onsite tours from all across the country," said James Baillie, a Fredrikson & Byron attorney representing owners Dave Kramber, David Thomas and Al Gluck, who were unavailable for comment. "We've had 165 inquiries and some are very enthusiastic."

A sale to the Mille Lacs Band would allow the tribal organization to add two golf courses, a marina and other amenities to its growing casino on Hwy 169. That would put the Mille Lacs Band in the company of other Minnesota bands that have their own designer golf courses tied to casinos, including the Wilderness at Fortune Bay in northern Minnesota and the Meadows at Mystic Lake in Scott County.

"Everybody up here has been buzzing about that except the band," said Judy Cain, director of the Mille Lacs Area Tourism Council.

In a statement to the Star Tribune, the band was circumspect.

"The Corporate Commission of the Mille Lacs Band of Ojibwe Indians has not yet determined if it would pursue buying Izatys," commission spokeswoman Patty Dunn said.

The resort is being sold through the Albert Burney Auction Co., which specializes in high-end properties. Izatys is being offered as seven individual parcels, including the golf courses, marina, lodge and maintenance buildings. Bids can be made on one or more of the parcels.

From 1922 to 1987, Izatys primarily was a family resort, owned and operated for much of that time by Jerry and Dorothy Dubbs, and Dorothy's family before that. Minneapolis businessman Chip Glaser then purchased the resort, invested several million dollars for a marina and a golf course and transformed Izatys into Izatys Golf and Yacht Club. Glaser sold the resort to Kramber, Thomas and Gluck in 2003. They filed for bankruptcy in December.

Over the past decade, Izatys, in some ways, was a victim of circumstances. Like other northern Minnesota resorts, it suffered in recent winters because of the lack of sufficient snow for snowmobilers and cross-country skiers.

Izatys also was late to the table as a golf destination, as courses popped up throughout the northern half of Minnesota. Izatys redesigned an old course and opened a new championship course in 1998 and 1999, eight years after the Pines at Grandview Lodge opened to become one of Minnesota's premier resort courses. The Preserve in Pequot Lakes and the Classic at Madden's Resort also opened before Izatys had its 36-hole layout ready.

As a result, play at Black Brook and the Sanctuary at Izatys has been below the volume at other courses. According to the auction sheet, each Izatys course had 15,000 rounds per season.

"Fifteen thousand is not too bad, but an 18-hole higher-end course should be doing 20,000 rounds in a resort area," said Eric Peterson, Grandview's director of golf.

Izatys also doesn't belong to the "Brainerd Golf Trail," a marketing and advertising coalition of 17 resorts and golf courses in the Brainerd lakes area, all within 45 minutes of one another.

"It's a beautiful property but it's going to need a lot [of upgrading] to get up to speed," Cain said. "Izatys is a big part of our industry. It's been a real disappointment to see what has happened to it."

Bill Lundeen, owner of Lundeen's Tackle Castle in Onamia, said Izatys also fell victim to cutbacks in corporate outings for clients and executives.

"The corporate groups just don't spend like they used to," said Lundeen, a fishing guide who worked out of Izatys' marina for more than 10 years. "I used to fish with people from companies like 3M and Cargill. I still do, but now I take out a dozen guys. Before I used to take out a dozen boats."

When the owners closed the doors last fall, their bankruptcy filing showed liabilities of nearly $5.9 million, including a first mortgage of $3.1 million, unpaid taxes, unpaid vendors and thousands of dollars in time-share rentals collected on behalf of condo owners affiliated with the resort. The Mille Lacs County assessor valued the resort at $5.3 million.

Gross revenue for 2007 was $2.8 million, a 15 percent decline from nearly $3.4 million in 2006, according to bankruptcy documents.

But Baillie, attorney for the owners, predicted the bankruptcy sale will allow all creditors to be paid and provide some profit to the owners.

"This is one of the best-known resorts in Minnesota," Baillie said.

"It's close to the Twin Cities, it's on a premier fishing lake, it has two golf courses and a marina. It's got a lot of amenities."

David Phelps • 612-673-7269