2 former St. Clair properties sold for $24.4M after foreclosure
A pair of companies owned by the founders of Las Brisas Property Management has purchased two beachfront buildings in Isla Verde once owned by British entrepreneur Keith St. Clair and slated to become hotels Jade and Noir, News is my Business confirmed.
In April, Gardenia Hotel Partners, LLC purchased for $21 million, via public auction the property that was to become the Jade hotel, according to the deed. Meanwhile, Amapola Hotel Partners, LLC picked up the former Hotel Empress — which was to become the Noir — and a second adjacent property for $3.4 million.
The two firms bought the properties after St. Clair defaulted on loans from Banco Popular de Puerto Rico (Jade) and FirstBank (Hotel Empress), and they entered a foreclosure proceeding.
The buyers founded Las Brisas Property Management 13 years ago, one of them being its CEO, Jacobo Ortíz. Las Brisas Property Management oversees numerous complexes, including Paseo Caribe in Puerta de Tierra.
The purchase price for the Jade includes hotel equipment that the buyers accepted as part of the deal, a source said.
When St. Clair announced his plans for the properties, the Jade entailed a $40 million investment and would add 112 rooms to the Isla Verde area. The accommodations were to include time-share properties, which News is my Business learned were sold, but are now in limbo after the acquisitions.
“St. Clair sold numerous units at one-week intervals. Prices varied,” said the source. “The new owner received no money from the sale of the units so he will not honor what St. Clair sold them.”
A spokesperson for the new owners confirmed this information saying that while the arguments are valid, once a buyer takes over the foreclosed debt, it is not obligated to fulfill the prior owner’s commitments.
Meanwhile, the Noir was supposed to be a 17-story hotel comprising 110 rooms, with a projected investment of $60 million.
Lawmaker steps in
The sale of the properties after the foreclosures is one of many that have swirled around St. Clair since his arrival on the island in 2015, when he became a resident and secured tax breaks through Acts 20 and 22, through which the government grants tax credits for investments and exports.
As part of his “mission and vision for Puerto Rico,” St. Clair announced lofty development plans in tourism, in which he vowed to generate thousands of jobs and hotel rooms. Initially, he purchased participation in the ESJ Tower property in Isla Verde, where he opened the Mare hotel and began marketing time-share units.
His arrival and management style triggered controversies with the ESJ apartment owners, some of whom reside in the building full-time and others who market their properties as time-shares. Dozens of lawsuits have been filed over the years.
As mentioned, St. Clair’s plans called for opening the two neighboring hotel properties in Isla Verde in 2018 (Jade) and 2019 (Noir), as well as several other tourism-related projects in Vieques and Cayey — none of which came to fruition. He blamed the COVID-19 pandemic for the delays and other problems.
In 2018, flanked by local government officials, St. Clair announced plans to build the Puerto Rico Film District in the Convention Center in Miramar, which as News is my Business reported exclusively, was terminated last year after several extensions.
In June, St. Clair filed for Chapter 11 bankruptcy protection, citing $39 million in debt. Among those creditors are several government agencies, including the Puerto Rico Treasury Department, and the Puerto Rico Tourism Co.
According to the filing, St. Clair owes the local Treasury Department about $1.4 million in unpaid taxes for different concepts — Sales and Use tax, corporate income tax, professional fees withholdings and income tax (payroll) withholdings. The Tourism Co. is owed about $46,000 in unpaid hotel room taxes.
On this issue, Treasury Department Spokeswoman Vilmar Trinta said the agency does not provide tax information on any process involving a taxpayer unless there is a public complaint in a criminal case.
“As in any jurisdiction in the world that collects taxes, in Puerto Rico there are also taxpayers who owe the state. For example, our records indicate that approximately 14,000 Treasury debtors have faced or are currently facing bankruptcy proceedings before the courts,” she said.
“The Department recurrently notifies and makes administrative efforts to collect contributions from taxpayers who have entered into arrears with the agency,” Trinta said, noting the agency is governed by the legal parameters and regulations of the Internal Revenue Code that apply equally to all taxpayers.
Meanwhile, Carlos Fontán, director of the Department of Economic Development and Commerce’s (DDEC, in Spanish) incentives office — responsible for approving the tax breaks — said while St. Clair’s personal decree under Act 22 is still valid, the one he had for film industry projects has been revoked.
In response to questions from News is my Business, Fontán said, as it stands, “applicable laws don’t call for an automatic cancellation of decrees if the beneficiary files for bankruptcy.”
This week, Rep. Mariana Nogales, of the Citizens Victory Movement (MVC, in Spanish), asked DDEC Secretary Manuel Cidre to make public the names of Act 22 beneficiaries whose decrees have been canceled. To that effect, she filed House Resolution 794, which would order the House to require the information form the DDEC.
“This isn’t the first time we have made this type of request. Previously, I sent a letter to Cidre asking to indicate the status of the decree granted to Brock Pierce, who publicly declared himself a Vermont resident and, therefore, doesn’t qualify to receive the privileges of Act 22,” she said.
“He never responded to my communication. It was only later published that more than 300 decrees were cancelled. Now we have taken on the task of looking at the history of the financial disasters of alleged hotelier Keith St. Clair in Puerto Rico, and again we ask ourselves: what else do these individuals have to do for us to reconsider the granting of those privileges?” she questioned.