The University of Montana is finally walking away from the island resort business—but without much to show for it.
For the second time in as many years, the university has put the Montana Island Lodge, located on a private island on Salmon Lake, up for sale, slashing the asking price by nearly 50 percent in hopes that a buyer will take the property off its hands.
For 20 years, the university operated the 18,000-square-foot mansion as a resort, hosting weddings, overnight guests and corporate retreats. A series of dramatic events in the early 1990s led to UM's acquisition of the unusual asset, which is only accessible by boat. It was built in the 1980s by businessman Bruce Vorhauer, the inventor of the Today contraceptive sponge. Not long after he built the property, Vorhauer's life and wealth unraveled. He landed in debt after a failed U.S. Senate run and other misfortunes, including a car accident on the way to the mansion that killed his fiancèe. Vorhauer burned his yacht, which he had purchased from billionaire businessman and UM donor Dennis Washington, a day before it was to be repossessed, according to an account of his life in the Los Angeles Times. A year later, facing an arson investigation, Vorhauer was found dead across the shore from the lodge, an apparent suicide.
Washington subsequently bought the property for $2.2 million at a foreclosure auction, then gifted it to the University of Montana Foundation in 1996. The island lodge was valued at $4.8 million at the time, according to UM Foundation financial statements. The university has leased the property from the foundation since, employing a caretaker and maintenance workers to manage the island.
What began as a gift eventually became a financial and management headache, and in 2014 the university decided to sell. But unloading the property proved difficult. The original $6.5 million asking price generated little interest, prompting UM to reconsider its options once the listing expired in October 2015.
"If we had to drop that price a lot, it doesn't really benefit the institution," Vice President for Administration and Finance Mike Reid told the Missoulian in January.
UM's calculus changed in the months that followed. The university shut down the lodge by spring and informed the UM Foundation that it would terminate its lease by January 2017, or whenever the property sells (whichever comes first). Officials say the decision was financial.
"The facility did not generate sufficient revenue to keep up with management and maintenance costs," spokeswoman Paula Short says.
- photo courtesy of Cole Bergquist
- The University of Montana Foundation re-listed its Montana Island Lodge for sale in August and reduced the asking price by 46 percent.
Associate Vice President of Administration and Finance Beckie Christiaens adds that the facility brought in roughly enough revenue to cover operations, but not enough to afford the long-term maintenance and capital upgrades required. With no bookings last summer to bring in revenue, the lodge ran a $40,000 deficit in 2016 and will continue to bleed utility costs until it's sold or the lease expires. No employees are assigned to the facility. Its phone lines are disconnected.
In August, the UM Foundation re-listed the property with a new real estate agent: former Grizzlies quarterback Cole Bergquist, who specializes in high-end residential realty with Sotheby's. They also reduced the price dramatically, asking $3.5 million.
UM Foundation President Shane Giese says the asking price matches what a recent appraiser said the property is worth. Bergquist calls it a fair market value.
"This was definitely not a firesale price," Bergquist says.
With the reduced price, however, UM stands to reap less from the property than it might have two decades ago. The terms of Washington's gift also stipulate that net proceeds from a sale must be divided equally between the four affiliate campuses, making the dividend to main campus smaller yet. Before dividing the money, though, officials in Missoula will look to recoup the maintenance costs and upgrades it has invested at the lodge over the years, which previous news articles state exceeded $1 million. Giese says a provision in the agreement allows for UM to be reimbursed for "improvement work" before the remaining money would be distributed, a phrase he says is "open to interpretation."
At least this time around, a sale could come quick. Bergquist says a prospective buyer group put the lodge under contract less than a month after listing. Bergquist brought out the welcome wagon for the buyers' September showing, including a new boat hauled over by a Bretz RV representative so the crew could tour Salmon Lake in style.
Bergquist says the partners, who are based in Salt Lake City, have "a lot of different visions" for the property. The agent's Facebook page also indicates he may have been able to leverage his football past to make the saleone of the buyers is an old teammate from his time in the Canadian Football League.
But the deal isn't final, Bergquist notes, with a presale inspection of the property still pending.
"We're nowhere near out of the forest yet," he says.