The plan to turn Oheka Castle over to golf champion Jack Nicklaus and developer Stanley Gale is all but “dead,” Gary Melius, the historic castle’s owner, said Thursday.
Melius said he does not expect the plan to transform Oheka and the Cold Spring Country Club into a Nicklaus-branded championship golf course and condominium community to proceed.
The proposal was intended to create “one of the finest golf courses in the world,” according to a letter from the club’s board president, Marvin Adler, to club members in the spring.
The plan also would have brought to a close the castle’s status as a destination for Long Island’s political power brokers and allowed Melius to repay the castle’s debt. Oheka owes $26 million on its two mortgage loans, according to an August report by Trepp LLC, a Manhattan-based company that tracks commercial mortgages.
Gale, Nicklaus and Adler could not be reached Thursday.
Melius said he couldn’t reach an agreement with Gale on the proposal.
Two people with knowledge of the proposal confirmed that it had fallen through during negotiations over terms.
Melius was shot at the castle in 2014, a crime that remains unsolved. Newsday reported this week that federal prosecutors issued subpoenas for records from the Elena Melius Foundation, a charity run by Melius, as part of a grand jury investigation that also involves charities run by former New York Sen. Alfonse D’Amato and former counsel to the Nassau County Democratic Party Steve Schlesinger.
Referring to news reports about his charity, Melius said, “I give millions of dollars away to charity. I have never taken a nickel in administrative fees.”
The Nicklaus development plans, reported by Newsday in April, called for a $20 million makeover of Oheka and the club, and the construction of condominiums along the “great lawn” of Oheka, according to the letter that Adler sent to club members. Oheka Castle would become the members’ clubhouse, with dining facilities, a pro shop and new lockers. The plan also called for a spa.
The club would get $16 million at the contract closing, in addition to a previous $6.4 million payment from Oheka. Club equity members would get $150,000 each.
Melius and the country club intended to hand over the castle and the club’s golf course to Nicklaus and Gale in a 99-year lease, Adler wrote. The total value of the deal would be $66.25 million, Adler wrote.
Melius said he still plans to build condominiums with a different partner.
In July 2015, the Town of Huntington’s planning board gave conditional site plan approval for 190 condominiums to be built on the grounds of Oheka and the club, town spokesman A.J. Carter said Thursday. No plans have been filed regarding the Nicklaus proposal, Carter said Thursday.
The news of the Nicklaus development hitting an impasse comes as Melius faces a foreclosure lawsuit by Oheka’s lender.
The lender, U.S. Bank N.A., filed a lawsuit naming Kahn Property Owner LLC, Melius and other defendants, a notice filed in state Supreme Court in Suffolk County shows. Kahn Property is the entity that owns the castle, public records show.
The court document, filed in June, does not necessarily mean the lender is determined to pursue a foreclosure sale, said Sean Barrie, a research analyst with Trepp. Lenders, he said, typically file foreclosure actions while they continue to negotiate with borrowers “just to have all their bases covered,” Barrie said.
Melius said he does not expect the foreclosure filing to interfere with his plans to build condominiums. He said of his lender, “I’m going to make a deal with them.”
LNR Partners Inc., based in Miami Beach, Florida, which services Oheka’s loan, did not respond to calls for comment by deadline.
The castle has two loans, Trepp reported this month. The larger loan’s balance is nearly $21 million; Trepp reported that “no loan payments have been made since December 2015.” The other loan, with a balance of $5.14 million, was listed as current.
Melius defaulted on the castle’s previous, nearly $28 million mortgage in 2013, according to Trepp. He negotiated a modification of the loan the following year and received a five-year reprieve, according to Trepp.
With Gus Garcia-Roberts and Mark Herrmann