APTOS >> The sale of the historic Bayview Hotel in Aptos Village, once thought to be on the glide path to success, has fallen through and the 147-year-old building is back on the market.

Datta Khalsa of Main Street Realtors, who had been facilitating the purchase on behalf of owners Cristina Locke and the Locke family, said the plug was pulled in late December due to, “some internal dynamics in the family,” and a second guessing on the buyer’s part about “the financial viability of the hotel at the price that was negotiated. Rather than renegotiate, (the buyer) cancelled.”

Khalsa told the Sentinel in November that the Lockes had accepted a purchase offer from a qualified local developer that was above the $3.9 million asking price. The buyer, he said, had put a deposit for the property into escrow with the deal expected to close only a month or two later. It was Khalsa’s understanding that the developer intended to renovate the three-story, nearly 10,000-square-foot hotel “to its full potential as a historic hotel, bar and grill, and events center.”

When the original sale fell apart, Khalsa said the Lockes pursued a backup offer that also proved unreliable, so the property was put back on the market almost two weeks ago.

Since then, multiple offers have come through that are less than the asking price, including from the original party, Khalsa said, setting the stage for another round of negotiations.

“Part of it was there’s more deferred maintenance than had been originally expected,” said Khalsa, acknowledging that it could take $1.5 million or $2 million to fully restore the hotel, which has not been in active operation for more than four years.

For the record

What was decidedly not a factor in undermining the November deal, Khalsa stressed, was a sticky legal battle playing out only a few yards from the hotel’s front door at the Santa Cruz Branch Rail Line. Locke and the owners of the Trout Gulch Crossing parcel that sits next to the Bayview, Betty 41st LLC represented by Laurie Negro, have been in a legal battle for years with the Santa Cruz County Regional Transportation Commission, the owner of the rail line.

The commission is making plans to establish a multi-use trail alongside the rail corridor that would eat into some of the parking area in front of the businesses, claiming the property deeds give it the right to do so.

Locke and Negro contend the parking area belongs to them, forcing the commission to ask a Santa Cruz County Superior Court judge to resolve the dispute.

Khalsa, in an attempt to correct false rumors he’s heard circling in the community, said the trail project was not a factor in the collapse of the original deal.

He said the prospective buyer had voiced some concerns about the dispute and the impact on parking early in the sales process, but he was reassured after learning that the back side of the Bayview property had more than enough room to make up for the parking that would be lost by the trail project.

“Those concerns were satisfied,” he said.

History repeats

The 14-room bed-and-breakfast, known for its late Victorian-Italianate architecture and Parisian influence, was originally constructed in 1878 by French immigrant Joseph Arano. Since the Locke family took over ownership in 2002, the historic building had been home to several restaurants including Ristorante Barolo, which was featured on the reality TV show “Restaurant: Impossible” in 2012. However, all of the various restaurant operations ultimately folded.

Aptos historian John Hibble called the hotel the “grande dame” of Aptos Village that holds a storied and circuitous history, predating almost everything that stands around it. It was declared a California State Historic Monument in 1974 and listed on the National Register of Historic Places in 1993.

The massive, sprawling magnolia tree that stands firmly rooted at the entrance, according to Khalsa, is one of the oldest in the county.

Khalsa said the Lockes are continuing to entertain offers and negotiate the terms of a new deal, including with the developer they were in contract with late last year.

“We do have other experienced operators who are looking,” said Khalsa, “but I do think (the original developer) is a particularly good fit.”