With the fire-damaged Karakahl auctioned off to the bank, village leaders mull land’s fate

The 2024 Presidential Election was taking place. While people across the nation waved signs, yelled at one another on social media, and headed to the poll to cast their ballots, an era was quietly ending in the Village of Mount Horeb. The Karakahl Country Inn was sold at a Dane County Sheriff’s Office foreclosure auction, and the East Coast-based Home Loan Investment Bank, which previously held the mortgage, became the property’s owner.

Located at 101 Perimeter Road, the Karakahl has a complicated history. It is inarguably one of the region’s most architecturally significant buildings, and it was once a swanky destination for travelers from far and wide, offering the weird and wonderful vibe of a Frank Lloyd Wright-inspired building housing a motel, a pool, and a restaurant enjoyed by locals and out-of-towners alike.

But by any definition, it has seen better days, and its remaining days are numbered.

Following years of decline accentuated by a fire that broke out in 2023 and subsequent water damage, the Village of Mount Horeb issued a raze order on the building last year. The owners of the Karakahl attempted to fight the order in court, but with the sale of the building in the fall, the building’s fate was essentially sealed.

“The lawsuit from the previous property owner for an injunction on the raze order is null now that it is owned by the bank, but the village raze order still stands,” said village president Ryan Czyzewski. “The board does not intend to take action on it, though. Since we anticipate a private entity purchasing the property for redevelopment, we can avoid that unnecessary expense to the village.”

While the exact fate of the land isn’t known, village leaders are currently working with potential buyers and developers to encourage a form of redevelopment in line with their goals.

“Since the bank took possession of the property, we have been in contact with a broker they have hired,” said economic development consultant Kristen Fish-Peterson.

“I’ve been asked to start drafting a TIF (Tax Increment Financing) project plan for that property and the vacant land across the street,” she added.

“Administrator Nic Owen and … [Kristen] have been in communication with the bank and connecting them with potential buyers [and] developers,” said Czyzewski. “Though the village can’t dictate who the bank sells to, we have given information as to what types of uses the village is interested in and fits in our comprehensive plan.”

He went on to say there are several types of development that could end up on the land.

“Most, if not all, of the developers that have contacted the village about it are interested in a primarily residential component due to its location near so many supporting businesses and services,” he said. “Some of the things we’ve recommended are senior housing, a group home for individuals with disabilities, mixed-use (commercial and residential mix), and workforce housing that helps with the ‘middle housing’ gap we’ve been discussing at [Community Development Authority,  Planning Commission and Village Board].”

Village leaders could consider creating a Tax Incremental District (TID 6) for the property and nearby properties to help pay for the redevelopment. 

“That will also help with incentivizing the type of redevelopment [that] is done with the property,” he added.

The official listed name of the new owner of the Karakahl is Wickenden St LLC.   

When the Karakahl Motor Hotel first opened its doors in 1964, it was lauded as an architectural landmark and a boon to the local economy. Designed by architect John Steinmann, who also crafted the Wisconsin Pavilion for the New York World’s Fair, the building featured a dramatic, swooping saw-tooth roofline, a swanky restaurant that looked like it had popped out of a Raymond Chandler novel, a sunken rock garden, a large pool, and walls covered in audacious colors. It was designed “with the Norse culture of the community” in mind, according to an article in the Capital Times that said it would “aid [the] Mt. Horeb economy.” Behind the project was C.S. Gonstead, the famous chiropractor who worked out of the similarly Frank Lloyd-Wright-inspired clinic located just behind the hotel. The newspaper in 1964 said it was the only motel in the area to offer dining accommodations.

When Gonstead’s widow, Elvira, died in a local housefire in 1991, her obituary noted that she had been the hostess at the Karakahl Inn, where she opened and managed her own dress shop.Several people claimed the word “Karakahl” was inspired by the Bible and meant, “Leave your cares.” A Kara Kahl is also a variety of Alpine goat.

The hotel that stands today – at least for now - is actually only a portion of the original structure, part of which was torn down and replaced by the Walgreen’s currently located at 1401 Springdale Street.

County records show the land, totally roughly two acres, and building are currently valued at around $620,000.