In early November, they bought the Ogden River Inn, a run-down motel - it was known as a flop house for drug dealers - and its long-vacant restaurant building perched above the Ogden River.

They ousted nearly every tenant and posted new rules that do not abide drugs or other illegalities.

But five months after buying the inn, Moyal and Johal, a native of India who has operated BC Chicken in Ogden for a decade, wonder if what they thought was a gold mine might instead turn out to be fool's gold.

Their plan was to spend about $300,000 to upgrade the motel and reopen the restaurant, where they wanted to serve Indian cuisine at tables near windows that face Ogden's mountains and from a patio next to the rippling water.

They hoped to make enough money to replace the old buildings with new ones in five or six years.

Their land is part of the Ogden River Project, a long-dormant redevelopment effort that is coming to life. But the Ogden River Inn, in the heart of a redeveloping commercial district, has become prime riverfront property

It fronts Ogden's downtown main street, Washington Boulevard, just up the street from where millions of dollars are being spent to build The Junction mall.

"We figured it was a gold mine," says Moyal, a transplant from Arizona and California who fell in love with Ogden - and its opportunity for real estate investors - on a visit here three years ago.

Now they aren't so sure.

"We didn't buy this to run as a dive motel. We bought it to clean it up, make it nice, make it pay for itself so we could afford to go to the next level of development," says Moyal.

They fear the city - whose officials they say want them to tear down the buildings to make way for commercial buildings and loft housing - will force them out.

"The city is trying to [make us] spend money we don't have," says a bitter Moyal. "Since we don't have it, they're graciously offering to give our property to one of their buddies."

River redevelopment

Moyal and Johal became owners in the Ogden River Project at just the wrong time - or right time, depending on one's perspective.

The project was conceived six years ago as a way to finally make something of the river running through the heart of downtown, while also helping reduce blight and creating economic opportunities on 60 central acres. Now, it is finally getting under way.

The effort was stalled for several years as Ogden focused its time and money on The Junction. Then, by a vote of the 2005 Legislature, the city lost its right to use eminent domain and threaten its use for redevelopment.

But the river project is hot, now that The Junction is under construction, the Legislature has given cities back the right to use eminent domain and real estate investors are flocking to a reviving Ogden.

"Businesses are wanting to move downtown," says Mayor Matthew Godfrey. "The market is right."

Increasing interest in real estate development downtown was one reason city planners persuaded the City Council in January to put a six-month moratorium on zoning changes and building permits in all parts of the project that the city does not yet own.

It was that moratorium, passed Jan. 2 but backdated to Dec. 20, that froze Moyal's and Johal's ability to do anything but maintain their inn and vacant restaurant building.

In the interim, the Ogden River Project's 12-acre first phase, where the city of Ogden bought and demolished 40 homes and businesses this winter, is attracting commercial developers.

Buyers are lined up for all eight lots, which will house shops, restaurants and some loft housing.

The first, Bingham Cyclery, plans to begin construction this month on its building on Washington Boulevard, just across the river from the Ogden River Inn. The Sunset-based chain of five Wasatch Front stores plans a bike shop that will offer rentals and a patio restaurant.

Although the first phase will be almost entirely commercial, later phases to the west - and across the river - will include 600 patio and townhomes, as well as apartments.

Bill Wright, the city's community-development manager, said he continues to negotiate with property owners to buy the approximately 90 homes and businesses in the rest of the project.

It will close on purchases when it is able to acquire all the property, demolish old structures and offer the raw ground to developers.

Godfrey said there is no fixed timetable for the later phases, although he thinks the project could move quickly.

The mayor does not expect that the city will avail itself of the new eminent domain law, which would have to start with a petition from landowners.

The mere existence of a city's right to eminent domain, however, can affect negotiations.

Property rights

Godfrey says it is not Ogden's intent to push Moyal and Johal off their property.

But he expects them to work with the city to come up with a development plan, an effort under way between business-development manager Scott Brown and Moyal.

Moyal and Johal say they bought the property only after being assured by one of Brown's staffers, Ryan McFarland, that the city had no plans to develop their part of the river project for five or six years, which dovetailed with their timetable.

McFarland could not be reached for comment on this story.

Shortly after they bought the inn and began jumping through the hoops to get the zoning and permits in place to reopen the restaurant and remodel the hotel, they heard numerous city officials deride the inn as worthy of nothing but a wrecking ball.

Their request for a business license was denied, but after an appeal, they were given a six-month temporary license.

The Planning Commission denied their request to rezone the vacant restaurant building, and the city said their site plan was not sufficiently detailed to pass muster.

Midway through their dealings with the city, Moyal and Johal were told of the moratorium, which stopped them from making any improvements to the property.

So far, the options proposed by business-development manager Brown are too ambitious for his pocketbook, Moyal says. He fears that, come June, the new zoning will bar the restaurant and prohibit any substantial improvements to the motel.

Without the revenue from both, the partners say they will be forced to sell to the city or another buyer.

At Moyal's request, Craig Call, Utah's Salt Lake City-based property ombudsman, is looking into whether the city's moratorium was legally justified.

But Moyal and Johal are not optimistic.

"They want big names. They want the Larry H. Millers coming in here. They don't care about Michael and Singh," Moyal says.

kmoulton@sltrib.com