Inn dispute awaits judge

SHEFFIELD - Portfolio-Sheffield will continue to operate the Sheffield Holiday Inn - skirting the city's midnight deadline to vacate the property - while awaiting a judge's response to a complaint against Sheffield for terminating its lease.

The company filed the complaint Monday in Colbert County Circuit Court and requested a temporary restraining order against the city of Sheffield.

In the past few weeks, the troubled hotel temporarily lost its flagship and electrical power and suffered allegations of unpaid taxes. The city council voted Aug. 22 to terminate the lease because of tax payment defaults.

In the complaint, Portfolio, an affiliate of the hotel investment firm, Kronos Hotels and Resorts, of Marietta, Ga., contends Sheffield did not give proper notification of the lease termination and did not give the company 90 days to solve its problems, which they say is required by the terms of the amended lease.

Sheffield gave Portfolio 15 days to respond to the lease termination.

The complaint also requests compensatory damages, a trial, plus all costs, expenses and fees and now awaits a response from Circuit Judge Hal Hughston.

Hughston was unavailable for comment Tuesday because of his involvement in a trial in Franklin County, according to his secretary.

Sheffield Mayor Billy Don Anderson referred all comments to the city's attorney because he said it was a legal matter.

"It is postponed until the judge can hear their request," said city attorney Vincent McAlister. "We won't take any action against Portfolio-Sheffield until they have their day in court."

The complaint states that Portfolio was supposed to be notified of the lease termination.

The city notified Kronos, LLC owner Charles Morais, Kay Scholar LLP, and Greenwich Capital Financial Products, which, as of 2007, was the holder of the mortgage, according to court records and McAlister.

"Morais got a notification personally," McAlister said.

McAlister said that in 2007, however, Kronos assigned the mortgage to another group that corporate officials declined to identify.

McAlister said that Kronos sent checks to pay for outstanding taxes owed, but that those checks bounced. "They have made no attempt to pay the revenue they owe," McAlister said. When asked for the dollar amount, the attorney called it "substantial."

"The city was left with no course but to terminate the lease," McAlister said.

Donnie Allen, owner of the local tax collection service STACS, which collects the city's taxes, said the hotel has a credit on sales tax payments from the restaurant and lounge, but the hotel's lodging taxes remained past due as of Tuesday afternoon.

Susann Hamlin, executive director of the Colbert County Tourism & Convention Bureau, was unavailable for comment about the past due lodging taxes and if any effort would be made to collect them.

In the complaint against Sheffield, Portfolio countered that it had offered to "cure the alleged breaches" and that "defendant's actions have caused and will continue to cause immediate and irreparable harm to Portfolio."

The city originally leased the property in 1981 to Sheffield Motel Enterprises Inc. In 1995, that lease was amended at the same time a bond issue was secured by a mortgage, which had been fully paid at that time. In June 13, 2007, the amended lease was assigned to Portfolio Sheffield.

Amendments only deal with the holder of the mortgage, which McAlister said was Greenwich Capital Financial Products, not the unnamed current mortage holder.

Trevor Stokes can be reached at 740-5728 or trevor.stokes@TimesDaily.com.