Hotel agreement on hold

SHEFFIELD - City Attorney Vincent McAlister is recommending the city accept an agreement with the long-term lease holder of the Holiday Inn hotel that includes paying back taxes.

Under the agreement, Wells Fargo Bank, which holds the lease to the 202-room hotel, would pay the city about $65,000 in back taxes.

The city would continue to lease the hotel to Wells Fargo, as it has done with the various owners since the hotel opened in the early 1980s.

A Sheffield resident and hotel industry consultant, however, wants the city to consider another option.

David Larson is trying to set up a meeting among himself, a real estate attorney he would bring to the meeting, McAlister and members of the city council to discuss the possibility of the city selling the hotel to an investor who has plans to make major renovations and improvements.

The Holiday Inn on Hatch Boulevard has been embroiled in controversy since the summer when it was learned that employees' paychecks were bouncing and taxes and utility bills were not being paid.

The Sheffield City Council terminated its lease with Portfolio Sheffield, a company that leased the hotel from the city since 2006. Portfolio Sheffield was owned by Kronos Hotels, of Atlanta, which has been having similar problems with hotels it owns across the country.

Through a series of hearings in state and federal court, it was determined that Wells Fargo Bank had an interest in the Sheffiled hotel and a federal judge placed the facility in receivership.

The receiver, Prism Hotels and Resorts, is operating the Holiday Inn.

The city council was prepared to act on McAlister's recommendation earlier this month, but Larson persuaded them to reconsider until he had a chance to meet with them and McAlister and make a counter proposal.

Larson said that according to an addendum to the hotel contract, Wells Fargo had a duty to notify the city that it had purchased interest in the hotel.

Because they failed to do so, Larson said Wells Fargo has no claim of ownership in the hotel. He said the city should be able to negotiate with other potential buyers.

McAlister said it's unknown what course of action Wells Fargo will take to protect its interest in the hotel.

Councilman Gary Scales said he is hopeful that the hotel will end up in the hands of a reputable company.

Scales said he is intrigued by a proposal by a client of Larson's who is interested in purchasing the hotel and building an enclosed water park in the existing courtyard.

Scales said he did not want to see the Holiday Inn, an important source of income for the city, to end up the way several formerly Kronos-owned properties have.

"Several (hotels) have shut down in different places," he said.

"We certainly don't want that to happen. The Holiday Inn is important to the area and to Sheffield."

Scales said he hopes to get an update on the situation during the Jan. 5 city council meeting.

Larson said he had yet to set up a date to meet with the city's attorney.

"I'd like to see us move as quickly as possible," Scales said. "I don't want it to stay in limbo."

Russ Corey can be reached at 740-5738 or russ.corey@TimesDaily.com.