Water Cutoff Threat Gets Days Inn To Pay Up – September 2, 2010

Thursday, September 2, 2010

Terrence McNally

Eye Business Editor

VALLEY WEST – With glacial speed, Arcata is finally seeing some payments come in from the long-delinquent Days Inn hotel in Valley West.

According to City Finance Director Janet Luzzi, it’s been a two-year process met with both silence and hostility from Days Inn management. She has been working on collecting payment since 2008 on a continually growing sum of both Transient Occupancy Tax (TOT) and water bills. Visits to Days Inn management to deliver bills have required the attendance of Arcata Police officers.

To date, Luzzi says the money owed Arcata is approximately $150,000 with about $120,000 owed in TOT – taxes collected on room bills as quests check out. Considering Arcata’s annual TOT take is about $900,000, the $120,000 at Days Inn is a sizable lump.

Day’s Inn’s battles with the City haven’t deterred it from innovating. The troubled Valley West motel’s new barbecue restaurant is soon to debut. TMc | Eye

Both Luzzi and City Manager Randy Mendosa point out that the back TOT cash was never Days Inn property, simply room tax collected by the front desk on behalf of the City.

“This is what you owe the people of Arcata,” Mendosa said he’s relayed to Day Inn’s parent company, Penta Hospitality of San Jose.

“A lot of businesses are hurting,” Mendosa conceded. “But they [Penta] have a lot of properties. It’s disappointing. I can’t loan the people’s money. And I’m not running a collection agency.”

Last March, Arcata won a $92,667.99 judgment related to delinquent TOT against Penta and a lien was placed on the hotel. Arcata will see its back taxes to that point, but only when and if the hotel is sold to a second party. In the meantime, utility and TOT charges have been accumulating.

Mendosa has been reluctant to trip the final switch – shutting off water to Days Inn – fearing that the hotel’s closure would mean the elimination of dozens of Arcata jobs and create a blight spot in the heart of Valley West.

However, in June he threatened to do just that – submitting a letter to Penta’s principals, Tarun Patel, Anil Patel (no relation) and Mukesh Mowji, that the City was moving to shut off utilities to Days Inn.

The threat resulted in an immediate lump payment to the City totaling $25,000. Furthermore, according to Luzzi, Arcata negotiated a monthly payment plan of $14,000 to begin slicing away at the TOT and water bills. Penta made both July and August payments of $14,000.

“I am gravely concerned if this arrangement is going to work,” Mendosa said. Should Days Inn miss a payment, the hotel loses water service.

“They’ve never threatened to turn off the water.” Days Inn Manager Mike Miller said. “We made an arrangement with them. Water is not the issue and never has been.”

In April, Days Inn owed $22,776.62 in unpaid water bills.

However, Penta co-ower Tarun Patel is more conciliatory and said that Penta was working to pay Arcata. “We understand that we do owe this debt. The hotel industry has been struggling, but we’re on a plan and looking forward to better times. The City has been very patient with us.”

Tags: ,