City sues hotel for late taxes
by Nick Rappley | Patterson Irrigator
Feb 16, 2012 | 1554 views | 0 0 comments | 14 14 recommendations | email to a friend | print
Best Western Plus Villa del Lago hotel
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While the city of Patterson seeks to wrest about $173,500 in back taxes and late fees from a local hotel, the hotel owner says the city owes him $2.5 million for storm drain improvements.

The courts will ultimately decide the matter, after the city sued Best Western Plus Villa Del Lago in October in addition to its former operator, American Hotels Inc. of Hayward, and developer and owner Dominic Speno

Speno filed a cross-complaint in November seeking $2.5 million from the city for storm drain improvements made at the hotel site in 1996, when the property was still in unincorporated Stanislaus County. He had little to say about the lawsuit this week.

“The suits are fairly clear,” he said. “We’ll wait to see how they progress.”

According to civil court documents filed in the Stanislaus County Superior Court, the hotel failed to pay more than $100,000 in transient occupancy taxes — otherwise known as a hotel room tax — for the second, third and fourth quarters of 2007. An 18 percent penalty brings the amount owed, the city alleges, to $173, 498.51.

The city charges an 8 percent transient occupancy tax on all hotel rooms rented out in the city. The money is supposed to be turned over quarterly, according to state law.

Court documents indicate that the city has tried to collect the debt since late 2007.

The local Best Western’s former hotel operator, American Hotels Inc., has since dissolved, and its president, Sanjay Bakshi, has been convicted of misappropriation of public funds in San Mateo County for failure to pay more than $300,000 in hotel room taxes owed the city of San Mateo while he operated a Comfort Inn and Suites there, according to the San Mateo County Times.

A phone number listed for American Hotels in Hayward has been disconnected. The California Secretary of State website indicates that the corporation run by Bakshi dissolved in October.

Speno’s lengthy cross-complaint alleges a deal struck with the county regarding reimbursement for storm drain improvements and flood control still stands, even though the property was annexed by the city in 2004. Speno contends that the money owed in the deal, which was not paid by the county, should be paid by the city because it annexed the land.

The court documents filed by Speno contain an agreement with the county.

Patterson interim Deputy City Attorney Doug White, who is handling the litigation in the matter, would not comment much on the issue. However, he said the storm drain improvements had not come up until the city filed its suit.

“It’s interesting that this issue comes up now,” he said.

White said that time had run out on the storm drain improvements and that the debt couldn’t be collected, because it had been so long since the improvements had been completed.

Speno’s attorneys at Manatt Phelps and Phillips tried to have part of the tax debt thrown out because the debt was allegedly too old to be collected, but that motion was denied by Stanislaus County Superior Court Judge Ricardo Cordova at a hearing in late December. The next court date for the matter is a case management conference set for June 18 where the parties will determine whether they can settle or must go to a civil trial.

Nick Rappley can be reached at 892-6187, ext. 31 or nick@pattersonirrigator.com.

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