Provo Mayor Joe Jenkins will sign an agreement approving the sale of the Excelsior Hotel now that the city council has authorized him to do so. The agreement will also settle lawsuits.
"All parties involved in the hotel (those with financial ties) have basically agreed to the sale. Now they just have to sign," Jenkins said.Victor Borcherds, owner of Heritage Mountain Resort, has already made a $3.5 million down payment on the hotel. He has offered $5.5 million for the Excelsior, but the sale is not final until litigation is cleared.
More than 50 lawyers met last week in Philadelphia to draw up contracts freeing the property from litigation and clearing its purchase. They represent bondholders, proposed buyers, federal and city governments and others with financial links to the hotel.
Jim Jardine, a Salt Lake City attorney hired by the city for his expertise in securities fraud, has been working closely with City Attorney Gary Gregerson to settle all lawsuits by bondholders against the city.
Since the city owns the land under the hotel and the parking garage, those involved in the settlement say the city has liability in the financial collapse of the hotel. They want the city to accept some loss and contribute $100,000 to the settlement.
That $100,000 will go toward $800,000 owed in back taxes. Back taxes have accrued on the garage as well as the hotel. Under the new agreement with Borcherds the city will be responsible to pay half of the insurance costs and half the electricity costs on the garage.
Jenkins said when the settlement is paid, the city will add it to the $100,000 pot. The remaining $700,000 owed in back taxes will come from Borcherds and developers. Borcherds already paid $500,000 of the $3.5 million down payment in back taxes. Developers will be expected to pay $200,000.
"All has not gone well at the hotel, so we decided to pay," Jenkins said. "The city has already expended $100,000 in legal fees. We felt like it would cost more in legal fees if we went to court."