The Paducah City Commission tonight may discuss buying the Executive Inn from Logan Asset Backed Fund for $1.8 million.
The agreement to purchase the closed hotel is key to settling a lawsuit with dual foreclosure claims from Logan and the Paducah-McCracken County Convention Center Corp.
“We are working on something and at this point don’t know if everything will be ready for the meeting,” Mayor Bill Paxton said late Monday. “We are waiting to hear from the attorneys.”
Sources familiar with the negotiations say the discussion will be added to tonight’s agenda if the city’s attorney sees a signed agreement from hotel owner Bhupinder Singh relinquishing ownership to Logan and that Logan signs an agreement to sell the hotel to the city for $1.8 million.
Logan holds a $3.5 million mortgage on the Executive Inn. Tonight ’s action would be the first reading of an ordinance to buy the hotel and discussion of the details. A formal vote would be taken in two weeks.
Under the tentative deal, Logan would absorb a $1.7 million loss on the mortgage plus interest estimated at $1 million. However, the company would avoid assuming responsibilities associated with owning the hotel until it could be sold at a court-ordered foreclosure auction.
Also, Singh would be paid an undisclosed amount for agreeing to transfer ownership without a lengthy lawsuit.
Logan wants the deal finalized by the end of the year so the loss can be written off in its 2009 taxes, according to those close to the negotiations.
Todd Farmer, Logan’s lo-cal attorney, and John Reed, Singh’s attorney, did not return telephone calls seeking comment. David Denton, the city’s attorney, said he couldn’t confirm he’s been involved in the negotiations.
The city is interested in the hotel because it is connected to the Julian Carroll Convention Center and Paducah Expo Center, which have seen little use since the hotel first closed in September 2008. The convention center corporation owns the facilities.
If the deal goes through, the tentative plan is to raze the hotel and then accept proposals from developers to build a new hotel of about 220 rooms, according to previous comments from Paxton and sources interviewed Monday. The Executive Inn, built in the early 1980s, has 436 rooms.
The purchase price and demolition would be financed with a bond issue repaid over 10 to 20 years.
The city is expected to ask the county to share in the costs, although Judge-Executive Van Newberry said late Monday that the city hasn’t contacted him and he wasn’t aware a deal is in the works for the city to buy the hotel.
Newberry would not comment when asked if the county would be willing to pay part of the costs.
The proposed purchase price of $1.8 million was confirmed by two sources close to the negotiations who said they believe details needed to be made public in advance of the commission’s formal discussion.
Also, as part of the deal, those two sources and another source said the city is considering paying a portion of what is owed to contractors, utility companies and others who hold liens on the hotel.
Contractors, who did work to reopen the hotel for last April’s quilt show, hold most of the liens. The liens, loans and other payments are about $800,000, and the city would pay 50 cents on the dollar.
Paxton would not confirm terms of a possible deal, saying it isn’t official until agreements are signed. “I can’t say anything,” he said. “It could jeopardize what’s going on.”
City Commissioner Gerald Watkins said discussions have been held in closed meetings regarding a possible settlement, but he declined to comment.
Jim Sigler, convention center corporation board chairman, said he will attend tonight’s city commission meeting. The corporation owns the land on which the hotel sits.
Sigler’s purpose, however, is to ask the city for $150,000 to help pay expenses of operating the convention and expo centers for the next six months. He hasn’t been officially told that buying the hotel will be added to the agenda, but will be ready to discuss it if asked.
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