Officials involved in the pending sale of the Executive Inn expect Bhupinder Singh’s affiliation with the hotel to end Tuesday.
Logan Asset Backed Fund is paying him $75,000 to settle a foreclosure suit, even though Singh owes the mortgage company more than $4.3 million.
The settlement, which Singh and Logan signed last month, is key to Paducah’s plan to buy the hotel from Logan for $1.8 million. The city must finalize the deal by Dec. 31, according to the purchase contract. Logan set the deadline so it can write off mortgage losses of more than $2.6 million on its 2009 taxes, Mayor Bill Paxton said earlier.
Attorneys say documents should be ready for the closing on Dec. 23. The city then plans to tear it down and find a developer to build a new downtown luxury hotel to support the Julian Carroll Convention Center and Paducah Expo Center.
It will be at least late 2012 and likely later before a new hotel opens, Downtown Development Director Steve Doolittle said.
The Sun on Friday obtained copies of the settlement agreement, purchase contract and other documents from the city after filing a request under Kentucky’s Open Records Law.
Settlement, purchase agreements
The amount of the payment to Singh was removed from the copy given to the Sun because it is considered confidential between Logan and Singh, City Attorney David Denton said. However, others with direct knowledge of the agreement confirmed the $75,000 figure.
Logan had offered Singh $300,000 during negotiations in June, according to court documents. Other terms of the June offer appear to be the same.
Singh, owner of the hotel since July 2007, would receive the payment and end his affiliation with the hotel when the Paducah-McCracken County Convention Center Corp. transfers leases for the hotel property and convention facilities to Logan, according to the agreement.
The convention center board is expected to approve the transfers on Tuesday, Chairman Jim Sigler said.
The Paducah City Commission also meets Tuesday to approve the hotel purchase. It would pay the $1.8 million with surplus funds that would be repaid later with funds borrowed through a 20-year bond issue.
As part of the agreement, Logan would not have to pay back taxes of nearly $160,000. The city, which is owed some of those taxes, will assume tax obligations to the state, county and city school board.
A l s o , Logan will receive insurance payments for damage that high winds from Hurricane Ike caused at the hotel last year. Roof damage wasn’t detected because the hotel was closed and water leaked inside, causing damage to about 50 rooms.
Court documents indicate insurance payments of $400,000.
What’s next
Paxton hasn’t ruled out accepting proposals to renovate the 436-room hotel, but said because of its age, size and unsuccessful efforts in the past, he doubts that’s an option.
Once the city owns the hotel, it would make plans to dispose of its contents, including beds, televisions, furnishings and other equipment.
Doolittle said the national liquidation firms have contacted the city seeking to hold a public action. He estimated income of about $200,000.
The city also will begin plans to have it torn down, which would cost an estimated $1.3 million.
Clearing the site would take most of 2010.
New hotel
Construction of a smaller, luxury top-name hotel isn’t likely to begin until 2011, Doolittle said.
So far, three developers have expressed interest, even though it would be spring or later before the city seeks proposals, Paxton said.
Building it on the same site on the river side of the floodwall next to the convention facilities won’t pose regulatory hurdles with the Army Corps of Engineers, Doolittle said.
The site is in the flood plain, but Doolittle said the only requirement is that structures be built one foot above the 100-year flood plain.
“There are buildings all over the city that are in the flood plain, including some in the mall area,” Doolittle said. “The fact it is behind the floodwall isn’t an issue.”
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