Park Motels and Resorts, which mentioned final month it was stopping debt funds on two of San Francisco’s most outstanding inns, has filed a lawsuit towards town alleging it was improperly taxed.
Three lawsuits filed in San Francisco Superior Courtroom on June 27 allege that metropolis businesses “illegally and erroneously imposed” property switch taxes on the Virginia-based actual property funding agency after it took management of three inns within the metropolis.
The authorized dispute is only one instance of actual property upheaval arising from the pandemic, when inns and workplace buildings fell into monetary misery. Town is seeing an uptick in property tax appeals, and a few Downtown workplace buildings have bought at important value cuts.
When Park Motels took over management of the inns, the corporate valued the properties in whole at $353 million and paid a switch tax of round $10.6 million on the three properties.
A number of months later, the go well with alleges, the Workplace of the Assessor-Recorder got here again to Park Motels and mentioned its willpower of truthful market worth for the properties was round $532 million, and subsequently, a better degree of switch tax was required.
Concurrently, Park Motels filed property tax evaluation appeals for the three inns disputing the quantity posed by the assessor-recorder. In February, the evaluation appeals board set a brand new truthful market worth at $484.3 million, in between Park Motels’ and the assessor-recorder’s quantity.
The lawsuits allege that the assessor-recorder incorrectly decided the upper tax cost, which included late fee penalties and non-taxable belongings comparable to private property as a part of their calculation.
“The 25% Penalty and 10% Penalty are unconscionable, extreme, unlawful, and unconstitutional as they’re punitive in nature and bear no affordable relationship to the offense of Plaintiffs’ alleged underpayment of actual property switch tax,” the lawsuits state.
Park Motels is in search of a refund of roughly $8 million in switch tax funds that it mentioned had been incorrectly calculated, along with prices and curiosity on the refund and lawyer’s charges.
“As soon as we’re served with the lawsuit, we are going to evaluation the criticism and reply appropriately,” mentioned Alex Barrett-Shorter, a spokesman for the Metropolis Legal professional’s Workplace.
Considerably paradoxically, Park Motels has already divested from two of those properties, promoting off the 360-room Le Méridien within the Monetary District for $221.5 million and the 171-room Resort Adagio for $82 million in 2021.
Park Motels nonetheless at present owns the 344-room JW Marriott Union Sq. along with the 316-room Hyatt Centric Fisherman’s Wharf.
In explaining its determination to desert the 1,921-room Hilton San Francisco Union Sq. and the close by 1,024-room Parc 55 San Francisco, Park Motels mentioned it was attempting to “materially scale back our present publicity” to the San Francisco market.
“Now, greater than ever, we consider San Francisco’s path to restoration stays clouded and elongated by main challenges—each outdated and new,” Park Motels CEO Thomas J. Baltimore Jr. mentioned in an announcement on the time.