Holbrooke avoids water shutoff | TheUnion.com

Holbrooke avoids water shutoff

The water will continue to flow at the Holbrooke Hotel after its owners paid their bill to the City of Grass Valley this week.

Owners paid an overdue balance of nearly $4,900 on their water and sewer bill with the city Thursday, avoiding a potential shut-off next week.

“We’re pleased they came in and took care of that obligation,” said Mayor Lisa Swarthout.

The late bill led to one of the two liens placed by the city on the landmark hotel this week, the other is a still-outstanding lien of nearly $37,000 for unpaid transient occupancy taxes owed to the city. The TOT is a 10 percent tax on each hotel room let in the city.

City officials worked out a payment plan with the Holbrooke in March to settle the debts, said Community Planning Director Joe Heckel. When the Holbrooke’s owners failed to make the payments, the city filed the liens, Heckel said.

The city should go after Atlantic First Holdings, Inc. and two Utah investors, said owner Mike Nudelman; Atlantic First Holdings is the group of operators who failed to turn the TOT money over the city when it ran the hotel for the owners in 2009.

The Holbrooke’s owners won a judgment against Atlantic First CEO Randolph S. Hudson Friday in Nevada County Superior Court for damages to the business. Court officials could not confirm the amount of the decision Friday, but it was for more than $600,000, Nudelman said.

“We don’t expect to get anything out of it,” said co-owner Jim O’Brien. “If (Hudson) does have any assets, they are hidden pretty well.”

Officials at Atlantic First did not return calls for comment on this story.

The Utah investors – Toni Johnson and Gareth Atkinson of Salt Lake City – operated the historic hotel, bar and restaurant from March 16, 2009 to July 31 of that year before pulling out due to financing issues.

Atlantic First operated the hotel from Aug. 1, 2009 to Jan. 4, 2010 before leaving hastily. Workers at the Holbrooke were unpaid for a two-week period in January.

Nudelman and O’Brien stepped in again to operate the hotel after Atlantic First pulled out.

Both of the operations groups – Johnson and Atkinson and Atlantic First – failed to pay the TOT to the city, Nudelman said.

Johnson and Atkinson could not be reached for comment Friday.

Sale still pending

The operators are responsible for passing the TOT to the city, said Grass Valley Assistant Finance Director Deborah Sultan.

“But it’s ultimately the owner’s responsibility” to pay the tax, Sultan added.

“The city took no action against the other operators,” Nudelman said. “We’re current on our TOT.”

Atlantic owes $18,032.19 in TOT and the Johnson/Atkinson group owes $19,566.40, O’Brien said.

This week’s developments highlight a troubling era for the Holbrooke’s owners.

In March 2009 they announced the 1851 landmark would have to close down if it wasn’t sold. The operation groups came in at that time on lease-to-own contracts, O’Brien said.

Early this year, the Holbrooke’s sale price was marked down to $1.4 million – a discount from the $4.4 million the owners asked for in 2008.

In late July, Citizen’s Bank, which holds the mortgage on the historic property, said the owners were in default and the hotel would be placed on the auction block Aug. 23. Citizen’s later postponed that sale to make time for a buyer to close escrow on the property. The auction was delayed until 12:30 p.m. Thursday, Sept. 9.

“That sale is still scheduled to go forward,” said Citizen’s Executive Vice President Phil Campbell. It would be possible to postpone the sale if it appears the offer could move into escrow shortly after Sept. 9, Campbell added.

Hotel ownership has changed hands three times in the last 20 years. Grass Valley Downtown Association Executive Director Howard Levine bought the property in 1991 and sold it in 2002 to the Matt Weaver family.

In 2005, the current group of owners, including O’Brien and Realtor Cheryl Rellstab, bought the property from the Weaver family for about $2.35 million.

To contact Staff Writer Kyle Magin, e-mail kmagin@theunion.com or call (530) 477-4239.

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