Step into the fray?

Published 4:18 am Wednesday, August 26, 2015

The Port of Astoria faces more than $158,000 in legal fees related to a lawsuit over operation of the Astoria Riverwalk Inn.

A merry-go-round of suitors for the Astoria Riverwalk Inn — or their lawyer or real estate broker — showed up at Tuesday’s Port of Astoria Commission meeting to make their pitches.

Port Executive Director Jim Knight had called the meeting last week to hear one more presentation from the well-connected Washington hotelier Mark Hollander, who has said he wants to bring a Marriott franchise to Astoria but isn’t interested in an open bidding process.

Hollander, who operates Hollander Hospitality out of Bellingham, Wash., proposed leasing the Riverwalk Inn and a vacant land parcel owned by the Port near the Maritime Memorial, operating the 50-year-old hotel and constructing a new building on the vacant land. Knight has said Hollander is interested in multiple hotels.

Hollander said his preference is to go into a short-term lease between 90 and 180 days to assess the property and operation. His and the Port’s attorney have been working on a short-term agreement since late last month, and Hollander said he would be able to take over the hotel within two days of that agreement being signed.

“I’m prepared to take negative cash flow during this short lease period to do my due diligence, and prepare for a long-term lease,” Hollander said.

The Port estimates Brad Smithart, the current operator of the hotel through his company Hospitality Masters, owes the Port and city upward of $400,000, along with tax liens. When asked about paying them off, Hollander said Smithart’s debts can fit into a larger project, adding he wants to put $1.5 million into the hotel.

Hollander also talked about fixing up the roads, landscaping and Chinook Building around the hotel. Like the Riverwalk Inn, Hollander said it will take time to determine whether the building housing the long-vacant Seafare Restaurant & Lounge is still salvageable, adding he could turn the former restaurant into a meeting space until the market is ready for another restaurant.

“We’d like to have literally a 99-year lease,” Hollander said of the long-term.

The Port Commission recently voted unanimously to continue negotiating a short-term agreement with Hollander, but to also develop an open bidding process in which Hollander would have to compete with a growing number of suitors for the Riverwalk Inn.

Hollander said he would not be willing to compete in that process. He, Knight and the commission met in a closed executive session after the meeting to discuss his proposal more in-depth.

Preceding Hollander’s presentations were pitches by several other suitors for the hotel during public comment.

Ganesh Sonpatki, a Portland operator of nine budget hotels through Param Hotel Group, has been courting Smithart since late last year. The Port Commission voted in early June to have staff work on transferring the Riverwalk Inn lease from Smithart to Sonpatki.

But the deal never finalized. The Port terminated Smithart’s contract in early July. And it has been trying since to evict him without shutting down the hotel.

Sonpatki’s lawyer, Colin Hunter, announced late last month Sonpatki was prepared to sue if the Port didn’t honor their agreement. On Tuesday, he showed up with a $273,000 cashier’s check he said was to pay Smithart’s debts with the Port as of June.

Hunter also brought transfer consent he said was completed Aug. 4 and signed by all parties but the Port. All that has to be done, he said, is for the Port to cancel Smithart’s eviction, sign the transfer, take the check and move on.

But the Port contends there is no lease to transfer to Sonpatki.

Former Hotel Elliott developer Chester Trabucco recently came forward as a contender for the hotel in partnership with native Astorian William Orr in a company called Astoria Hospitality Ventures. Orr is a lawyer who also leads a seafood processing company in Seattle.

Trabucco said it was he who called Commissioner Stephen Fulton and asked him if Sonpatki’s proposal to operate a budget hotel in the Riverwalk Inn was the best use of the building. “I started that mess, but I think you have more interest in the hotel now,” he said.

At Tuesday’s meeting, Trabucco presented a 90-day contract to operate the hotel in the short-term, adding he and Orr have made available $350,000 to pay off Smithart’s debts. Trabucco presented a vision of restoring the Riverwalk Inn and Seafare restaurant back to their original glory.

Moreover, Trabucco said, he, Orr and Sonpatki are in daily contact and willing to work together on operation of the hotel. It was unclear how linked the proposals from the Param Group and Hospitality Ventures are.

Ann Samuelson, a real estate broker from Seaside and former Clatsop County commissioner, came to represent her client, James Mulloy, owner of the Comfort Suites through Malbco Holdings LLC. He owns 10 hotels, she said, and is interested in investing in Astoria, the hotel and the restaurant.

Samuelson said the Port should look at selling the hotel to get some money for other industrial projects creating more living-wage jobs.

“Many people have failed in business, and I’m one of them,” said Smithart, who approached during public comment to share his disgust over what he said has been disrespectful treatment by Knight and the Port.

“Being a tenant and being slandered by the Port for failing at business is offending,” Smithart said, adding the way he has been spoken to by Knight is disgusting, and the last time he tried to talk with Knight about his lease, he was thrown out of the Port’s offices.

Smithart has said he wants to get out of the hotel and focus on the arcade he opened in downtown Astoria. He also maintains that he has offered a solution to his debt the Port hasn’t taken, referring to Sonpatki.

Smithart said he has spent hundreds of thousands of dollars fixing up a rundown hotel and pays about $700,000 in payroll.

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