News for the Hospitality Executive
|By Max B. Baker, Fort Worth Star-Telegram, Texas
Knight Ridder/Tribune Business News
Sept 24, 2004 - FORT WORTH, Texas - As part of a crackdown on delinquent hotel/motel taxes, the city of Fort Worth is suing a downtown hotel for more than $250,000 in unpaid bed taxes.
The Fort Worth Plaza, located southeast of the Fort Worth Convention Center and formerly known as the Ramada Plaza, is being sued for unpaid bed taxes going back several years, said Elizabeth Parmer, an attorney hired by the city.
At one time the 434-room hotel owed as much as $700,000, she said.
Interim City Manager Charles Boswell said the city decided to aggressively pursue collection of the delinquent hotel/motel taxes several years ago after it was faced with cutting thousands of dollars from the budgets of the city's museums and other cultural programs.
State law allows cities to collect a 7 percent bed tax for cultural and tourism efforts. The city collects an additional 2 percent to pay off Fort Worth Convention Center bonds.
The tax generated $8.4 million in fiscal 2003 but it is expected to bring in $8.3 million through this fiscal year.
"We were in a revenue crunch and looking to cut back and it seemed silly to do that when money was owed to us," Boswell said. "I think it is the kind of thing that can't be ignored."
The current owners of the Fort Worth Plaza, who have been trying to sell the hotel, could not be reached for comment.
Realty Capital Partners of Colleyville and Harrell Hospitality of Addison have been under contract to buy the property. They plan to spend $12 million on a new look for the property and they got $12.9 million in tax incentives from the Fort Worth City Council for the project.
Richard Myers at Realty Capital could not comment on the status of the sale.
Boswell did not think the tax lawsuit would have any affect on the tax incentive package.
In the past four years, the city has filed up to 20 lawsuits and collected at least $500,000 from hotels and motels that have failed to turn over the taxes to the city, Parmer said.
"For the past four years, the city has been much more aggressive," she said.
After charging its customers the tax, the hotel holds onto the money and then makes a quarterly payment to the city, Parmer said. But hotels that are struggling financially will dip into that money and then find themselves unable to replace it, she said.
While the city can shut down a hotel for non-payment of its hotel/motel taxes, if often negotiates a payout for the past due amount, Parmer said.
In September, City Treasurer Skipper Shook wrote that the city had asked its attorneys to take action against 13 delinquent tax accounts totaling more than $348,000. Nine had paid their obligations and two had begun making payments. The report did not include the Fort Worth Plaza Hotel account.
Shook said the city initially decided not to try and collect on the Fort Worth Plaza account while the sale was being negotiated, but within the past few weeks decided to take steps to protect its interest.
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(c) 2004, Fort Worth Star-Telegram, Texas. Distributed by Knight Ridder/Tribune Business News. PDQ,