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The Economic Development Authority of Portsmouth, Virginia Sues
Developer, Old Towne Hospitality, Over Stalled Holiday Inn

By Dave Forster, The Virginian-Pilot, Norfolk, Va.McClatchy-Tribune Regional News

Nov. 03, 2010--PORTSMOUTH -- The Economic Development Authority filed a lawsuit Tuesday seeking $210,000 from a company for being nearly two years late in building a hotel near downtown.

Jay Barot, the manager of Old Towne Hospitality LLC, said the action would not deter him from delivering a Holiday Inn by the entrance to the Downtown Tunnel. But he criticized the move, saying that it was politically motivated and unfair in light of other stalled projects.

"What makes the city think that a small businessman like myself would be able to get money from somewhere miraculously and do this project under the current economic crisis that nobody's an exception to?" he asked.

Barot closed on a deal to buy land from the Economic Development Authority on Feb. 1, 2008. His development agreement required him to build a hotel by Jan. 31, 2009, or face an accruing fee of $10,000 every month he is late.

Authority Chairman C.W. "Luke" McCoy said the lawsuit doesn't mean the authority intends to cut ties with Barot. They still hope he will deliver the hotel, he said.

McCoy said the authority's board members "have been dealing with this for the last six, eight months, and we just finally felt like it was time to bring it to a head and let's see how serious Old Towne Hospitality really wants to be."

Barot did some early site work on the property, but that stalled in July 2009, according to another court filing by the city. He said he has spent about $1.2 million on the project so far, including the land purchase.

In September, the city attorney filed a court action to compel Barot to resolve stormwater control violations at the site. Barot said he had a contractor begin addressing those issues late last week.

Barot said he has been talking for about a month with a group of potential investors who are interested in financing the hotel. He did not recall names of members, but he said they involved parties from New York and California.

"They want to give me a commitment, but I am looking at the fine details on that," he said.

Dave Forster, (757) 446-2627,


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