Monday, June 14, 2004


Hyatt to replace Rim, says Rosenblatt; Redevelopment Agency wants to see the books

(Previous item updated 6/15/04)

The Press Democrat reported today (6/15, "Hyatt to take over troubled Vineyard Creek hotel") the Hyatt Corp. will replace Rim Corporation as Norm Rosenblatt's partner in the Vineyard Creek Hotel, Spa and Conference Center:

"Rosenblatt, who heads Innkeeper Associates Development Co. and owns and operates the hotel with Rim Corp. of Modesto, said he expects to announce details of an affiliation with the Chicago-based Hyatt hotel group next week. An affiliation with the hotel giant has been the subject of rumors among city and tourism officials for weeks. Hyatt would take over the Rim Corp.'s role as an investor and hotel manager, Roseblatt said.

'It would require their managing the hotel, which we are prepared to do,' Rosenblatt told Redevelopment Agency directors. 'It would require the Rim Corp. to step out. ... This is the best chance for the hotel to succeed.'"

The City Redevelopment Agency must approve the ownership change, and also Rosenblatt's request to ask the County to reassess the hotel complex, and lower the property tax burden:

"According to city documents, Vineyard Creek owners will ask Sonoma County tax collector Tom Ford to cut the property assessment value in half, to $16.5 million."

The Redevelopment Agency members weren't ready Monday to rubber stamp the request. One reason was a lack of documentation of the hotel complex's finances:

"Rosenblatt promised the panel he would provide more financial information. He said he was responsible for making the decision to not pay the property taxes. He said the four dozen investors in the ownership group called Vineyard Creek LLC have agreed to pay the back taxes when the property assessment issue is resolved.

Employees were paid, city bed taxes and sales taxes were paid and bank loan payments were kept current, he said. 'I made those decisions to keep the hotel open,' Rosenblatt said."

But Rosenblatt hasn't paid all the outstanding bills:

"In response to questions from the redevelopment directors, Rosenblatt acknowledged that hotel owners owe about $200,000 to vendors and have not paid an unspecified amount of interest on secondary loans."

Vineyard Creek's actual ownership and management remain unclear.
Rosenblatt referred to "the four dozen investors in the ownership group called Vineyard Creek LLC". The Secretary of State's records show a Vineyard Creek, L.L.C. in San Francisco with the same agent as that of Innkeeper Associates Development Company, also of San Francisco.

It appears that Rosenblatt is still in charge, representing the 48 Vineyard Creek investors and Innkeeper Associates Development. He apparently has or claims the authority to replace the Rim Corp. with the Hyatt chain as part owner and manager of Vineyard Creek.

According to the Rim Hospitality website, Rim acquired Rosenblatt's Innkeeper Associates in 1999; but Innkeeper Associates Development is a separate entity. Rim has also owned the Marriott Courtyard Santa Rosa across the street from Vineyard Creek since 1998.

City officials must know the names of the investors Rosenblatt represents. Since the public owns almost 40% of the troubled Vineyard Creek project, they ought to share that information with the public.

Thursday, June 10, 2004


Vineyard Creek Stiffs the Tax Man--$600,000 for two years of business

The City of Santa Rosa owns the property, and has put $14 million of the taxpayers' money into the new $35.6 million Vineyard Creek Hotel, Spa and Conference Center on Railroad Street. That's almost 40% of the project's value.

Norm Rosenblatt of Innkeeper Associates Development Co., and the Rim Corporation of Modesto (it bought Innkeeper Associates in 1999) developed and operate the hotel. According to the Press Democrat, after two years in business they owe Sonoma County $600,000 in property taxes. They plan to ask the Assessor, through the City's Redevelopment Agency, to reduce the overdue bills.

It looks like they stiffed the tax man because they knew they could get away with it. The PD reported 6/9,

"Vineyard Creek officials said they paid what they consider the most pressing taxes and costs first, such as wages and vendors, and wanted to show a full year's worth of business experience before seeking a property tax cut."

And they were right about the tax man:

"County Assessor Tom Ford said he is not alarmed by Vineyard Creek's failure to pay because the flagging economy has affected many businesses and prompted many requests for reassessments. Normally, he said, the county does not initiate steps to take over a property until taxes are delinquent for five years.

'We look at the building and see plenty of value in a multimillion-dollar structure,' Ford said. 'They are experiencing a cash flow problem right now and we will consider any request.' Ford said the Vineyard Creek owners owe about $209,000 for 2002 and about $389,000 for 2003."

They haven't paid the City any rent either. They don't have to pay some token rent until 2006, unless they start to make serious money:

"At this point, Vineyard Creek does not owe rent to Santa Rosa. The agreement reached with the city's Redevelopment Agency calls for the hotel to pay $100,000 in rent each year that revenues top $10 million, with the provision kicking in no later than 2006. In 2003, the hotel reported about $9 million in revenues."

A follow-up story today (6/10) said Rim and Innkeeper are looking for a major partner to help bail them out. Local gossip points to the Hyatt chain:

"Ben Stone, coordinator of the Sonoma County Economic Development Board, said a Hyatt affiliation was the only hotel group being bandied about in business circles. 'When I first heard it, I thought it was unlikely because Hyatt does not typically go into secondary markets. But then, we do have a Sheraton and a Hilton and it might make sense to the Hyatt to have a presence in Wine Country,' Stone said."

The City's ED manager was also uncertain but hopeful:

"'All the rumors center on Hyatt, but we've received nothing in writing yet,' said Jocelyn Lundgren, Santa Rosa's economic development manager."

"Lundgren said city officials are waiting for 'good news' from Rosenblatt. 'Assuming it is indeed the Hyatt, it would be quite a coup because they only take on properties that represent their company well, and they don't take on properties that are troubled financially,' Lundgren said."

The Press Democrat is as unconcerned about the debt as the tax man. A 6/14 PD editorial ("Hotel realities") said,

"The three-year slump in the travel business also makes it reasonable for Vineyard Creek to ask for a reappraisal of value for property tax purposes.

That being said, both the redevelopment agency and the county need to build protections into the reappraisal deal that ensure Vineyard Creek pays its fair share of property tax when its business improves."

Thursday, June 03, 2004


FPPC to fine former Planning Commissioner Carlile $24,000

The State Fair Political Practices Commission is scheduled to fine former Santa Rosa Planning Commissioner Dick Carlile $24,000 at its June 10 meeting, according to the FPPC agenda: Carlile stipulated 5/26 to nine violations of the Political Reform Act: four counts of conflict of interest, and five counts of failing to fully disclose his private economic interests.

His stipulation acknowledges conflicts associated with his actions in connection with the Santa Rosa Golf Center, on Highway 12; Cobblestone Homes' Prospect Annex Apartment project, in Rincon Valley; a parcel map for Victor Trione's White Oak Drive property, near Oakmont; and Robert "Buzz" Pauley's The Rises project Downtown.

He also acknowledges failure to disclose owning stock in Sonoma National Bank; the proceeds of the sale of his previous office building at 565 West College Avenue; and income to Carlile-Macy from a variety of individual clients for several consecutive years.

The FPPC is expected to adopt an exhibit with this Conclusion:

"Conflict of interest violations are among the most serious violations of the Act, and historically carry a high penalty. Respondent's violations are aggravated by the fact that they are part of an on-going pattern of conflict of interest violations.

SEI non-disclosure violations are also serious violations of the Act. In Respondent's case, as a principal of a major civil engineering firm in the City of Santa Rosa, the non-disclosure of substantial economic interest, occurring over a period of four years, was especially serious because of the potential for numerous conflicts.

Civil engineer Carlile is president of Carlile-Macy, and currently owns 26% of the company. Carlile-Macy is the fifth largest civil engineering firm in the North Bay area, according to the North Bay Business Journal, with $5.2 million in 2003 revenues. Christopherson Homes (Skyhawk) and the City of Santa Rosa are among its major clients. Its offices are at 15 Third Street in Railroad Square.

Carlile was a member and Chairman of the Planning Commission for two terms 1997--2002, and was a Design Review Board member 1977--92. He resigned in December 2002 following a joint "Study Session" between the PC and DRB, at which he and Carlile-Macy partner Curt Nichols of the DRB reportedly received testimony from a C-M employee.

Carlile's wife Lynne has been a member and chair of the Board of Community Services. His partner Jack Macy was also on the DRB. Nichols is currently a DRB member.

Carlile's $24,000 fine compares to the $18,000 the FPPC assessed Supervisor Tim Smith for campaign finance violations a few years ago. The FPPC fined current Mayor Sharon Wright $14,500, and current Councilmember Janet Condron $3,000 in 1998. Both stipulated to conflict of interest violations, in connection with their employment by the Chamber of Commerce; and Wright also admitted failing to fully disclose her private financial interests.

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