City Obtains Close To $500,000 in Settlement with Former Sheraton Pasadena Hotel Operator

The City of Pasadena has received $497,000 to resolve its claims in the bankruptcy of Urban Commons Cordova A, LLC, one of the former operators of the Sheraton Pasadena Hotel.

Urban Commons took hundreds of thousands of dollars in transient occupancy tax and tourism business improvement district assessment monies, without turning the monies over to the city on a monthly basis, as required by law.

“I am proud of Pasadena for standing up to collect money owed to its taxpayers, which was wrongfully withheld,” said Mayor Victor M. Gordo.

“The Transient Occupancy Tax, or TOT, is paid by everyone who stays at a local hotel. Hotel operators are compelled by city law to collect a TOT and Tourism Business Improvement District (TBID) assessments from guests, and those funds “shall be held in trust for the account of the city until payment is made to the tax administrator.”
TOT funds are scheduled to be turned over on or before the 20th day of the month. The money goes into the city’s general fund.

But according to the lawsuit, “all or some of the monies owed under the TOT and TBID ordinances were used in the purchase, improvement and repair of the Hotel and other properties and assets owned and/or operated by one or more (defendant).”

In proceedings unrelated to Pasadena earlier in Urban Commons’ bankruptcy case, the bankruptcy judge found two of Urban Commons’ former principals to be “fraudsters,” according a statement provided by the City of Pasadena.

The city has collected a large multiple of what some other creditors received from Urban Commons.

Pasadena’s lawsuit in California court continues against other operators of the Sheraton Pasadena Hotel, where the city is seeking the remaining unpaid hotel tax, interest, and penalties.