Owners of Sheraton Pasadena Owe City Nearly $700,000 in Back Taxes, Lawsuit Claims

The owners of the Sheraton Pasadena owe the city more than $690,000 in delinquent taxes, the city alleges in a lawsuit.

Urban Commons LLC and associated companies Hospitality LLC, EHT SPH LLC, and Aimbridge Hospitality LLC are named in a complaint filed by the city in April, claiming it has not received $690,806.26 that was collected via Pasadena’s Transient Occupancy Tax over a nine-month period.

“The Hotel has failed to remit (or failed to timely remit) TOT or TBID (Tourism Business Improvement District) assessments for a significant portion of time from the periods of May 2019 through February 2020,” according to the complaint.

In addition to the back taxes, the city is also seeking interest, penalties, and attorney fees.

The parties are scheduled to meet in Los Angeles Superior Court for a status conference on Sept. 16, said Pasadena Chief Assistant City Attorney Javan Rad.

Urban Commons representatives said in a written statement that the company hoped to avoid litigation.

“In the past 90 days, Urban Commons has paid over 50% of outstanding taxes to the city of Pasadena,” the statement said. “We are processing an additional ‘good faith’ payment to the city, which we hope will ensure Pasadena City Council approves a payment plan that was submitted to the city attorney on July 23rd.

“If the payment plan is approved, we believe there will no longer be a cause for a lawsuit,” according to the statement.

“If the payment plan is approved, we believe there will no longer be a cause for a lawsuit,” according to the statement.

By city law, hotel operators are to collect TOT taxes and 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.”

The funds are supposed to be turned over on the or before the 20th day of the month after the guests made their stays. The lawsuit alleges that Urban Commons failed to do so.

“(The defendants) have misappropriated, commingled and/or misidentified a certain and presently ascertainable amount of TOT principal collected from hotel guests, which remains unpaid,” the claim states. The city of Pasadena “has made multiple demands for remittance of the TOT principal, penalties, and interest, as discussed herein.”

Furthermore, the lawsuit alleges that “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).”

The city’s claim against the businesses also describes “half-hearted efforts to delay this action.”

Urban Commons representatives promised to pay 50 percent of the amount owed in early March, then follow up with the remaining 50 percent three weeks later, according to the claim and emails provided by the city.

A payment of 10 to 20 percent of the total bill was made on March 6, and a company official promised payments would continue to come over the next three weeks until the debt was paid, the claim states.

“Upon information and belief, as of the date of this Complaint, (the defendants) have made no payments following the fractional payment of March 6,” according to the claim.

Urban commons paid hundreds of thousands of dollars in back taxes related to its operation of the Queen Mary to the city of Long Beach two months ago after the city had threatened to take them to court, the Long Beach Post reported.

And the Long Beach Business Journal reported that officials from the cities of San Mateo or San Jose have also said Urban Commons owes delinquent hotel occupancy taxes to their municipalities.