The DoubleTree Hotel, a downtown landmark owned by fallen entrepreneur and convicted criminal John Thomas “JT” Burnette, may be heading towards the auction.
On September 24, Tallahassee Circuit Judge John C. Cooper granted summary judgment of $ 32.6 million to Wells Fargo, the mortgage holder’s trustee, and ruled that IB Tallahassee was in default. on the mortgage. IB Tallahassee lists Burnette as the manager and is identified as the borrower in court documents.
Lawyers for Shutts & Bowen who represent the bank said they could not comment. A request for comment from Burnette’s attorney was not immediately returned, but court documents filed by IB Tallahassee blamed the default on the pandemic.
If the money is not paid with 4.25% interest, the court said, the court clerk will sell the hotel to the highest bidder in a public auction at 11 a.m. on October 28.
This was the date of Burnette’s initial sentencing, convicted on August 13 on federal corruption charges involving a paid extortion program that also entangled former City Commissioner Scott Maddox and his partner, Paige Carter-Smith .
Acting US Attorney Jason Coody said in a post-trial press release that the verdict “confirms a multi-year investigation into public corruption in the city of Tallahassee.”
Maddox was sentenced to five years and Carter-Smith to two years. Burnette faces a maximum sentence of 20 years in prison for extortion, fraud and other charges. The date of his conviction has been moved to November 9.
The hotel itself was at the center of the trial. Prosecutors claimed Burnette slashed a $ 100,000 payment to Maddox for his abstention in a vote that would have allowed a rival to go ahead with a competing hotel. Jurors eventually acquitted Burnette of a racketeering charge involving the hotel’s allegations.
Burnette said the hotel was “the gateway to Tallahassee”
Burnette and his former business partner Kim Rivers, now his wife, had big plans for the 16-story hotel built in 1972 when IB Tallahassee bought it in 2015 for $ 21 million.
In a 2015 article, Burnette told Democrat that the hotel “is the gateway to Tallahassee” – a place where visitors will have their first experience of the capital.
At the time, the group’s directors included Rivers, Darren Phillips and Frank Whitley.
They wanted to build on the DoubleTree experience for customers, adding an improved facility to the high quality service already provided, Rivers said at the time.
“Our job, in our opinion, is to really improve the customer experience,” said Rivers. She went on to become CEO of Trulieve, the country’s largest medical marijuana company.
From 2016 to 2019, Burnette invested $ 8 million in a renovation and added a futuristic-looking restaurant and lounge on the 17th floor with downtown views, which required the closure of a section of the Adams Street for a year.
Potential buyers seem interested
Some potential buyers say they are interested in acquiring the property.
Brian Ballard, one of the state’s most powerful lobbyists, told the Tallahassee Democrat he “would definitely take a look.”
In a June article in the Democrat, Ballard said he initially planned to build a hotel instead of a modern six-story office building at 201 E. Park Avenue, where his company headquarters is located. Ballard Partners.
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He decided not to do this because the size of the plot would require an even taller building than what currently exists. At this point in the article, when asked if he had any other plans for doing something else downtown, Ballard said, “Well, I’ll never say never.”
The DoubleTree could be Ballard’s entry into the hospitality industry, despite the opening of several new hotel properties in the Tallahassee market. The newest downtown competitor is the new AC Hotel by Marriott Tallahassee Universities at the Capitol at Cascades Park.
“It’s a beautiful property. It’s an iconic piece in downtown Tallahassee, ”Ballard said of DoubleTree on Thursday. “That’s something I’d be interested in, but I think the debt structure seems to be so complicated. It might be too hard. “
Ballard said he has had many guests who have stayed at the DoubleTree over the years. He said the service over the past seven years had not lived up to its potential but could be in “good hands”.
“There really never was a passing mark for service. I don’t think they put enough money into it, ”he said. “Maybe the bankruptcy court will settle all this. And once they do, I’m definitely very interested in it, if all the financial issues are resolved. “
Even though the DoubleTree is in debt, commercial real estate experts say the site is still an attractive asset in downtown Tallahassee.
“The DoubleTree has always had a superior location to virtually every other downtown hotel,” said Ed Murray, Business Broker and President of NAI TALCOR. “You can walk to the Capitol. You can walk to the courthouse. It’s in the park. It’s just a great place.
To be successful, Murray said the property must be kept up to date and relevant.
“I hope this one will be. I don’t know, “he said.” But your location usually trumps everything. It has always been and always will be a good location.
Pandemic blamed for financial problems
Despite its location, the DoubleTree has not generated enough revenue to pay its financial obligations, court records show.
According to the complaint filed in December, IB Tallahassee borrowed $ 25.5 million from Goldman Sachs. IB Tallahassee defaulted on the loan in April 2020 after the company stopped making payments.
In its response to the complaint, IB Tallahassee blamed the COVID-19 pandemic for its inability to keep up with mortgage payments.
“Due to the unprecedented and unforeseen economic conditions which now surround the country, and more particularly in Florida, IB Tallahassee is unable to meet its obligations towards the applicant, who is himself experiencing these harsh economic realities. “the company said.
The company also said the property’s value was equal to the amount owed.
Wells Fargo asked the court in January to appoint a receiver to take over the property, and amended that request in June, saying the borrower had refused to comply with its obligations under the loan agreement, including putting hotel money in a secure account. .
“The borrower remains in control of all income generated by the DoubleTree Hotel Tallahassee despite the borrower’s complete and total failure to pay the amounts due under the loan,” reads the additional motion of June 2.
“The borrower’s refusal to comply with the most basic cash control provisions of the loan documents is further evidence that the appointment of a receiver is not only supported by the recourse provision of the mortgage, but also required by the control law, “he added. motion says.
The court granted receivership two weeks later. Hotel staff were made aware of the receivership appointment and general manager John Kelly was fired.
Other defendants listed in the lawsuit are RB Tallahassee, whose officers are out of Columbus, Ohio; Burnette Roofing, an inactive company which listed Burnette as president; CEMEX Construction Materials Florida, in Palm Beach County; and 1 Hour Signs, a business owned by Scott and Jennifer Thornton of Tallahassee.
But the complaint indicated that these defendants may also have claims to the property. For example, the complaint says that RB Tallahassee can claim an interest in the property under a final judgment of $ 150,000 plus pre-judgment interest of $ 8,400 plus attorney fees, awarded by the court against IB Tallahassee. .
Jeffrey Schweers is a reporter in the Capital Office for USA TODAY NETWORK-Florida. Contact Schweers at [email protected] and follow him on Twitter @jeffschweers.
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