SAN JOSE — San Jose hotel owners who defaulted on their loans and face foreclosure are also behind on lodging taxes, a key part of the city’s revenue stream, court records show. .
Comfort Suites San Jose Airport faces foreclosure due to overdue loans totaling $5.4 million, according to documents filed with the Santa Clara County Records Department in October 2022.
But that wasn’t the only delinquency by the group that owns Comfort Suites, according to county court documents.
According to court records, the owner of the Comfort Suites San Jose Airport has failed to report and pay city taxes on what the city estimates to be $1.6 million in revenue from hotel guests staying at the property.
In a lawsuit filed on December 12, 2022, the City of San Jose named several defendants in the lawsuit, including individuals, real estate companies and financial companies.
Among the defendants are hospitality and real estate executives Hitesh Patel, Hansaben Patel, Bhavesh Patel, and Jashvant Patel, according to the Santa Clara County Court case. and corporate entities Hitesh Investments, Golden State Hospitality, Redwood Credit Union, Satyam 1050 Orange Drive LLC, Silvergate Bank, and The Mortgage Capital Development Corp.
Hitesh Investments, a group that currently owns hotel properties through multiple affiliates, is led by Hansaben Patel and Bhavesh Patel, and its main business is in the lodging and real estate industry, according to county and state business records. am.
The current owner paid $6.6 million to purchase the hotel in 2013, according to county documents.
The defaulted loans totaled $5.4 million, according to county public records. Loan offered in 2021.
Months after the funding was provided, Hitesh Investments and Patels began to stop paying required taxes to the city of San Jose, court records show.
According to legal documents, two types of taxes have not been paid by the hotel owner. One is the temporary resident tax. The other is the convention center facilities district tax.
Tax payments are generated by the rent that lodging operators collect from guests for staying in hotel rooms. Both taxes generate large cash flows for the city.
The temporary residence tax goes into the city’s general fund.
Convention center tax revenues are used primarily to “finance the expansion, construction, reconstruction, restoration and upgrades” of the San Jose Convention Center in downtown San Jose.
According to the hotel’s website, Comfort Suites Hotel is part of the Choice Hotels chain. This hotel is primarily aimed at business travelers rather than leisure travelers.
The 2020 coronavirus outbreak has brutalized the hotel and travel industry in the Bay Area and around the world. The economic pain worsened after state and local government agencies imposed widespread business shutdowns to combat the spread of the deadly bug.
Nearly three years after these closures were imposed, experts say many Bay Area hotels still struggle with subpar occupancy rates and room rates.