Modesto council to hear Budgetel appeal over unpaid taxes

The Modesto City Council on Tuesday will hear an appeal from the Budgetel Inn & Suites over a city decision that it owes more than $100,000 in unpaid lodging taxes and penalties.

Budgetel is operated by United Resorts LLC, and United Resorts CEO and President Shavi Ahmed said he does not dispute his motel owes the money. He said he will ask the council to accept a $35,000 or $40,000 payment and allow him to pay off the balance over several months. “I am willing to pay the money,” he said.

Finance Director Gloriette Genereux said the unpaid taxes and penalties are for several years. She said Modesto tried to work with the 102-room motel during the recession and its aftermath by agreeing to payment plans. But she said they were not honored.

The city has had other problems with the McHenry Avenue motel, which is two blocks south of Briggsmore Avenue and in recent years also has operated as an America’s Best Value Inn and a Vagabond Inn. The Police Department in August singled out the motel and another one for generating high numbers of calls to police for service.

Ahmed said guests with vouchers issued by Stanislaus County and nonprofit agencies make up a significant number of the Budgetel’s clientele. People who are given the vouchers face being homeless without them. But neighboring businesses complain these guests can cause problems and attract more problematic people.

“A lot of my staff and customers feel unsafe,” said Amanda Moreno, assistant general manager at the Denny’s next to the Budgetel, on Monday. “The only thing that has helped is the Modesto Police Department has increased its patrols of the parking lot.”

United Resorts is appealing a January 2015 decision by Genereux, acting as the city’s tax administrator. She ruled Budgetel owed $57,807 in what are called transient occupancy taxes – which is the 9 percent tax that lodging establishments are supposed to charge guests and then pass on to the city – and $43,498 in penalties.

Genereux said Modesto relies on the honor system when it comes to motels and hotels paying the city what they owe in transient occupancy taxes, though she said the city does have informal ways of checking whether a motel or hotel is paying.

Senior Deputy City Attorney John Goulart said it is his understanding that Budgetel owes Modesto unpaid transient occupancy taxes from after Genereux’s January 2015 decision. An amount was not available Monday from the city.

Goulart said there were several reasons behind the delay in the council hearing Budgetel’s appeal. He said motel representatives mistakenly sent their appeal of Genereux’s decision to Superior Court rather than to City Hall as required. He said that delayed the appeal reaching the city, and an attorney then with the city ruled the appeal was not received within the time limit.

Goulart said the city’s staff eventually decided the appeal should be heard by the council. He said that could help the city if it files a lawsuit to collect the unpaid taxes and penalties. He said the city has to show it exhausted all of its administrative remedies, including a council hearing, when filing a lawsuit.

The attorney for United Resorts will not be able to attend Tuesday’s council hearing. Ahmed said if council members do not accept his payment plan, he will ask them to reschedule the hearing so his attorney can be there.

Ahmed disputed that Budgetel owes the city unpaid taxes other than the amount in the appeal and denied that the Budgetel has not been a good neighbor to nearby businesses. He said some of his guests would be homeless if it were not for the Budgetel.

The council will meet at 5:30 p.m. in the basement chambers of Tenth Street Place, 1010 10th St.

This story was originally published May 2, 2016 at 7:01 PM with the headline "Modesto council to hear Budgetel appeal over unpaid taxes."