In the coming weeks – it’s not yet clear when – Marina City Council will consider whether to forgive $735,000 owed to the city by Harvey Dadwal, the developer who built the Marriott Hotel in the The Dunes project in Marina.
Dadwal’s claim is this: If the city doesn’t forgive the debt, his hotel will go into foreclosure, which would in turn sink his plans to build a second hotel on an adjacent property. Dadwal’s hotel, since opening last June, has generated over $400,000 in transient occupancy tax to the city, and the implication in Dadwal’s request was that, not only would that revenue be cut off if the city doesn’t forgive his debt, but that having the debt on his books would also prevent him from securing financing to build a second revenue-generating hotel.
Simply put, the question facing Marina City Council is this: Is Dadwal bluffing?
The answer remains unclear, and Dadwal did not respond to repeated requests for comment.
City Council first considered his request at an April 17 meeting, and the commentary among councilmembers was spirited, and in the end, skeptical, when they asked that Dadwal provide documentation to back up his claim.
City Council was set to consider the request again May 15, but Dadwal requested the discussion be pulled from that agenda. That came after the city’s report on his request stated the information provided by Dadwal “is insufficient to make an informed assessment as to the financial condition” of his company.
Dadwal’s debt to the city comes after an agreement he struck in 2014 to incentivize the timely development of his hotel by agreeing to pay for its impact fees through the first four years with 50 percent of the hotel’s transient occupancy tax.
Originally, Dadwal’s deadline for completion was July 2016. As it became clear he would miss that mark, he promised to pay the city $100,000, over time, if the deadline would be extended to March 31. He also missed that deadline, which means that, per the agreements he made with the city, Dadwal is on the hook to pony up $735,000.
While the details of Dadwal’s finances are unclear, it is clear that the hotel is doing well: based on the TOT paid to the city, the hotel has pulled in more than $3 million since opening last June.
According to the city’s report, if Dadwal’s hotel is foreclosed on, it would take 12-18 months before it could open again, due to the time it takes to navigate bankruptcy proceedings, which in turn would lead to lost revenue.
That would only happen if Dadwal isn’t bluffing.
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