The Portola Hotel and city of Monterey are again at odds over the conference center.

The Portola Hotel and the city of Monterey haven’t been getting along well in recent years. Last September, the city agreed to pay the hotel $2.85 million to settle a lawsuit Portola filed in January 2017 over the costs and lost revenue related to the years-long remodeling of the Monterey Conference Center, which is owned by the city and is physically connected to the hotel.

Now there’s a new dispute between the two parties, with far more treasure on the line: On Jan. 9, the hotel filed a claim against the city for $25 million, alleging the city, “without the courtesy of any advance communication,” began billing the hotel 25 percent of the common area maintenance charges for the entire conference center for the first time in more than 40 years.

The claim states the new charges jeopardize the hotel’s mortgage loan, “diminish the value of its property and business” and violate its property rights.

At the center of the dispute is the hotel’s lease of the 10,655-square-foot DeAnza Ballroom in the conference center, which was entered into in 1976 and renewed in 2004 under new terms. According to Portola’s claim, the hotel is terminating that lease – which is set to expire in 2028 – this February.

Monterey property manager Janna Aldrete, however, says the city had been inadvertently undercharging the hotel since the inception of the new lease in 2004. Aldrete, whose office manages 90 leases, says she only realized the mistake last summer when going over the lease during the recent litigation.

Under the terms of the settlement, the hotel was not responsible for any unpaid rent prior to June 1; once they settled, the city, on Nov. 1, 2018, billed the hotel the 25-percent rate for the common area charges from June to October of last year, a bill that totaled $49,047. (By comparison, the city had only billed the hotel a total of $3,478 for common area expenses from July 2014 to December 2014.)

Aldrete says she’s not clear why the city undercharged in past years – the lease was being managed by a different department – but she says the terms of the lease are clear.

“I see it as an obligation to honor the contract,” Aldrete says. “I’m just enforcing the lease.”

Portola owner Jim Grier declined to answer questions about the claim – “We don’t want to argue the merits of this thing in the newspaper,” he says – but in a written statement says the city refused to engage in mediation on the matter and “that the issues could only be resolved by a lawsuit.”

“Obviously,” the statement reads, “the hotel is disappointed that another lawsuit is the only avenue of resolution acceptable to the city.”

Monterey City Council denied the hotel’s $25 million claim on Jan. 15, setting the stage for another lawsuit.

Conference center General Manager Doug Phillips says he doesn’t know what’s going to happen if the hotel pulls out of the lease in February, but he says the conference center will take over renting out the ballroom if that’s what it comes down to.

“It’s unfortunate we just can’t come to some sort of an agreement, but that just seems to be the nature of the beast these days,” Phillips says.