A judge has approved Param Hotel Corp.’s plan to take over the Astoria Riverwalk Inn next year and pay the debts of former operator Brad Smithart to the Port of Astoria, the city and Clatsop County.
The Port’s lawyer has indicated the agency will appeal the decision.
In a notice of judgment filed Friday, Circuit Court Judge Dawn McIntosh ruled the Port is obligated to lease Param the hotel for two years, beginning in November, with a five-year lease-extension option. Param will pay the Port $5,000 and 7 percent of gross sales per month.
Param, a Portland-based hotelier, sued the Port two years ago after not being chosen as Smithart’s successor, despite the Port Commission voting to give the company Smithart’s remaining lease for paying his debts. Param’s lawyer, Colin Hunter, claimed the Port had violated a contract created by the vote and shown favoritism toward the hotel’s current operator, Astoria Hospitality Ventures, whose owner is a brother-in-law of a former Port commissioner. The owner of Hospitality Ventures recently secured a lease on the adjacent Chinook Building, with plans of creating a tourist district between the commercial complex and the hotel.
A jury originally awarded Param $4 million in damages against the Port, including more than $200,000 for breach of contract and nearly $3.8 million for fraud. McIntosh later cut the damages to less than $1 million, agreeing with the Port that fraud claims against the agency are limited to $682,800 by the Oregon Tort Claims Act.
When Param takes over the hotel, the company would pay $580,000 into an escrow account. The Port would receive $273,180 for back-due rent and revenue sharing, the city $115,858 for lodging taxes and the county $4,633 for property taxes. The remainder — $186,327 — would go to Smithart, who also owes significant amounts in taxes and has relocated to New York.
Param must also make good on a promise to invest $200,000 in the hotel during its initial lease. The company will receive credit for Smithart’s investments in the property, and will work with the Port to calculate progress toward the total.
McIntosh, who gave Param the choice between damages or the lease as the Port initially promised, dismissed all other claims against the Port and Port Executive Director Jim Knight. In a previous objection to Param’s judgment plan, Luke Reese, the Port’s attorney, said the agency intends to file a notice of appeal after the judgment was filed.
The Port must ensure the hotel is kept in good condition for Param’s takeover in November, and that the company receives any revenue from room reservations after its lease starts. Param may inspect the property once every two months with 72 hours’ notice before the takeover.