Nine years ago, a judge found that a financially struggling hotel in Koreatown had failed to pay its share of local taxes, ruling that the company owed the city of Los Angeles nearly $3.5 million.
City officials, reeling from their own financial crisis, were so eager to collect that they sent sheriff’s deputies into the Wilshire Boulevard hotel to retrieve a portion of the money. The City Council eventually reached a legal settlement in 2012, securing $2.65 million — less than officials claimed they were owed — from the hotel and its owner, Leo Y. Lee.
Council members began dealing with Lee again earlier this year. But this time, they began looking at providing financial help for his latest venture: a new 192-room hotel planned in another part of Koreatown.
After The Times inquired about Lee’s previous legal dispute with the city, City Atty. Mike Feuer said he would oppose any financial aid for Lee’s planned hotel. Such an arrangement, while not illegal, would be “outrageous,” he said.
“I think it takes real chutzpah for a developer to try to avoid paying millions in taxes that he owed to the city, and then return and ask taxpayers for a subsidy,” Feuer told The Times last week.
Councilman Herb Wesson, after speaking with Feuer, is now backtracking on the idea of a hotel subsidy — and asking his colleagues to vote Tuesday to drop the effort. Councilman Curren Price, who previously supported Wesson’s request to explore financial aid for Lee’s hotel, now opposes any taxpayer assistance, according to his spokeswoman.
Victor Sahn, who served as the hotel developer’s bankruptcy lawyer in 2012, says his client is being wrongly portrayed as a “deadbeat.”
Lee was one of many businesses owners overwhelmed during the 2008 recession, losing millions of dollars, Sahn said. The businessman also had a “bona fide” dispute with the city, arguing that some parts of his building were being rented by the month and therefore did not require payment of transient occupancy taxes, also known as bed taxes, the lawyer said.
Lee’s hotel companies filed for bankruptcy in 2011. Once Lee succeeded in selling the property, he used the proceeds to pay off his obligations, the lawyer said.
“People are playing a blame game with someone who shouldn’t be blamed, who did his best to keep a project going,” Sahn said. “And when he couldn’t keep it going, he sold it and paid his creditors as much as he possibly could.”
Wesson and Price first broached the idea of providing financial help to Lee’s planned 21-story hotel last year. Both men signed a motion asking the city’s policy analysts to determine whether Lee’s company, 3800 West Sixth Street LLC, should be allowed to keep a portion of the taxes generated by his hotel