Three El Paso hotels owe $1.5 million-plus in unpaid taxes

Jan. 13--The owners of three El Paso hotels, which had ties to El Paso's TVO real estate companies, owe the city and county more than $1.5 million in delinquent hotel taxes and penalties.

The unpaid taxes are another black mark for TVO and its executives, who late last year were hit with a fraud lawsuit by an El Paso investor. And in October, El Paso businessman Russ Vandenburg, who founded TVO and its affiliated companies in 1983 with his brother, Wayne Vandenburg, stepped down as CEO of TVO North America due to health problems.

TVO is a group of national real estate management and property-services companies based in El Paso and Chicago.

The hotels that owe the delinquent taxes are the Hilton Garden Inn at the University of Texas at El Paso campus; the former Country Inn and Suites by Carlson, which last month was returned to its previous Holiday Inn brand, at 900 Sunland Park Drive in West El Paso; and the Courtyard by Marriott El Paso Airport hotel at 6610 International Road, near Airway Boulevard and Interstate 10, in East El Paso.

TVO, which had part ownership and managed the three hotels until recently, no longer has ownership or management of the hotels, Michelle Kaip, president of newly formed Elevation Hotel Management, said in an email. Elevation now manages the hotels.

Elevation is a company affiliated with ASI Capital, a Colorado Springs, Colo., investment firm, which has been partners with TVO in its El Paso hotels.

ASI continues to be part of each of the investor groups that own the three hotels, an Elevation spokeswoman said in an email.

The city can try to collect the delinquent taxes from companies and partnerships that had ownership in the hotels when those taxes were due, and also can pursue new ownership for the late taxes, said Carmen Perez, a lawyer for Delgado Acosta Spencer Linebarger & Perez, the El Paso law firm collecting delinquent taxes for the city.

City officials in December sent a demand letter to the companies, listed as owners of the hotels in El Paso Central Appraisal District records, to collect the delinquent hotel taxes.

El Paso City Council on Tuesday gave city lawyers the green light to pursue the delinquent taxes, including filing lawsuits if necessary.

The El Paso County Attorney's Office also is determining the best way to try to recover delinquent county hotel taxes for the three hotels, county officials said.

The county does not know how much is owed by the hotels because the hotels self-report their county hotel taxes, Arturo Pastrana, the county's chief deputy tax assessor-collector, said in an email.

The city collects a 9 percent hotel occupancy tax on El Paso hotel rooms, including a special 2 percent hotel tax to help pay for the Downtown baseball park. The county collects a 2.5 percent tax on El Paso hotel rooms.

The money, by Texas law, can only be spent on tourism, convention and hotel-related promotions and projects that result in visitors staying overnight in hotels.

ASI and TVO officials declined to comment about the delinquent taxes or when TVO and TVO-affiliated companies divested their ownership and management interests in the hotels.

However, Elevation Hotel Management provided the El Paso Times with this statement:

"It would be inappropriate for EHM to comment on any outstanding tax issues (for the three hotels) on the part of the previous management or how they might choose to resolve those issues," the statement reads.

"EHM is committed to acting as a good corporate citizen and is eager to see these three properties play a role in El Paso's increasingly vibrant hospitality industry."

ASI and TVO Capital Management, the investment arm of TVO North America, in June bought the 90-room, Courtyard by Marriott hotel for $11.2 million, the companies reported then.

ASI in July 2012 reported that it took controlling ownership in the Hilton Garden Inn at UTEP.

ASI also has ownership in the Holiday Inn El Paso West on Sunland Park, according to a news release the company issued last month saying that the former Country Inn and Suites was rebranded as a Holiday Inn.

TVO North America bought the 176-room hotel in December 2014 in a foreclosure sale, and Russ Vandenburg, then TVO CEO, said the company was spending $3.1 million on renovations. TVO changed the hotel's brand because its long-standing Holiday Inn franchise expired, Vandenburg said at the time.

The hotel owes almost $531,000 to the city in unpaid hotel taxes and penalties, according to city data.

Just over $900,000 of the delinquent taxes and penalties are owed by the Hilton Garden Inn at UTEP.

The Courtyard by Marriott El Paso Airport hotel owes just over $62,000 to the city.

The Hilton Garden Inn is owned by High Desert Investors LP; the Holiday Inn El Paso West on Sunland Park is owned by HD Sunland Park Property LLC; and the Courtyard by Marriott El Paso Airport is owned by ELP MC Venture LLC. Those are the same partnerships that owned the hotels when TVO was one of the partners.

TVO was in the spotlight in December when a fraud lawsuit filed against it came to light.

Carlos Martinez Ortega, who operates Roma Commercial, an El Paso real estate holding company, and Roma Homes, an El Paso homebuilder, alleges in his lawsuit filed in El Paso federal court in October, and amended in November, that Russ Vandenburg, Wayne Vandenburg and TVO companies stole more than $3 million in investments and a loan for the Riverchase apartments in Alabama and for the Hilton Garden Inn at UTEP.

An El Paso state court judge last month approved an agreement that allowed the Alabama apartments to be sold for $39.2 million and ordered that $3.75 million from the sale proceeds be deposited with the El Paso court for distribution to Martinez, the Vandenburgs and other Vandenburg-tied investors in the apartment complex.

Martinez's lawsuit remains active in state court in El Paso.

Vic Kolenc may be reached at 546-6421; vkolenc@elpasotimes.com; @vickolenc on Twitter.

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