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story.lead_photo.caption The Hotel Frederica, Little Rock’s second-oldest hotel, was closed Sept. 13 for not paying state sales taxes on room revenue.

The owners of the Hotel Frederica in downtown Little Rock are considering several offers to purchase the landmark property, which was closed about two months ago by the state Department of Finance and Administration for failure to pay state sales taxes.

Eric Nelson, associate director of Newark Moses Tucker Partners, the exclusive agent for the sale of the property, said Monday the firm had "several offers, a handful of offers," but he declined to elaborate.

There also is no timetable to close any deal, although it's unlikely that another "call for offers" will be made, he said. The most recent call ended Nov. 12.

A minimum price also was not set for the hotel that's been a landmark in downtown Little Rock for 105 years. It's the city's second-oldest hotel, after the Capital Hotel.

Starlight Hospitality Group, based in Sherwood, bought the hotel three years ago for $2.85 million.

The group of five owners spent some $2 million on renovations, transforming the place into a boutique hotel with new artwork, enlarged photographs of downtown Little Rock from the 1950s and 1960s, and an update in furnishings for its guest rooms and meeting facilities. The hotel was being operated under Ascend Collections, the boutique brand of Choice Hotels International.

The state closed the hotel on Sept. 13 for not paying state sales taxes on its room revenue. The amount of taxes not paid is confidential under state law. A warning of possible closing was sent to hotel owners on Aug. 2.

Then and Now: Hotel Frederica in downtown Little Rock

[Interactive not loading above? Click here to see it » arkansasonline.com/thennow/legacyhotel/]

"When a company is at least a month delinquent in payment of sales taxes or withholding taxes, [the finance department] initiates notification letters to the company," department spokesman Scott Hardin said in a recent email. "We make every effort to allow a business to operate, working with them on payment plans, etc., if needed."

Hardin said he couldn't comment specifically on the Frederica case.

According to a department website that tracks business warnings and closings, the state in 2019 so far has issued warnings to 31 businesses in Pulaski County and closed 11. Most of the warnings, and resulting closures, dealt with not paying sales taxes. Statewide, the finance department has issued about 230 warnings and closed about 70 businesses since the first of the year.

The Frederica, known for decades as the Hotel Sam Peck, is the most prominent of the businesses on the department's list of closures. Others on the list include small cafes, janitorial services, cleaners and automobile-detailing shops.

The original hotel building opened in 1914 and was expanded in 1941 to include a five-story art-deco annex and sixth-floor penthouse suite designed by architect Edward Durrell Stone. A 49-room "motor court" was built and operated separately in the 1960s as the Motel Sam Peck.

In 2018, the finance department closed about 85 businesses statewide. Businesses that are closed can reopen under certain requirements.

"Companies are well aware of the tax compliance issue months before we ever issue a closure order (understanding the compliance issue could lead to closure)," Hardin continued in the email. "The initial closure notice asks that the business contact us within seven days (again giving them an opportunity to work with us on a plan) in order to avoid closure."

Hardin said more than half of the cases result in the businesses and the state developing a plan allowing them to remain open.

"If we don't hear from the company and it is evident the situation will not be remedied, approximately seven days later the business is formally closed (we are escorted by local police)," he wrote. "This time frame changes from case to case depending on quite a few factors."

A total of how much the state is owed in sales taxes from similar closings statewide wasn't immediately available.

The Hotel Frederica has about 70,000 square feet, including a first-floor restaurant of about 3,000 square feet. Since the hotel's most recent renovation, the restaurant has been leased out once, with that business closing well before, and unrelated to, the hotel's tax troubles.

Nelson, of the Newmark real estate group, said the restaurant is still being marketed for lease, although that could change with the selection of a new hotel owner.

While the entrances and windows to the hotel have been boarded up since the Sept. 13 closing, some minor vandalism has occurred, Nelson said.

"It's the nature of what we have to deal with," he said. "No matter where or what a building is, you have to make sure it's sealed off, and sometimes you still find some problems."

Business on 11/26/2019

Print Headline: Bids offered for historic downtown Little Rock hotel shuttered weeks ago for failure to pay sales taxes

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