The Sky Lodge on Main Street has in recent years been the subject of legal disputes between the principal owner, Ken Abdalla, and a group of residential owners.
Those conflicts led to a decision from Third District Court last fall, to put the Lodge into a Receivership.
Since then, the Receiver has come to the court a couple of times to settle arguments. During the most recent session, last week (February 12th), the Receiver asked that Abdalla, and his business entities, be compelled to pay their share of a Special Assessment, needed to maintain and operate the Lodge.
The plaintiff group, members in the Union Square Owners Association, have alleged that Abdalla controls almost all the commercial units at Sky Lodge, as well as a majority of the fractional residential units. They have claimed that Abdalla, running the Lodge through a web of business entities, associates and relatives, has financially mismanaged the property, allowed the structure to deteriorate, engaged in self-dealing, and reduced the rental value of the units.
Last October, Third District Court Judge Kent Holmberg appointed John Curtis as a temporary Receiver for Union Square and its real and personal property.
The Receiver levied a Special Assessment on the owners in December, amounting to $550,000.
At the February 12th hearing, the Receiver’s attorney, Troy Aramburu, said that almost all the non-Abdalla owners have paid their share of the Assessment. But he contended that Abdalla and his business entities have refused to pay, for no good reason.
He said Abdalla’s share of the Assessment is a little over $329,600.
Aramburu said they’ve made some headway. But the Lodge still has some immediate needs with its finances and maintenance.
“Things like property taxes for the residential side of the units remain unpaid--$129,000, as we pointed out in the papers,” Aramubur told the judge. “The utilities. The payroll. The various repairs to what’s been referred to as the envelope of the building, the outside of the building, the drainage, things of that nature need to be maintained, needs to be repaired. Issues of insulation need to be looked at. Snow removal systems need to be looked at. As the court has seen from the various reports that have been filed by the Receiver on a monthly basis, we have broken pipes that need to be repaired.”
The attorney added that Abdalla has responded with red herrings, wanting to re-review the financial records, or asking for clarification.
“When we haven’t heard anything in terms of payment schedules or even “I don’t have the money to pay you,” Aramburu said, “the Receiver hasn’t heard anything from Mr. Abdalla that, “Hey, I would love to pay you. But I can’t. I just don’t have the money.” It’s always - “Let’s walk through this AG report again, or let’s walk through—I think you sent different invoices” or whatever it is that we’re seeing now in the briefing.”
But Abdalla has said he has been assessed for spaces he doesn’t own or hasn’t seen invoices for properties he does.
His attorney, John Snow, said Abdalla has been in litigation with his former accounting manager, Brenda Nagle, over inaccuracies in the records. He said there are mistakes or confusion in the Assessment.
“For example, on the Commercial properties, Snow said, “there was a single invoice for $117,000. It did not break down the assessment between the units, so there’s no way to verify whether or not the assessment is correct. And third party Talisker Club has an interest in one of the units, and has an obligation to pay that share, so the assessment needs to be correct so that amount can be passed on to Talisker Club. And then with respect to the Union Square ownership, he has 12 notices to pay for units he doesn’t even own. Now, if you do the math, you may be able to figure out what is and is not being assessed. But he doesn’t have that information until just now, when it’s acknowledged that that was an incorrect statement, or should not have been billed in the first place.”
The judge quizzed the attorney about Abdalla’s position.
Judge: “Your client doesn’t want this project to fail.”
Snow: “No, he does not.”
Judge: “And so why not make payment, and sort out the accounting later?”
Snow: “Well, because he wants to make—he doesn’t want to unnecessarily fund the hotel.”
Judge: “Why not make payment for what he’s sure that he does owe, or what he’s reasonably certain that he owes, and work out the accounting?”
Snow: “That could be, that is an avenue that can be explored.”
The judge asked what amount Abdalla could pay that he doesn’t dispute. Attorney Snow conferred with his client for a few moments.
“At this point,” Attorney Snow responded, “he (Abdalla) doesn’t have the number. But all he’s asking for is the ability—at this point, taking this information and meeting with Curtis, he can go through the 99 invoices and make a determination of what is not in dispute.”
The judge didn’t issue a ruling, asking Abdalla and the Receiver if they’re willing to have a meeting, and see if they can delineate where they agree or disagree on the assessment. Abdalla’s counsel said they could have a meeting this week, or the following week.
Aramburu, meanwhile, said if the financial records have problems, that can be laid at the feet of Abdalla himself, who set them up. He said they’re willing to meet but said the accounts receivable document they sent in December should be the basis for the discussion.
“What I don’t want to do is walk out of here, and kind of have another ‘Dog ate my homework” excuse, Aramburu said. “The AR aging summary that we’ve been looking at is a document that’s been sent to Mr. Abdalla and his counsel since December. It breaks down by fractional share, by fractional unit, every one of these, at least according to the books and records of the Association, every one of the Abdalla entity units.”
