Failed motel could cost taxpayers $100,000

photo City leaders in Calhoun, Ga., worry they might have to demolish the Oglethorpe Inn off Interstate 75 at public expense. The hotel once was owned by U.S. Rep. Tom Graves, R-Tenn., and Georgia Senate Majority Leader Chip Rogers.

Calhoun taxpayers could be on the hook for more than $100,000 to clean up a business blunder by two lawmakers who preach cutting taxes and rail against government intervention.

Calhoun City Administrator Eddie Peterson said if City Council members declare the Oglethorpe Inn a health hazard, the Gordon County town is looking at spending "lots of dollars" to raze the structure, formerly owned by U.S. Rep. Tom Graves, R-Georgia, and state Senate Majority Leader Chip Rogers, R-Woodstock.

The city has had to clear out derelict garages and houses at times, but taking down the large two-story motel would mean spending money the city doesn't have, Peterson said.

Mayor James Palmer said he and other officials are looking at legal options to recover the costs, but they might have to move forward on the property in the coming weeks.

"We're trying to exhaust all options before it comes back on the taxpayers," he said.

Peterson said the city has threatened commercial developments with demolition before, but city-sponsored razings have been averted because "usually the property owners will realize they're going to have to pay it anyway."

photo U.S. Rep. Tom Graves.

The Oglethorpe Inn went from being a cheap place to stay off Interstate 75 to the center of controversy in 2010 when Bartow County Bank sued Graves and Rogers over a loan they took out in 2007 to buy and renovate the building and start a business.

Attorneys for the bank alleged that Graves' and Rogers' company, Tich Hospitality, defaulted on a $2.2 million loan when it failed to make payments and then violated the loan terms when the pair sold the company without telling the bank.

The legislators filed a countersuit, claiming the bank had changed the terms of the deal. Tich's attorney argued in court documents that the bank couldn't claim default because it had been lenient on collecting payments and should have known the lawmakers' personal guarantees on the loan wouldn't hold up.

Graves and Rogers settled the suit out of court early this month.

The settlement terms are confidential, but an Aug. 12 letter from Calhoun's attorney, William Bailey, indicates the bank modified the loan by changing its maturity date to February 2015 instead of the initial date in March 2008 and reduced the balance to $1.18 million.

The letter also states that Graves personally does not owe taxes and is not liable for any of Tich's back taxes.

photo State Sen. Chip Rogers, Woodstock

A spokesman for Graves asked Friday to review the letter and said he could not comment on the settlement because of the confidentiality agreement.

"All parties have been committed to finding a positive solution and I am pleased to share that our common goal has been achieved," Graves said in a statement issued after the case was settled. "I am happy this matter is fully resolved in an equitable and fair manner."

Adam Pipkin, a spokesman for Rogers, told the Cherokee Ledger-News that the senator's involvement with the motel ended two years ago.

"The back taxes are not Chip's -- he sold the inn in 2009," Pipkin told the paper. "When he sold it, everything was current. Whatever has built up has nothing to do with Sen. Rogers."

In a phone interview Friday, John Edens, the hotel's former manager before he bought the motel from the lawmakers in late 2009, said the motel is in bad shape. When the power was cut off in February, residents -- including several "meth heads" -- ransacked the furniture and rooms, he said.

Edens said he removed the doors on all of the rooms to keep the motel from becoming "the biggest whorehouse in Gordon County."

The rooms have been open to the elements ever since.

"It looks like Baghdad," Edens said.

A code enforcement officer with the city declined to comment on the state of the motel and said all public statements were being handled by the city attorney.

Peterson said Calhoun council members have not put a vote on the property on their agenda, but "it's on their minds."

He said the first step would be putting $15,000 worth of fencing around the building to keep people out. Then the building would be leveled, which would cost the county an estimated $100,000. The property could then be sold to pay off a lien against it for back taxes from 2009 and 2010. Edens said the property has been valued at $550,000.

Edens also discussed the terms of sale when he bought the motel. He said he bought Tich and the motel building for $10,000, but he said he was never required to pay.

Edens acknowledged "brushes with the law" and a checkered financial history. In 2010, the Atlanta Journal Constitution reported that he had filed for bankruptcy in 2004 and has had more than $200,000 in liens and judgments filed against him. Most of the liens had been thrown out in recent years, the paper reported.

He also was charged with theft by conversion in Roswell, Ga., in June, but the charges have been dropped.

After the sale, Graves and Rogers both washed their hands of Tich's bills, saying they no longer owned the company.

Palmer said he and the council would get an update on the property from county staff at a meeting Monday.

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