Unpaid tax bills of nearly $300,000 threaten the survival of downtown Lawrence’s historic Eldridge Hotel.

Agents with the Kansas Department of Revenue, escorted by Douglas County sheriff’s deputies, entered the hotel Wednesday evening and confiscated what cash the business had on hand cleaning out cash register drawers to partially satisfy $108,982 in unpaid guest, sales and Kansas withholding tax bills.

Douglas County tax officials did not take part in the raid, but the Eldridge also is delinquent for the past three years of county real estate taxes. The hotel owes a total of $188,814 in property taxes dating to 2000. The business has a $30,851 tax payment due June 20 that it also has not paid.

“We definitely owe back taxes,” said Rob Phillips, general manager of the hotel. “The economy has put us in a terrible position. They (state officials) came and talked to me last night, and I paid them some money.”

Neither Phillips nor Dedra Platt, manager of the Revenue Department’s civil tax enforcement office, would comment on how much money was taken from the business. Both, though, confirmed it was not enough to satisfy the back taxes owed the state.

County officials may be the next collectors to come through the hotel’s doors. Douglas County Treasurer Pat Wells said she would put the hotel up for auction if the business didn’t pay its 2000 real estate taxes, totaling $77,510, before the county’s annual tax auction in 2004. A date for the auction hasn’t been set.

The hotel was open Thursday, but Phillips said the tax situation eventually could lead to it closure.

Competitive situation

Eldridge Hotel

Phillips said business at the hotel, which offers 48 two-room suites and is on the National Register of Historic Places, has been off by about 30 percent since the SpringHill Suites by Marriott opened downtown in 2001.

He said the Eldridge was put at a competitive disadvantage when Lawrence city commissioners allowed Marriott to purchase 138 spaces in a city-owned parking lot adjacent to SpringHill Suites for exclusive use by guests.

The Eldridge shortly afterward asked city commissioners to allow it to designate the 24-parking spaces in the city lot directly west of its building for exclusive use by its guests.

The city’s Downtown Parking Advisory Board denied the request.

Kiss of death

Phillips, who has operated the hotel for 17 years, said he would approach city commissioners in the coming weeks about approving a similar request for use of the parking lot. He said the future of the hotel likely would be at stake.

“I would say that if the city doesn’t do something to help us with the parking situation, they will have given the kiss of death to the hotel,” Phillips said.

Lawrence Mayor David Dunfield said the city would be open to hearing Phillips’ proposal, but said he thought there was a good reason why his previous request was denied.

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“Clearly, if we would have allowed that, it would have opened up a lot of questions,” Dunfield said. “If we allow it, I think we could have a lot of requests of that nature.”

Assistant City Manager Dave Corliss said the lot Phillips was referring to was built using a benefit district. Property owners in the area paid a special assessment to the city for the cost of the lot with the assumption that it would serve all area businesses.

Corliss said the situation was different from the Riverfront Plaza parking garage, which was built with city at-large tax dollars and was built more specifically to serve what was then the Riverfront Mall property, which now houses the Marriott.

But Dunfield agreed that the Eldridge, at the corner of Seventh and Massachusetts streets, plays an important role in the stability of downtown.

“It is an important anchor for downtown,” Dunfield said. “But the city doesn’t have the responsibility for managing it and ensuring its success. That goes beyond what we can do.”

The city has helped out the Eldridge in the past. In 1985 it issued $2 million in tax-exempt industrial revenue bonds to assist in a $3 million project that renovated the building from an apartment house back into a hotel.

In arrears

Platt said the Revenue Department had the legal ability to start a foreclosure proceeding against the Eldridge but was not yet considering that option.

“The ultimate goal would be for the taxpayer to contact us and get an acceptable payment plan with us,” Platt said.

Phillips said he had hired an attorney to begin discussions with the department. He said he believed he could come up with the necessary money to pay the back taxes if he could show investors that the parking situation was resolved.

“I think we have some reorganization financing lined up if we get parking,” said Phillips, who declined to name possible investors. “But nobody with money is willing to touch this if we don’t have parking.”