FAYETTEVILLE — The Cosmopolitan Hotel came under new management June 22 and its court appointed receiver, Ozark Asset Management, is working to ensure the Fayetteville hospitality landmark survives to serve future generations.
“Everyone from the lender, to the city, to the state department of finance has been incredibly supportive as we help this hotel work through its challenges,” said Brian Ferguson, president of Ozark Asset Management.
He said the hotel’s lender, ANB Venture and its operating division known as Kingston Management Services, injected $21,000 in June and $38,000 in July to help cover the hotel’s operating expenses.
He remains confident the hotel will support itself as football fans flock to Fayetteville come September and October.
The receiver filed its first monthly report with the Washington County Circuit Court on Thursday.
Ferguson said there were no real surprises in the eight-page mandatory report.
The hotel had $32,170 in the bank account used for operations when the receiver took control of the finances in June.
The receiver hired Chandler Hospitality Group as manager for the hotel following the contract termination of Midas Hospitality.
Emily Reynolds, attorney for the receiver, said she is in the process of reaching a compensation agreement with Midas for work performed between June 3 and June 22.
Ferguson said Chandler Hospitality retained the local staff and has extensive experience with properties in receivership, as well as its own construction division.
The court report indicated Midas had occasionally run payroll without proper tax withholding payments to the appropriate federal and state authorities.
The receiver is still trying to determine the delinquent amounts outstanding to taxing authorities, according to the report.
The court report also indicated that one of the hotel’s owners, Richard Alexander, withdrew $36,000 from the hotel’s Arvest bank account, made out in cashiers check to the Internal Revenue Service on June 15.
The receiver required Alexander to turn the check over to his attorney, David Fisher, as the withdrawal was prohibited by the receivership order.
Reynolds said the parties are working together to decide what is the best use for the withdrawn funds, that have not yet been returned to the receiver.
She said the ongoing foreclosure action by ANB Ventures and closure appeal from nonpayment of sales taxes with the Arkansas Department of Finance will be heard before Washington County Circuit Judge Kim Smith on Sept. 9.
Ferguson said the state helped the receiver re-permit the hotel so that business can continue operating.
Six floors are under construction at the hotel, leaving just 91 of 235 rooms operational.
The hotel collected income in June of $167,703 with expenses of $135,550, according to the report.
The hotel’s building permit has expired and the receiver is working with the city of Fayetteville to stay compliant. An inspection is being scheduled.
A lease with the city of Fayetteville for parking spaces in the municipal parking deck is being redrawn and awaits approval by the City Council. Utilities have been transferred into the receiver’s name and the hotel’s bank account was moved from Arvest to Bank of America, according to the report.
The receiver ask the court to approve payment of $6,359 in legal fees to Warner, Smith & Harris PLC for its work in negotiating new lease agreements with the city and its work with the state regarding sales tax and tax permits issues.
Ozark Asset Management earned $3,600 in June for its work as receiver.