Correction: An earlier version of this story gave the incorrect title for a county office. It is the San Luis Obispo County Tax Collector's Office. Also, tax auctions aren't traditionally held on the courthouse steps, as the story said; they are held online.
David Weyrich, owner of The Carlton Hotel, owes nearly $1 million in back taxes to San Luis Obispo County on his landmark Atascadero property, leaving him a little more than a month to save it before the hotel heads to public auction.
As of this month, Weyrich owes the San Luis Obispo County Tax Collector's Office $903,557 in unpaid property taxes on The Carlton at Traffic Way and El Camino Real, according to county tax records.
The property is listed under Weyrich’s name and Carlton Hotel Investments LLC. It includes the 52-room hotel and its ground-floor restaurant and bakery spaces, according to the county.
“We have paid this year’s taxes current and are entering into an agreement and paying the installment in the next couple of weeks,” Weyrich wrote Tuesday to The Tribune.
County records show that Weyrich has paid $85,222 in property taxes for fiscal year 2012-13. The larger default bill accounts for the five previous fiscal years dating back to fiscal year 2007-08 where property taxes went unpaid or partially unpaid, according to the county Tax Collector's Office.
In 2010, the Carlton was assessed at about $13 million by the county. The current value has since dropped to almost $7.1 million, according to the 2012-13 tax bill.
Weyrich has faced numerous financial challenges involving his personal and business assets in the past five years. He’s lost major holdings in local wineries, vineyards and housing developments to foreclosure and issues related to unpaid debt.
Weyrich has also struggled with paying taxes in the past, including failing to pay state taxes on the original restaurant at the hotel called The Carlton Restaurant & Grill. That move ultimately prompted the restaurant to close under his management and re-open under the direction of other tenants who have all come and gone for various reasons. The most recent was Colby Jack’s, which closed this month.
The Carlton’s property tax bill, which accrues 1.5 percent in interest each month that it is past due, has been in default since June 30, 2008, according to the county Tax Collector's Office.
If property taxes go unpaid for five years without the owner establishing a payment plan, the property becomes available for public auction.
If Weyrich doesn’t set up a payment plan — typically 20 percent of the past-due bill to be paid in annual installments — before the June 30 deadline, the county will launch a power-of-sale process to recoup the unpaid taxes plus the costs of the auction, according to the county Tax Collector's Office.
County tax officials say they’re working with Weyrich, who they say calls their office about once every two weeks.
The power-of-sale process can also start if a property owner doesn’t remain in good standing after a payment plan is set up.
Recording a power-of-sale means Weyrich loses the option for a payment plan and has until 5 p.m. of the day before the auction to pay his tax bill in full.
However, such paperwork and the various legal steps it takes to bring a property to auction can take up to an additional five years due to county budget cutbacks, according to the Tax Collector's Office.
Barring other changes, Weyrich would continue to own and run the property during that time.
The auctions are held online.
In 2010, The Carlton was in trouble with its lender. At the time, Lafayette-based R.E. Loans Inc. announced that the hotel was defaulting on its loans. The firm disclosed that negotiations for a forbearance agreement on the property were in the works. The agreement delayed action on the debt owed until Weyrich and the lenders could agree on an amount.
On Tuesday, Weyrich said the hotel’s loan is no longer in default and it is operating on a new financing note.
“We have had a forbearance agreement in the interim since 2010,” he added.
Calls to R.E. Loans on Tuesday were not returned.