Oil City Council moves forward with planned hotel purchase

Oil City Council voted Thursday to move forward with the planned purchase of the former Days Inn hotel property by the city and the Oil Region Alliance.

Council unanimously passed a motion to allow the partnership of the city and ORA to buy the property from Oil City Hospitality LLC, owned by the Shah family, for $499,000 plus closing costs.

The city and ORA are pursuing grants to pay for the demolition of the building. They view the project as an investment in the momentum of future improvements to the city and region.

Thursday’s council meeting was held before a packed house, and city manager Mark Schroyer explained the city’s rationale for pursuing acquisition of the landmark downtown property as well as plans for what to do at the site.

“We felt the city will have to take care of it sooner or later, like so many other buildings,” Schroyer said, adding that “this is a move for the future of Oil City. We didn’t feel we could move forward until it was taken care of.”

Schroyer said the city, ORA and Oil City Hospitality have entered into a “verbal handshake agreement” for the $499,000 plus closing costs deal.

He said the whole process came about rather quickly in the past month and that mayor Bill Moon, using his real estate expertise, has drafted a sales agreement.

Schroyer also commended the Shah family for working to help the city.

The ORA is ponying up $200,000 toward the purchase of the hotel, and the city is in a place financially to be able to go through with buying it, Schroyer said.

In addition to the city and the ORA, Schroyer said Venango County, the Northwest Commission, the Oil City Main Street Program and the Venango Area Chamber of Commerce are involved.

The various entities will enter into an agreement delineating their responsibilities once the sale is finalized, Schroyer said.

The plan would then be to demolish the hotel, Schroyer said, adding that he and the others involved are confident they can get grants to fund the demolition, which he estimated will cost about $500,000.

They are also thinking of trying to salvage the hotel pool, Schroyer said.

The goal is to clean up the site, make it more attractive and market it for future development, he said.

Rehabilitating the hotel was also looked into, but it is a 100-room structure and even if it were new, Schroyer said he didn’t think it could be supported in Oil City.

Schroyer noted that many questions are swirling about why the city is buying the hotel now and for almost $500,000, twice what the current owners paid.

“I think the city has precedent with the Brody Block. It kept changing owners and was sold over the internet,” Schroyer said. “That was exactly where this was heading…it is a similar situation,” he added.

The hotel is currently on the market for $2.5 million, Schroyer said, adding that the Shahs have put money into the hotel since they bought it for $250,000 in early 2021.

Schroyer said the Shahs have implied that selling the hotel for $499,000 will be almost breaking even, maybe losing a little money.

As to the question of if the city was going to pursue buying the hotel, why didn’t the city do it three years ago when it went up for sheriff’s sale, Schroyer said the property was never for sale at the price of $250,000.

Moon’s offer of $1 at the sheriff’s sale was rejected and ownership went to First Western SBLC Inc. of Dallas, Schroyer said. The hotel was then put on the market for $999,000, but the agent told Schroyer the city could buy it for $750,000, which they didn’t.

First Western had done business with the Shah family before and sold it to the Shahs for $250,000, Schroyer said. He added that at that time it was still the hope of the city that with a change of ownership the hotel would be fixed up and become viable again.

The hotel has sat vacant since it closed in 2019. It has been “rapidly deteriorating” since, Schroyer said, noting several waterline breaks in the building.

“We had another break-in (at the hotel) in the past week. Other fairly heinous criminal activity has gone on over there,” Schroyer said.

The recent break-in is the second in the last couple months that Schroyer has noted at a council meeting.

Oil Region Alliance leader John Phillips said his staff and board are very glad to partner with the city on the project.

Phillips noted that what has been going on in Oil City is bigger than building demolitions as he spoke about the various restoration projects also under way at the Downs Building, 100 Seneca and the old Lyric Theatre building.

Kim Scott, the chief of staff for state Rep. R. Lee James, conveyed James’ strong support for the endeavor to buy the hotel.

Several people at the meeting raised questions about potential ongoing litigation in connection to past dealings involving the hotel.