Historic Inn May Go on the Block

EUREKA, Calif. —  The historic Eureka Inn -- a grand old Humboldt County hotel that has played host to presidents and prime ministers -- is facing foreclosure after a creditor announced plans to sell the block-sized Tudor-style building at public auction Feb. 2.

The foreclosure was the second piece of recent bad news for inn owner John Biord, who faces criminal charges of allegedly misappropriating $117,000 in bed taxes paid by inn guests.

The combined actions will probably spell the end of his nine-year tenure as the hotel’s owner. During that time, the business has been the subject of numerous financial disputes with tax agencies, contractors and suppliers.

“It’s been an extraordinary challenge,” Biord said.

On Jan. 7, a Superior Court judge denied a motion by Biord’s attorney to drop the felony charges of failing to pay the bed taxes. Biord has paid the back bed taxes in full. No trial date has been set, but the first hearings in the case are to begin next month.

Assistant Dist. Atty. Tim Stoen, who is prosecuting the case, said he wanted to send Biord to jail.

“I think that there has to be some symbolic jail time -- it doesn’t have to be much, but it should be something,” he said.

The foreclosure was brought by Wells Fargo, which holds a first mortgage on the inn dating to 1990, five years before Biord bought it. The bank is asking for nearly $700,000 owed on the loan to be paid in full before the Feb. 2 deadline.

Although the bed tax case and the foreclosure are Biord’s most pressing problems, his financial troubles run much deeper. In 2002, the Internal Revenue Service placed liens totaling $750,000 on the inn, mostly for what the agency said was failure to submit taxes withheld from employees’ paychecks. A year later, Humboldt County notified Biord of its intent to seize the inn for failure to pay property taxes totaling $150,000.

Biord said that he had been working with the IRS to resolve his unpaid accounts, but that tough economic conditions during his ownership meant that some bills had to go unpaid.

“This has been such a tough process, and a tough time,” he said. “Your main focus is on keeping your doors open and your employees paid.”

The inn, which houses two restaurants, a bar and several conference rooms in addition to 105 guest rooms, was built in 1922 by a group of local business leaders who pooled their resources. Over the years, many notable figures have slept there, including Winston Churchill, Herbert Hoover and Ronald Reagan. In 1982, it was designated a National Historic Landmark.

But time and lack of money have taken their toll. The building has never been thoroughly modernized. Delivery of hot water to some rooms is sporadic, and people familiar with the inn say it needs major electrical and structural repairs. “The place is an embarrassment. It’s literally falling apart,” said a resident of the area.

Late last year, a deal to sell the business to a small Santa Rosa-based consortium called Fountaingrove Inn LLP fell apart after the parties failed to reach an agreement. Bill Carson, Fountaingrove’s general manager, worked as a Eureka Inn manager for 17 years before Biord bought it.

“I would say it’s in need of remodeling,” Carson said. “It’s the grand old lady of the county; it’s important, and that’s why we are interested. But we’re not going to pay anything more than it’s worth.”

Biord said he had a plan that would let him keep control of the inn, but acknowledged that his ownership may end Feb. 2.

“The thing might be better off being owned by someone else -- someone who’s got more money to put into it,” he said. “We’ll see what happens on that day.”