Owner of 'homeless hotel' owes thousands in utility fees

LANSING - A broken meter may further set back a local nonprofit's efforts to buy and maintain "a homeless hotel" in the city.

The Magnuson Hotel, known to many as Lansing's "homeless hotel," owes more than $51,000 in unpaid water and sewer charges to Lansing Board of Water and Light — the fault of a broken meter.

Officials at the utility company said it "has not and will not turn off water service" to the facility, and Stephen Serkaian, a spokesman for BWL, said the utility company is working with the hotel's manager to develop a payment plan.

But the hotel's regional manager Yingtao Xiao said Friday its owner, Alvin Peh of Singapore, says he won't pay the bill.

The State Journal has been unable to contact Peh.

Peh owes approximately $51,213 in "unbilled water and sewer consumption," according to an email sent to Xiao from Lori Pung, general accounting manager for BWL.

It's the result of a water meter that showed no water usage for over a year, from October of 2014 to December of 2015. The problem wasn't discovered and the meter repaired until last December, Serkaian said.

Now, Peh is responsible for paying back those costs, Serkaian said. He said the utility did waive "certain" fees and fines though.

"We have internal processes and that, combined with customer comments help us make sure all of our equipment is operating properly and with this case, we missed it," he said. "It's probably an extreme example of a meter that's not working. We cannot give away service for free."

The looming bill worries Homeless Angels Founder Mike Karl. His nonprofit organization is currently housing about 100 homeless individuals, including about 30 children, at the hotel, located off South Pennsylvania Avenue just north of Interstate 96.

The group has been a constant presence at the property for the last few years, maintaining a second-floor office there and working with homeless individuals and families seeking shelter. Their rooms are paid for through donations.

And it's the latest financial road block at the property, which owes just over $110,000 in delinquent property taxes, according to the Ingham County Treasurer's office.

Working toward an agreement

Karl said the Homeless Angels has been raising money to buy the property, currently for sale. Without it, he said, the homeless people served by his group have nowhere to go.

"This has been the busiest summer that we've had," he said. "For me, it would be devastating because we'd be dumping people on the streets."

Karl said he's hopeful Peh can reach an agreement with BWL.

The Homeless Angels have raised about $90,000 toward the cost of purchasing the hotel, Karl said. The property was listed for $1.5 million with CBRE, Inc. in February.

"We're in talks with the owner," Karl said.

Serkaian said BWL only shuts off service to a customer "after all other options have been exhausted."

He said the payment proposal emailed to Xiao Thursday, which projects a monthly minimum payment of $17,500, "is not intended at all to threaten cut off of service."

The email was "simply a proposal," Serkaian said. "It identifies what we need for them to stay current." Serkaian said he's "confident" BWL can reach an agreement with Peh.

Xiao said Friday that BWL staff plan to look at the hotel's existing meter again before this weekend, but he said the utility's proposal is out of reach for Peh.

"As far as our financial situation, we don't have that money," he said.

Karl said the hotel's average monthly utility bill was about $3,500 before BWL replaced the faulty meter. The jump in costs is "ridiculous," he said.

"It makes no sense to me," Karl said.

Serkaian declined to discuss the Magnuson's past utility bills.

Xiao said Peh has kept up with the hotel's current utility bills. Serkaian told the State Journal he can't disclose an individual's payment history.

According to the county treasurer's office, the Magnuson faces foreclosure by March 31 of 2017 if the property's delinquent taxes aren't paid. Records show the most recent payment, of $5,428.79, was made at the end of March.

Contact Rachel Greco at (517) 528-2075 or rgreco@lsj.com. Follow her on Twitter @GrecoatLSJ.